Court settles ownership of Bulgaria’s Plovdiv fair
Bulgaria’s supreme court of cassation ruled to confirm the judgment of an appellate court that kept the Plovdiv International Fair in the ownership of controversial local businessman Georgi Gergov. The court said that the suit pressed by the Economy Ministry did not have sufficient justification for the case to be reviewed in the high court.
The fairground, Bulgaria’s venue of choice during the communist era for major international trade fairs and exhibitions, is on the list of companies banned from privatisation, but since 2008 has been effectively controlled by Gergov, who also runs the socialist party organisation in the region.
After taking office in July 2009, the centre-right GERB Cabinet ordered a review of the transactions that gave Gergov control of the fair and took the case to court, winning a favourable ruling from the Plovdiv Regional Court in January 2011, only to be overruled on appeal six months later.
The case dismissed by the cassation court was the second time the Government attempted to wrestle back control of the Fair, after the initial case was shot down by the Plovdiv Court of Appeals in April 2010, when it ruled that the privatisation ban was never breached because there had been no direct sale of state-owned shares.
Commenting on the decision, Gergov said that he welcomed the “rule of law” and said he hoped that the litigation would not interfere with the Fair’s partnership with the ministry to mark the 120th anniversary of the first exhibition held by the Fair, as quoted by Bulgarian National Radio.
Gergov became an indirect shareholder in the fair in 2006, when Puldin Tourinvest, a joint venture between himself and the Plovdiv city hall, acquired 33.94 per cent in the fair through an equity hike, sanctioned by then economy minister, socialist Roumen Ovcharov.
A year later, in another equity hike, Puldin Tourinvest raised its stake to 49 per cent in exchange for assets, owned by other Gergov firms, transferred to the fair. These included several restaurants and a hotel in Plovdiv’s old town, as well as their equipment.
In 2008, Gergov became the de facto majority shareholder by buying out small shareholders, namely heirs of people who were given shares as restitution for assets seized by the communist government after 1946. Gergov’s two companies, Puldin Tourinvest and Putishta Plovdiv, now hold 50.58 per cent in the Plovdiv International Fair. By law, the Government is required to maintain a stake of no less than 51 per cent in the fair.
Puldin Tourinvest is still a joint venture between Gergov and Plovdiv city hall, but the businessman has increased his stake in the company from 25 per cent to a majority stake using the same method – increasing his stake by transferring other assets in exchange for new shares.
This equity hike had received the necessary approval from the city hall and then-Plovdiv mayor Ivan Chomakov. After deciding not to run for mayor in the 2007 local elections, Chomakov was offered the job of executive director of the Plovdiv International Fair, but under intense media scrutiny, the former mayor appeared to turn down the offer in December 2007.
Even as the Government pursued its investigations throughout 2010, Gergov did not stop his attempts to gain full control of the fair, offering at one point to exchange TZUM, the communist-era central department store in Sofia turned shopping centre, which he owns, for the state’s remaining stake in the fair, an offer that the Economy Ministry turned down.
(Photo: Edoardo Forneris/flickr.com)