- Earlier this year, Hippoland received a buy-out offer from its main competitor, Comsed, shortly after a friend of Alexander Staliyski - a businessman close to Prime Minister Boyko Borissov, acquired 50% interest in Comsed
Trade-in toys have never been an explosive business. Sales are growing but competition is stiff, especially with the mass advance of online shops, which even before Covid-19 put existing chains to the test.
However, for one of the large players on the Bulgarian market, Hippoland, the pandemic seems to be the lesser problem of 2020. The active and open participation of owner Marian Kolev - and many of his employees - in the anti-government protests seeking the resignation of the prime minister and the top prosecutor has triggered synchronized check-ups of the company by the tax authorities and the economic crime police unit.
The case brought to light even more disturbing events from the beginning of the year, which even Kolev is unwilling to speak about at length. In brief: a buy-out offer, accompanied by a mild threat from the main competitor Comsed, was made shortly after a 50% stake in that company was acquired by Danail Genev, a bodybuilding coach and close ally to Alexander Staliyski - a mighty, yet shady figure in Bulgarian business world.
Staliyski was president of the national bodybuilding and fitness federation and is a personal friend to Prime Minister Boyko Borissov. He was rumoured to be part of a secret circle of decision-makers, known as The Big Cats and is now said to be close to another important behind-the-scenes figure - the oligarch and lawmaker Delyan Peevski.
This made the case against Hippoland a mixture of political repression and corporate ridership.
Comsed is one of the oldest toy retailers in Bulgaria. The company was founded in 1989 by Rosen Filimonov and Ognyan Gavrailov who started off as Lego importers with a single shop and gradually expanded to a large chain with outlets in all larger cities. In 2015, Gavrailov died and was inherited by his daughter Galina Gavrailova who joined the management. Hippoland has a shorter history. It was set up in 2005 but quickly outpaced its competitor and in 2007 it was already a leader in turnover until Greece's Jumbo entered the market and topped the sales ranking in the segment.
The distance between Hippoland and Comsed grew wider and at the end of 2019 Kolev's company had a market share of 30% and sales twice as large as Comsed's. The rest of the market is fragmented but online shops are quickly gaining share.
The status quo started to change at the beginning of this year. A notification sent to the Commission for Protection of Competition shows that the other Comsed founder, Rosen Filimonov, left the company and sold his share to bodybuilder Danail Genev. Thus, Genev became a 50:50 partner with Galina Gavrailova.
Though her name was not specifically mentioned, media reports make it clear that it was Gavrailova who made the offer to Kolev to sell Hippoland on behalf of her new powerful partners. That happened in January 2020, months before Comsed's ownership change received anti-trust approval and was finalized in May.
In an interview for Evrokom TV Kolev gave details of that meeting. After Gavrailova told him he had to sell half of his business he replied that he knew who her cronies were and that Boyko Borisov would sooner or later lose power. "She laughed at me and said: Who's Boyko Borisov? My people tell Boyko Borisov what to do," Kolev told Evrokom.
Cause and effect
The chronology of events after that is clear. Marian Kolev is an active participant in the anti-government protests that have been going on day after day since early July. Unlike other businessmen who avoid direct confrontation with the authorities, he gives the green light to his employees and they often go to the protests dressed incorporate green T-shirts.
On September 2 Kolev was in front of the parliament building with his 17-year-old son, who got pepper-sprayed in the eyes during clashes between protesters and police. The businessman published an angry open letter on the company's Facebook page calling for the resignation of the government. On the next day, September 3, the letter was published in the media and on September 4, the authorities launched mass check-ups in Hippoland's shops and offices.
One can only theorize on how and whether the events are connected in a cause-and-effect chain. Kolev himself seemed to be confident of such a connection, at least in the beginning. "I presume the check-ups were not directly coordinated by the government but by other people who are pulling the strings," he told Free Europe. Asked to be more specific, he mentioned Delyan Peevski, a member of parliament from the Movement for Rights and Freedoms party.
In his interview for Evrokom Kolev said that Alexander Staliyski had tried to reach him through common acquaintances. And when he asked Gavrailova what price they were offering to buy his business, she replied they could pay any price but it was them who would set it, not him. Later on, Kolev somewhat softened his story and for 24 Chasa Daily he described the ominous offer as "an indecent proposal by a lady".
