"When businessmen are being acquitted by courts, the general public is left with the impression that either they have been targeted without justification by the state, or that there is no way for certain rich people to be prosecuted and tried successfully by the Bulgarian judiciary" - Mihail Ekimjev, lawyer.
"Where corruption is a state policy, no prosecution can interfere," Prosecutor-General Sotir Tsatsarov told late-night TV host and political hopeful Slavi Trifonov at the end of November, quoting his predecessor Nikola Filchev.
While Mr Tsatsarov's perverse goal was to appear impotent and just another cog in the institutional machine, and hence blameless for all failed anti-corruption cases against senior politicians and business figures, he - and his predecessor - had a point. Corruption is widespread in the country, especially among elites, where it intersects party lines, cutting through the border between business and politics.
And the top prosecutor easily turns a blind eye to corruption cases bearing all the attributes of high-level fraud if they are connected to politicians currently in power.
The two sides of the anti-corruption coin
The past couple of months provided several examples of such behaviour. An outside observer might say, looking at the surface, that the state has ramped up its efforts in fighting graft: the third cabinet led by Prime Minister Boyko Borissov and the majority in parliament led by his GERB party mustered enough support to push through a brand new anti-corruption body, the Commission for Illegal Assets Forfeiture (CIAF), and new specialized court designated to focus on high-level corruption cases was established. Then, over the summer and at the beginning of autumn the newly created institutions started targeting a succession of high-profile Bulgarian business personalities, all linked to the privatization process of the late 1990s.
A deeper look, however, reveals a very different picture. While the state chastised some troublesome individuals with the stick of justice, it handed carrots to others. Two particularly striking examples of this over the last couple of months have been the assets awarded by the state to two prominent members of the nominal political opposition to GERB - the honorary president of the Movement for Rights and Freedoms (MRF) party, Ahmed Dogan, and Georgi Gergov, a businessman and regional leader of the Bulgarian Socialist Party (BSP) in Plovdiv.
A very expensive hole
Mr Gergov received a very expensive gift. The government allocated 43 million levs (22 million euro) to the purchase of a plot of land of 2915 sq. m. the businessman owns in the central part of the coastal city of Varna. The site, which contains the foundations of an unbuilt department store, is colloquially known as The Hole in the city and has stayed empty for over three decades. The Hole was until recently owned by Gergov's Central Department Store - Varna, or TzUM - Varna, a sister company to TzUM-Sofia, the large department store in the heart of the capital's government district which itself mimics Moscow's GUM. Back during socialist days, The Hole was supposed to turn into Varna's offshoot of the landmark department store.
The ownership of TZUM - Varna was recently transferred to another company controlled by the socialist businessman - Sunny Day, which owns the seaside resort of the same name and has been heavily indebted for years despite its attractive location close to Varna, warm springs and beautiful beaches. It currently owes 110 million levs (55 million euro) to UniCredit Bulbank.
The valuation of 22 million euro smells of a scam. The Hole can never be used for a large-scale construction project because it is at the center of what once was the acropolis of the ancient Greek city of Odessos. Hence all construction activities were suspended with the fall of Communism. However, Varna mayor Ivan Portnih, the majority of city councilors, the Bulgarian government and the state-owned Bulgarian Development Bank (BDB) found the price reasonable.
First, Mr Portnih recommended buying the plot of land in early October, then the deal was quickly approved by the Municipal Council with the votes of both the ruling GERB party and its formal opposition MRF, while the BSP councilors voted against it. Soon afterwards, the Bulgarian government approved the purchase. Meanwhile several days before that BDB purchased close to 15 million euro of Sunny Day's debt from UniCredit Bulbank.
This is not the first time that various institutions under the control of GERB have extended a helping hand to Mr Gergov's ever failing businesses. Back in 2016, BDB granted a 15.6 million levs' loan to another company owned by him - Plovdiv International Fair, and its subsidiary Sunny Day Residence. Most of the financing was used to repay their liabilities to UniCredit Bulbank.
In theory, the mission of the state-owned development bank is to provide financing to small and medium-sized enterprises. Yet, operations for the rescue of large-scale businesses affiliated to the powerful of the day are far from new. Previously, BDB handed out loans to a number of large construction companies such as Vodstroy 98 and Ponsstroyengineering.
Several theories explain why various government-level institutions treat Mr Gergov so well. One is that the businessman is one of opposition Socialist party leader Kornelia Ninova's principal opponents. He is also leader of the Socialist party organization in Plovdiv, Bulgaria's second largest city. One possible explanation for Mr Borissov's generosity is that he is supporting an internal enemy of his main political enemy, Ms Ninova.
Significantly, despite the huge blue-collar workforce employed in the economic zone surrounding the city, the Socialists have never been a force to be reckoned with there. Some suspected that the Socialists deliberately stayed inactive at the 2015 municipal elections to ensure the re-election of the GERB-nominated mayor Ivan Totev.
The other possible scenario is more complicated. According to three independent sources of Capital weekly, the municipal and state support for the deal, including a portion of the 22 million euro allocated by the state, is part of a three-way deal between media mogul and MRF MP Delyan Peevski, Mr Gergov and the authorities and it is a prelude to Mr Peevski acquiring the Sunny Day resort.
Honorary leader's own power plant
The other recent shady gift of the government to a supposed political opponent, the honorary leader of MRF Ahmed Dogan, is also related to Varna. The politician, who was quoted as openly stating in 2009 that he was "the instrument serving out the handouts" of financing in the country and who moved away from active political life five years ago after an assassination attempt, bought 70% of Varna thermal power plant (TPP) at the beginning of September.
The plant has been mothballed for three years because its former owner, Czech energy group CEZ, considered it economically unviable. Varna TPP has six generating units with a total installed capacity of 1260 MW designed to work on imported hard coal, which makes it very expensive to modernize to meet the EU's environmental requirements. The plant had an option to run on natural gas, but it would have made its electricity output terribly expensive.
However, at the end of 2017, the children of former transport minister Danail Papazov acquired the power plant for 48.5 million euro. Mr Papazov served as transport minister in the MRF-supported government of Plamen Oresharski (2013-2014). Several months after the acquisition, the government led by PM Borissov decided to increase the capacity of the so-called cold reserve, the idled power generating capacities that can be kick-started in case of electricity shortages, power failure or emergencies.
Then state owned Marica Iztok 2 TPP withdrew its bid to provide additional cold reserve only for Varna TPP to win the sweet deal. Under the contract, Varna TPP will receive 27 million levs per year to stay in reserve and when it starts operation, the price of its electricity will not be capped. This provision made it possible for the power plant to switch to natural gas, although its previous owner had ruled this option out.
Then Mr Dogan walked in, paying an undisclosed sum to acquire the plant. Of course, the state prosecutor's office has remained silent over this blatant waste of public money (we can't call it corruption for legal reasons).
In a nutshell, the deal will provide the honorable MRF leader with a business that is well-funded for at least a year ahead. It might also help Mr Dogan find a legal ways to declare his funds. During his political career, Mr Dogan has never been a direct owner or manager of any company. The only large-scale business profit he has made is the one-million euro fee he received as a hydro engineering consultant to the Tsankov Kamak dam project. He was later investigated for an undeclared conflict of interests in that case - to no effect. As a politician out of the limelight, he does not have to declare his wealth but his revealed deposits in the now bankrupt Corporate Commercial Bank amounted to about half a million euro.
Although Mr Dogan's connection with the current government is much more tenuous than Mr Gergov's, it shows how the state has the capacity to inject taxpayers' money in a failing business and then transfer it to the right people who can control it, closing the oligarchic circle.