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Treasury sanctions influential Bulgarian individuals and their expansive networks for engaging in corruption

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The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned three Bulgarian individuals under the "Magnitsky Act" for their extensive roles in corruption in Bulgaria, as well as their networks encompassing 64 entities.  The Administration believes corruption degrades the rule of law, weakens economies and economic growth, undermines democratic institutions, perpetuates conflict, and deprives innocent civilians of fundamental human rights, and today’s action — the single largest action targeting corruption to date — demonstrates the Department of the Treasury’s ongoing effort to hold accountable those involved in corruption. 

The US government will continue to impose tangible and significant consequences on those who engage in corruption and work to protect the global financial system from abuse.

“The United States stands with all Bulgarians who strive to root out corruption by promoting accountability for corrupt officials who undermine the economic functions and democratic institutions of Bulgaria,” said Office of Foreign Assets Control Director Andrea M. Gacki.  “Not only does corruption deprive citizens of resources, it can erode the institutions intended to protect them.  This designation under the Global Magnitsky sanctions programme shows that we are committed to combatting corruption wherever it may be.”

This action targets Vassil Kroumov Bojkov, a prominent Bulgarian businessman and oligarch; Delyan Slavchev Peevski, a former Member of Parliament; Ilko Dimitrov Zhelyazkov, the former Deputy Chief of the Bulgarian State Agency for Technical Operations who was appointed to the National Bureau for Control on Special Intelligence-Gathering Devices; and the companies owned or controlled by the respective individuals.  These individuals and entities are designated pursuant to Executive Order (E.O.) 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act and targets perpetrators of serious human rights abuse and corruption around the world.  These sanctions coincide with complementary actions taken by the US Department of State to publicly designate Peevski and Zhelyazkov, among others, under Section 7031(c) of the Department of State, Foreign Operations, and Related Programs Appropriations Act due to their involvement in significant corruption.

The designations constitute the largest Global Magnitsky action taken on a single day in the history of the programme, targeting over 65 individuals and entities for their significant acts of corruption in Bulgaria. 

The corrupt activities undertaken by the individuals designated today demonstrate how pervasive corruption goes hand-in-hand with other illicit activity.  The breadth of today’s action shows that the United States will support the rule of law and impose costs on public officials and those connected to them who use government institutions for personal profit.  Today’s designation exposes Bojkov, Peevski, and Zhelyazkov for abusing public institutions for profit and cuts off these individuals’ and their companies’ access to the US financial system.  To further protect the international financial system from abuse by corrupt actors, Treasury encourages all governments to implement appropriate and effective anti-money laundering measures to address corruption vulnerabilities.

These actions send a strong signal that the United States stands with all Bulgarians who strive to root out corruption.  We are committed to helping our partners realize their full economic and democratic potential by tackling systemic corruption and holding corrupt officials accountable.  Treasury remains committed to working with Bulgaria to address money laundering reforms that lead to financial transparency and accountability.  We call upon regulators to communicate the risks of doing business with these corrupt officials and their companies.  

Vassil Kroumov Bojkov (Bojkov), a Bulgarian businessman and oligarch, has bribed government officials on several occasions.  These officials include a current political leader and the former Chairman of the now-abolished State Commission on Gambling (SCG).  Bojkov also planned to provide a sum of money to a former Bulgarian official and a Bulgarian politician earlier this year to help Bojkov create a channel for Russian political leaders to influence Bulgarian government officials.

Bojkov is currently in Dubai, United Arab Emirates, where he successfully evaded Bulgarian extradition on a number of charges levied in 2020, including leading an organized crime group, coercion, attempted bribery of an official, and tax evasion.  In its investigation, the Prosecutor’s Office of the Republic of Bulgaria found that in February 2018, Bojkov paid the then-Chair of the SCG 10,000 Bulgarian Lev (approximately $6,220) on a daily basis to revoke Bojkov’s competitors’ gambling licenses.  Following this massive bribery scheme, the Chair of the SCG resigned, was arrested, and the SCG was abolished.  There remains an international warrant for Bojkov’s arrest as his influence continues in Bulgaria.  In advance of the July 2021 Bulgarian parliamentary elections, Bojkov registered a political party that will run candidates in the aforementioned elections to target Bulgarian politicians and officials.

Bojkov is designated pursuant to E.O. 13818 for being a person who has materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, corruption related to government contracts or the extraction of natural resources, or bribery. 