Of course, the lady, in that case, is only the figurehead. Behind her lurk the shadows of dependent institutions used for corporate or political purposes. And even bigger shadows.
The secret kingdom of Alexander Staliyski
Judging by data in the Commercial Register, Alexander Staliyski participates as owner in just a few pretty modest businesses. As a matter of fact, Staliyski is the focal point of quite an eclectic corporate empire, yet all his companies are not just managed by but also formally registered to close friends of his or dummy figures.
That makes it hard to prove he is the actual owner of this secret and diverse kingdom, ranging from a glassware plant and TV studios to a waste collection company and trade in mobile devices. Nevertheless, there are enough indirect links.
The initial capital of Staliyski's group undoubtedly has its roots in Corporate Commercial Bank (Corpbank), the now-infamous lender that went bankrupt in 2014. Staliyski's girlfriend Violeta Sechkova was a minority partner and executive director in No Frame Media - a company set up in 2009, which secured most of the external productions of a TV channel gaining popularity at the time - TV7.
No Frame Media was controlled by one of the companies used by Corpbank's owner Tsvetan Vasilev to finance the TV channel. After a series of transformations and shortly before the bank was shut down, the company and its studios were bought out by Corpbank-financed companies. At the moment of closure of Corpbank Staliyski and Sechkova had deposits amounting to 30 million levs and 5 million euro in the bank. This money became the basis of a complex scheme.
The two partners assumed control of one of the Corpbank-financed projects: Rubin glass container plant in the city of Pleven. In October 2014 they assigned their receivables from the bank to a newly established company, Capital Investment, which was not formally connected to them. Capital Investment in turn transferred most of the receivables to the plant's owner, Rubin Invest, which used them to pay its debts to the bank. The remaining 8.8 million levs or so was assigned to Peevski's Cibole Services Incorporated Bulgaria, which used it for a similar purpose.
Thus, Rubin Invest's debt to Capital Investment quickly became non-performing and the company's assets were acquired by the creditor. That was followed by several transformations and transfers to other companies, landing the plant in the hands of Glass Contribution, a company formally owned by Luxembourg-registered Redford DPF. However, executive director of Rubin is Sechkova's brother Stefan.
Glass Contribution is the link to Staliyski's interests in another field - the waste collection business. The executive director of Glass Contribution, Dimitar Violinov Iliev, and his brother Petar is the formal owners of companies that have won municipal contracts worth tens of millions of levs. The core of the business is the Center for Recycling company which participates in a number of consortia for waste collection.
Then there is Comsed's new co-owner Danail Genov, who is said to only represent Staliyski's interest in the company. He is known mainly as a bodybuilding coach. He was a member of the bodybuilding federation at the time Staliyski was its president. A direct connection between the two can only be seen in a single company, MTH Trade. Until last year it was solely owned by Mihail Zahariev but in October 2019 the capital was increased from 100 levs to 100,000 levs with three new partners joining it. Violeta Sechkova acquired 30%, Todor Konstantinov and Mihail Zahariev had 25% each, and Danail Genev subscribed a 20-per cent share. In early 2020 Zahariev transferred another company of his, Sinopoint, to Sechkova and remained manager. The company has a specialized Samsung Experience Store in Sofia's The Mall.
MTH Trade is a strange company, to say the least. In 2017 it reported 8 million levs revenue and in 2018 its revenue surged to 44 million leva. Its profit also nearly doubled: from 410,000 to 746,000 levs. The results for 2019 are similar, but the profit increased further to a touch above 1 million levs. The company is registered as a seller in Emag and Amazon, where it offers Samsung phone covers. However, that can hardly explain the substantial sales volumes.
Just recently there was another change in MTH Trade's ownership: in late August Sechkova transferred her ownership stake to Boyan Staykov. He has shares in many other companies and in one of them is a partner with Danail Genev's mother. Both Sechkova and Genev hold stakes in dozens of other companies that operate mainly in the field of real estate and construction.
Given the amorphous structure of all these possessions, it is difficult to say what is owned by Staliyski and what is owned by Peevski. Nevertheless, the empire looks enormous. And its methods of growing are frightening.