Krassen Nikolov analyses the most boisterous scandal that shook Sofia in the midst of the presidency of the EU Council – the deal for the sale of Bulgarian assets of ČEZ.
Krassen Nikolov is a journalist specialised in judiciary affairs. He works for Mediapool and is a regular contributor for BulgarianPresidency.eu for the six months of the Bulgarian Presidency of the Council of the EU.
Recent sociological surveys have shown that the majority of Bulgarians (57%) believe that the cause of the scandal are the secretive dealings of the ruling GERB party and of Prime Minister Boyko Borissov personally. The main reason for this widespread opinion is the lies by the parties involved in the scandal. Three of these lies have already been exposed.
Since the beginning of this year, media in Bulgaria and the Czech Republic have written that three Bulgarian banks have given guarantees to ČEZ to finance the company “Inercom”, which signed the contract for the purchase of assets of the Czech company in Bulgaria. The cost of the acquisition is estimated at over half a billion euros. The agreed purchase price of the assets is €342 million. “Inercom” must have an additional €200 million to repay the ČEZ-Bulgaria loans and for the shares of the minority shareholders. However, Inercom doesn’t have that money. The entire business of the unknown Bulgarian Ginka Varbakova, which owns Inercom, is valued at €50 million. Therefore, the role of the three banks in the deal is key.
On Thursday, the chair of the special parliamentary commission on the ČEZ case, Zhelyo Boychev (BSP), announced that Bulgaria’s FIBANK has issued a letter of support stating that it is interested in participating in the financing of the deal. This happened on 19 December last year. The intended support is of €80 million. At the end of February, FIBANK announced publicly that it did not commit to fund the deal.
FIBANK played a central role in another scandal during the Bulgarian presidency – the intentions of building a new cabin lift and ski slopes in the Pirin National Park. These intentions are supported by the Bulgarian government, which has reinforced the doubts that the bank and people in high positions in Sofia have very large common interests. Already in the beginning of 2017 GERB announced that it is committed to the construction of the lift and this was confirmed in January in person by Prime Minister Boyko Borissov. The construction works in Pirin took thousands of protesters to the streets of Sofia at the beginning of the year.
The second big lie in the ČEZ deal is linked to the state-owned Bulgarian Development Bank. At the end of February, just like FIBANK, the state-owned bank said it had no stake in the deal. A month later, the head of the credit institution, Stoyan Mavrodiev, admitted that the bank had sent a letter to ČEZ in which it expressed interest in participating in the deal. It sounds unrealistic that the Bulgarian Development Bank would take such a commitment without coordinating its intention with Prime Minister Borissov or with public figures close to him.
The Bulgarian Development Bank has not yet submitted the requested documents to the parliamentary commission that is investigating the deal, Boychev said. He added that if this did not happen within a certain time, Parliament would ask for the assistance of the central bank.
The third big lie was recognized by the government itself. Last week, Finance Minister Vladislav Goranov admitted that the state had never intended to buy the Bulgarian business of ČEZ. He announced that the government’s intentions announced a month ago were just an effort to “trying to calm down” society.
At the end of February, the Czech newspaper Lidové noviny revealed in detail the sources from which Inercom relies to receive the money for the purchase of ČEZ Bulgaria. The newspaper referred to a document indicating that the Bulgarian Unicredit Bulbank promised to credit Varbakova with €180 million, FIBANK with €80 million and the Bulgarian Development Bank confirmed with a letter that it would give €65 million for refinancing of existing loans of ČEZ-Bulgaria. The Czech newspaper is owned by Czech Prime Minister Andrei Babiš and is considered as credible. The same document the Czech newspaper refers to was sent by a representative of the Czech government to Prime Minister Boyko Borissov.
Thus, it can be summed up that two of the big lies on the deal come directly from the Bulgarian state, and the third comes from a bank suspected of having a hidden relationship with the state. This can only add to the public’s suspicions that the ruling GERB party is trying to cover its ties with “Inercom Bulgaria” and its participation in the deal with the ČEZ assets.