The historic building opposite the Russian Church on 6 Tsar Osvoboditel blvd in Sofia likely houses many secrets. It contains the office of the construction giant Hidrostroy, one of the companies that flourished during the EU-funded construction bacchanal of GERB and MRF over the past 12 years.
Hidrostroy's owner Veliko Zhelev became a household name last Monday night after he was arrested for blackmailing and physically assaulting his now ex-employee Blagoy Andonov in front of witnesses. On Wednesday, the businessman, a longtime close associate of the government and owner of several of the country's biggest construction companies, was released on bail after denying that he had attacked Mr Andonov.
This immediately caught the imagination of conspiratologists. Other reasons lay behind this arrest, critics of Bulgarian institutions claimed - for example, to hide evidence of bigger transgressions by the businessman from the European prosecutor's office. There are no concrete grounds for believing this. But the arrest of Mr Zhelev who has nurtured close associations with "elite" politicians such as ex-PM Boyko Borissov and mogul Delyan Peevski, and whose business growth in the sector was entirely dependent on the state, is certainly a surprise. The Prosecution, and the courts as a rule, don't usually mess with the likes of him.
Zhelev's lawyer Menko Menkov called the situation a "simple domestic scandal," but when a man who officially (or semi-officially) owns companies with revenues topping BGN 500 million is involved, there can be nothing simple about it.
How the arrest came about
Blagoy Andonov was the director of the Construction Directorate in Zhelev's company - VDH, formerly Vodstroy 98. Mr Zhelev bought the company from a person linked to MRF MP Delyan Peevski (now sanctioned for corruption under the Magnitsky Act). The deal for Vodstroy happened months after Mr Borissov's "catharsis", when the then-PM canceled public procurements for BGN 1.7 billion over suspicions of corruption, and the links winning companies forged with Mr Peevski and ex-Lukoil head Valentin Zlatev.
On February 24, 2023. Andonov lodged a complaint with the police over the alleged attack and, just a few days later, the State Prosecution launched an indictment. This early and active involvement by the prosecution is important precisely because it shows that Mr Zhelev's "political umbrella" - the immunity enjoyed by all those involved in large public procurements of recent years - may have been removed. But why?
According to two independent sources of Capital weekly who requested anonymity, the beating of Mr Andonov had indeed taken place despite Mr Zhelev's denials. One of our sources claimed that Mr Andonov was likely committing internal abuses and his boss got angry and fired him. When the dismissed employee went to collect his employment record, Mr Zhelev made him sign a promissory note for money he owed because he had embezzled it. Another source confirmed a statement by Mr Zhelev's lawyer's that there were witnesses to this conversation. Both Mr Menkov and Mr Zhelev himself, however, explained that the people there and the videotapes would confirm that there was no beating.
According to our source, however, other employees - site managers, engineers - were brought in to watch what was going on for edification and were seriously worried. "Most of them are young people who don't remember the days when they used to beat us up off our cars," our source said, alluding to the days of the thugs in the 1990s. What is certain in all this is that it becomes the occasion for the next, noisy and important episode in this story.
Arresting the construction boss
On the evening of March 6, Mr Zhelev was arrested for 24 hours and raids on his offices and homes began. Subsequently, the prosecutor's office detained him for another 72 hours. And then, on Wednesday, the supervising prosecutor imposed a pre-trial detention bond of BGN 20,000 and banned him from leaving the country. The charge against Mr Zhelev is that he assaulted Blagoy Andonov and forced him to sign an obligation to return BGN 68,000.
Monday night's action included extensive searches of Mr Zhelev's offices in Sofia as well as in Varna. The arrest raised questions and speculation ran amok about whether it had entirely different goals. Some saw in it a "signal" of sorts to Mr Zhelev, but it was unclear by whom and why. He was always on good terms with the authorities and wild theories about giving signals to his political mentors appear far-fetched. What is left is to probe the theory that the arrest is somehow linked to Mr Zhelev's business
A road hypothesis
In the construction industry, internal corruption is common - it happens that directors arrange specific suppliers in exchange for a commission, for example. Mr Andonov's role in the plot therefore sounds plausible.
The question, which at first glance seems a legitimate one, is why computers and documents are being exported in relation to a minor injury case and a blackmail complaint. Theoretically, there is a week between the prosecution's order to search the offices and the actual search, so if anyone wanted to warn Veliko Zhelev, they could have, so he could have hidden any incriminating material. However, there is no evidence of this.
Some commentators contend that documents are being seized from Hidrostroy's offices so that they can be hidden - including from European prosecutors (EPPO), in case an investigation is launched into any of the company's projects. In short, the arrest was a pre-emptive move to forestall a large investigation. Significantly, alongside this arrest, just a few days earlier, Regional Minister Ivan Shishkov had inspected Sofia's Northern Expressway. This was built by an alliance involving Mr Zhelev companies, including Hidrostroy. Mr Shishkov told the media that the tangent was built with EU money, so its construction will probably be checked by EPPO.
There are two problems with this theory. The route was completed in 2016; most likely, all payments were also made by that year, and EPPO can only investigate projects after 2017. Even if there were an investigation into abuse, Mr Zhelev would not be held responsible for the missing asphalt. There are other officials along the chain who signed off on the documents and were responsible for the construction.
The final theory: infighting
And the third possible explanation for his detention is that Veliko Zhelev has been deposed or has at least fallen foul of leading figures in the Borissov/Peevski circle. His 72-hour detention would appear to back this up. Mr Zhelev is considered by many sources to be a member of the inner circle of former PM Borissov as well as Mr Peevski, but this may be subject to change. There are at least two publicly known cases in which the prosecutor's office has been triggered in conflict with people from this circle - this is how former CorpBank owner Tsvetan Vassilev was thrown out of the game, and the scheme was similar with lottery mogul Vassil Bozhkov.
In the Veliko Zhelev story, it seems, the prosecution will continue to be active.
On Monday at noon, just before Mr Zhelev's arrest, the state prosecution announced that Prosecutor General Ivan Geshev had requested information from the Interior Ministry and Minister Shishkov about irregularities on the roads, including the Northern Expressway and Hemus highway. And the prosecutor's office has been conducting litigation over Hemus for a long time. Interior Minister Ivan Demerdzhiev on Tuesday urged the prosecution to look for a link between legal proceedings there on Hemus and the current one on the alleged attack. Mr Demerdzhiev said that if there is such a link, the prosecution should explain what it is and inform the public.
Whatever happens to Mr Zhelev, it is worth noting that the caretaker cabinet has shown significant activity in terms of investigating potential fraud in the infrastructure sector. It will be curious to see if any of this will lead to meaningful investigation by the Bulgarian or the European prosecution, but most importantly - if it will terminate the vicious practices of in-house procurements that have plagued the sector during GERB's rule. Without this, society will be no better off, regardless of Mr Zhelev and Hidrostroy's fate.