OFAC is also designating 58 entities, including Bulgarian Summer, registered in Bulgaria that are owned or controlled by Bojkov or one of his companies:

  • Vabo-2005 EOOD, Digital Services EAD, Ede 2 EOOD, Nove Internal EOOD, Moststroy Iztok AD, Galenit Invest AD, Vabo 2008 EOOD, Vertex Properties EOOD, VB Management EOOD, Va Bo Company EOOD, Vabo Management EOOD, Vabo 2012 EOOD, Prim BG EAD, Eurogroup Engineering EAD, Kristiano GR 53 JSC AD, Nove-AD-Holding AD, Bul Partners Travel OOD, Bullet Trade OOD, Caritex Lucky AD, Sizif V OOD, Thrace Foundation, Vabo Internal AD, and Bulgarian Summer are owned or controlled by Bojkov.
  • Rex Loto AD is owned or controlled by Vabo-2005 EOOD.
  • Eurobet Partners OOD is owned or controlled by Digital Services EAD.
  • Eurobet OOD is owned or controlled by Eurobet Partners OOD.
  • Eurobet Trading EOOD is owned or controlled by Eurobet OOD.
  • Vabo Systems EOOD, Vato 2002 EOOD, Nove Development EOOD, Property-VB OOD, Trans Nove OOD, Nove Partners OOD, Adler BG AD, Efbet Partners OOD, and Internews 98 OOD are owned or controlled by Nove Internal EOOD.
  • Eurosadruzhie OOD and Decart OOD are owned or controlled by Vabo Systems EOOD.
  • Numerical Games OOD, Lottery Distributions OOD, National Lottery OOD, and Eurofootball OOD are owned or controlled by Eurosadruzhie OOD.
  • National Lottery AD is owned or controlled by Nove Development EOOD.
  • Meliora Academica EOOD, Domino Games OOD, and ML Build EAD are owned or controlled by Decart OOD.
  • Games Unlimited OOD is owned or controlled by VB Management EOOD.
  • Evrobet - Rumania EOOD and Old Games EOOD are owned or controlled by Games Unlimited OOD.
  • Vihrogonika AD is owned or controlled by Vabo Management EOOD.
  • Vabo 2017 OOD and Lottery BG OOD are owned or controlled by Vabo 2012 EOOD.
  • Siguro EOOD is owned or controlled by Eurogroup Engineering EAD.
  • Trakia-Papir 96 OOD, Parkstroy-Sofia OOD, Publishing House Sport LTD, and CSKA Basketball Club are owned or controlled by Nove-AD-Holding AD.
  • Ancient Heritage AD is owned or controlled by Thrace Foundation.

Delyan Slavchev Peevski (Peevski) is an oligarch who previously served as a Bulgarian MP and media mogul and has regularly engaged in corruption, using influence peddling and bribes to protect himself from public scrutiny and exert control over key institutions and sectors in Bulgarian society.  In September 2019, Peevski actively worked to negatively influence the Bulgarian political process in the October 27, 2019 municipal elections.  Peevski negotiated with politicians to provide them with political support and positive media coverage in return for receiving protection from criminal investigations.

Peevski also engaged in corruption through his front man Ilko Dimitrov Zhelyazkov (Zhelyazkov), the former Deputy Chief of the Bulgarian State Agency for Technical Operations and former Bulgarian State Agency for National Security (DANS) officer who was appointed to the National Bureau for Control on Special Intelligence-Gathering Devices.  Peevski used Zhelyazkov to conduct a bribery scheme involving Bulgarian residency documents for foreign persons, as well as to bribe government officials through various means in exchange for their information and loyalty.  For example, as of 2019, Zhelyazkov was known for offering bribes to senior Bulgarian government officials who were expected to provide information to Zhelyazkov for onward passage to Peevski.  In return, Zhelyazkov would see that individuals who accepted his offer were placed in positions of authority and also provided a monthly bribe.  Peevski and Zhelyazkov also had an official placed in a leadership position to embezzle funds to them in 2019.  In another example, as of early 2018, these two government officials ran a scheme to sell Bulgarian residency documents where company representatives purportedly paid bribes to Bulgarian officials to ensure their clients received citizenship documents immediately rather than making the $500,000 deposit or waiting the five years for a legitimate request to be processed.  Lastly, Zhelyazkov also blackmailed a potential Bulgarian government minister with criminal charges from Bulgaria’s Prosecutor General’s office if the minister did not provide him further assistance upon appointment.

Peevski and Zhelyazkov are designated pursuant to E.O. 13818 for being foreign persons who are current or former government officials, or persons acting for or on behalf of such an official, who are responsible for or complicit in, or who have directly or indirectly engaged in, corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, corruption related to government contracts or the extraction of natural resources, or bribery. 

OFAC is also designating six entities registered in Bulgaria that are owned or controlled by Peevski or one of his companies:

  • Int Ltd EOOD and Intrust PLC EAD are owned or controlled by Peevski.
  • BM Systems EAD, Int Invest EOOD, Inttrafik EOOD, and Real Estates Int Ltd EOOD are owned or controlled by Intrust PLC EAD.

As a result, all property and interests in property of the persons above that are in the United States or in the possession or control of US persons are blocked and must be reported to OFAC.  In addition, any entities that are owned, directly or indirectly, 50% or more by one or more blocked persons are also blocked.  Unless authorized by a general or specific license issued by OFAC, or otherwise exempt, OFAC’s regulations generally prohibit all transactions by US persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons.  The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person or the receipt of any contribution or provision of funds, goods, or services from any such person.

