BALKAN BLOG: Digging up Borissov’s hidden skeletons

BALKAN BLOG: Digging up Borissov’s hidden skeletons
By Denitsa Koseva in Sofia May 29, 2021

Just a few weeks after Bulgaria’s former prime minister Boyko Borissov failed to form a fourth government after the April 4 general election, the country’s new interim government has started revealing corruption, blackmail, illegal wiretapping and misuse of authority in pretty much all state-controlled institutions. Many of the cases are directly related to the former leader, which might cost him not only the upcoming snap election on July 11, but end his political career. 

Borissov’s Gerb party didn’t secure enough votes on April 4 to form a new government. With no other party in the new parliament able to put together a ruling coalition either, an interim government under former defence minister Stefan Yanev was installed while a new vote is organised. 

The caretaker government appointed by President Rumen Radev on May 12 was tasked further with digging into state institutions to reveal how Borissov had left them after Gerb’s 10 years in power. It has done this with enthusiasm: virtually every day the caretaker government has been revealing new cases of corruption and abuse of office during Borissov’s time in power, as well as numerous cases in which political dependence can be assumed in supposedly independent institutions. These include suspiciously high debts, drained funds and contracts provided to companies allegedly close to Gerb in the days ahead of the April 4 vote.

Critics of Borissov say that all institutions in Bulgaria are rotten and full of incompetent people appointed just because of their loyalty to Gerb and of their willingness to provide lucrative deals to companies related to the ruling party and to its informal ally, the ethnic-Turk Movement for Rights and Freedoms (DPS).

Threats and violence for those who do not obey

The hidden skeletons first started appearing with the testimony by a local businessman during a session of a special committee set up by the previous parliament to probe Borissov’s government. Svetoslav Ilchovski claimed he was shown a video of another businessman, currently in prison, who had been sexually violated and filmed by guards. 

The video, Ilchovski claimed, was used as threat. He said it was shown to him and several other businessmen at a party organised by a person close to Borissov in the prime minister’s hunting lodge. According to Ilchovski, he was repeatedly pressured by people close to Borissov. Associates of the prime minister forced him to sell his products at lower prices and to back away from an agricultural land purchase, he claimed. He also said state agency representatives forced him to pay a racket if he wanted to get water for his plantations. He did not provide documents proving his accusations but said he has them and will provide them to the committee.

That scandal evolved further after Ivan Angelov — one of the owners of Sofia-listed poultry company Gradus — also decided to testify to the committee, denying accusations by Ilchovski that he used its influence with the prime minister to present a false hike in Gradus’ turnover ahead of its IPO. The company held the biggest IPO in ten years on the Sofia Stock Exchange in 2018. Ilchovski said that he was asked by Angelov to help fake a higher turnover for his company on behalf of Borissov, and claimed he has photos and other proof.

That scandal marked the end of the work of the previous parliament, which was dissolved after no political party managed to form a government. 

Schemes for ‘friends’

Another skeleton was excavated in the past days by Economy Minister Kiril Petkov. He announced that his ministry will launch an in-depth probe into loans worth around BGN1bn (€511.3mn) provided by the Bulgarian Development Bank (BDB) to eight companies, including four allegedly connected to controversial businessman Delyan Peevski.

A scandal related to suspicious loans provided by the BDB broke in 2020 shortly after the first coronavirus (COVID-19) outbreak in Bulgaria. The BDB was tasked with helping companies to survive the coronacrisis and the parliament approved a BGN700mn capital hike for the bank to be used for cheap loans and loan guarantees to companies that were hit by the crisis.

However, in April 2020 local media revealed that the bank had extended a BGN75mn loan to an unknown firm with a tiny income and zero profit a few weeks after the country declared a state of emergency. The bank’s then head, Stoyan Mavrodiev, was fired by Borissov but no deep investigation was carried out.

In July 2020, Hristo Ivanov, one of the leaders of the reformist Democratic Bulgaria, said that companies and individuals related to the DPS received loans worth more than BGN500mn from the BDB, or one third of the credit portfolio of the state-owned bank. That was not probed either.

On May 17, Petkov said he is appointing a committee for public control of the funds along with the Agency for Financial Supervision, that will enter the BDB and carry out a thorough investigation into the suspicious loans.

“Let’s see how these funds were spent and why by statute and by law this bank should help small businesses, but [BGN]1bn is provided to eight people, four of whom are probably connected,” Petkov said.

Each of these eight entities has received loans of at least BGN100mn. According to Petkov, they were either owned by or related to people connected to Gerb and the DPS, including Peevski, Rumen Gaytanski (known as “the Wolf”) and brothers Kiril and Georgi Domuschievi. In the past, all of them have been suspected of benefitting from their close ties to those in power, while Peevski, who is also a DPS member, was believed to be one of the most influential people in the country and who become a synonym for corruption and murky deals.

That scandal evolved in the following days after Petkov revealed that of the BGN1.9bn loans provided by the BDB, BGN1.8bn went to just 20 companies. The minister invited the largest eight companies to meetings to discuss why they borrowed these sums from the BDB, but none of them accepted the invitation.

The government also replaced the head of the Road Infrastructure Agency, Georgi Terziyski, and his deputies. The agency has been accused of granting contracts worth billions to the state owned road construction company Avtomagistrali untransparently and without tenders. The company has been hiring subcontractors for the lucrative deals also without calling tenders.

Illegal wiretapping

Among the most shocking scandals that broke in the past days in Bulgaria concerned the wiretapping of opposition politicians ahead of the April 4 vote by security bodies, without permission from a court. The information was first revealed by Atanas Atanasov, one of the leaders of Democratic Bulgaria and a former chief of the counterintelligence services, who has claimed that 32 opposition politicians were wiretapped ahead of the elections, including members of Democratic Bulgaria. It is not known whether Borissov was aware of the illegal wiretapping.

That information was subsequently confirmed by Interior Minister Boyko Rashkov who said he has information that documents proving the wiretaps were being destroyed. In the following days, more information appeared, revealing that a total of 82 politicians were wiretapped, some of them during the months-long mass anti-government protests last summer, and the others ahead of the April 4 vote.

In response, Yanev removed Dimitar Georgiev, the current head of the State Agency for National Security (DANS). Georgiev, along with other heads of security bodies, has taken a long leave until September, allegedly to avoid removal from his position altogether. Rashkov has said the move “decapitated’ the key security agencies in the country.

The scandal, which has become known as the ‘Bulgarian Watergate’, is still evolving. The prosecution said it will probe those claims but results are only expected after the July 11 vote.

Rotten institutions

Borissov might end up facing trial if the next government manages to reform the judiciary and secure independent and fair work of the prosecution.

Even if not charged, Borissov seems doomed to lose the next general election on July 11, or at least to gain fewer votes than on April 4, losing any chance to return to power. According to the latest polls, his Gerb party would get around 21% of the vote, down from 26% in April, and even that advantage is uncertain as popular showman Slavi Trifonov’s There Are Such People has increased its support to 20%.

The ongoing revelations could boost the performance of the new political formations, There Are Some People, Democratic Bulgaria and Stand up! Thugs out!, which got a respectable share of the vote in April, but insufficient to form a government. They are enjoying rising support, according to the polls, but are still polling below the 50% they would need to form a stable majority. Things could change, should more scandals erupt in the following weeks. On the other hand, analysts warn that this wave could turn in favour of Borissov if the caretaker government makes mistakes by replacing professionals or appointing controversial figures.