Building upon the Global Magnitsky Human Rights Accountability Act, E.O. 13818 was issued on December 20, 2017, in recognition that the prevalence of human rights abuse and corruption that have their source, in whole or in substantial part, outside the United States, had reached such scope and gravity as to threaten the stability of international political and economic systems.  Human rights abuse and corruption undermine the values that form an essential foundation of stable, secure, and functioning societies; have devastating impacts on individuals; weaken democratic institutions; degrade the rule of law; perpetuate violent conflicts; facilitate the activities of dangerous persons; and undermine economic markets.  The United States seeks to impose tangible and significant consequences on those who commit serious human rights abuse or engage in corruption, as well as to protect the financial system of the United States from abuse by these same persons.

Click here to view more information on the designation.

Bulgaria

Election weekend in Eastern Europe brings unexpected change and hope for progress

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On Sunday (11 July), Bulgarians went to the polls for a second time in less than six months after former Prime Minister Boiko Borisov failed to form a governing coalition following April’s parliamentary election, writes Cristian Gherasim, Bucharest correspondent.

With 95% of ballots tallied, former Prime Minister Boiko Borisov's GERB center-right party came out first winning 23.9% of the vote, according to data provided by the Central Election Commission.

Borisov's party is neck and neck with the newcomer anti-establishment party "There is such a people" (ITN), lead by singer and television presenter Slavi Trifonov.

Borissov’s narrow lead might not be enough for him to retake control of government.

Anti-corruption parties "Democratic Bulgaria" and "Stand up! Mafia, out! ”, ITN's potential coalition partners received 12.6% and 5% of the vote, respectively. The Socialists obtained 13.6%, and the MRF party, representing ethnic Turks, 10.6%.

Some political pundits have speculated that ITN, Trifonov's party - which avoided forming a governing coalition in April - could now try to form a majority with the liberal alliance Democratic Bulgaria and Stand Up! Mafia out! parties. This would see a populist party with no clear political agenda taking power. However, the three parties may not get the majority needed to form a government and may be forced to seek support from members of the Socialist Party or the Movement for the Rights and Freedom of Ethnic Turks.

Boiko Borisov's GERB center-right party which has been in power for almost the entire past decade has been tainted by graft scandals and the continuous nation-wide protests which only ended in April.

In Republic of Moldova, president Sandu’s pro-European Party of Action and Solidarity secured a majority of votes in Sunday’s parliamentary elections. As Moldova is trying to get out of Russia’s grip and head towards Europe, the election struggle again saw pro-Europeans and pro-Russians locking horns. The two directions are antagonistic and were an additional reason for the division of society, which fails to find its link to build together the future of the poorest state in Europe.

More than 3.2 million Moldovans were expected to get out and vote to nominate their representatives in the future parliament in Chisinau, but the real impact was done by Moldavians living abroad. Moldovian diaspora help Sandu’s pro-European party secure the win and thus possibly opening the way for Republic of Moldova future European integration.

More than 86% of Moldovan citizens abroad, who voted in Sunday's early parliamentary elections, backed President Maia Sandu's Action and Solidarity Party (PAS). A PAS victory offers Sandhu a friendly legislature to work with while trying to put the country on a path to European integration.

Maia Sandu promised before the Sunday vote that a win for her party would bring the country back into the European fold, focusing on better relations with both neighboring Romania and Brussels.

Much like it happened during November’s vote which saw Maia Sandu winning the presidency, Moldavians living aboard made all the difference as a good many voted for pro-European candidates.

Talking to EU Reporter, Armand Gosu, associate professor at Bucharest University and specialist in the ex-Soviet region said about the pro-European win that “this victory creates the preconditions for a new wave of reforms, especially in the judiciary and the fight against corruption, reforms aimed at creating a favorable internal framework for foreign investment that will ultimately lead to an increase in living standards, the rule of law and a high degree of resilience in the face of foreign interference. Sunday’s result is a start, there have been other such beginnings, but in order to lead somewhere, the EU must also change its approach and offer a concrete perspective.”

Armand Gosu told EU Reporter that “Republic of Moldova is invited to reform itself, to enter into various cooperation mechanisms with the EU, to open its market for European products and to become more and more compatible with EU standards“ but becoming a potential EU member country may take many decades to happen.

Mentioning the Russian influence in the Republic of Moldova, Gosu said that we will see a clear detachment from Russian sphere of influence after the final results are in and after we will have new parliamentary majorities.

“When speaking about Russian influence, things are more complicated. The false pro-European governments that held power in Chisinau -referring to the ones controlled by the fugitive oligarch, Vladimir Plahotniuc- abused the geo-political discourse, the anti-Russian rhetoric in order to legitimize themselves in front of the West. Maia Sandu's party is pro-European in another way. She talks about the values ​​of the free world and not about the Russian threat as a pretext to limit civil liberties, to arrest people and to outlaw associations or even parties. I believe that Maia Sandu has a correct approach, making profound reforms that will fundamentally transform Moldovan society. In fact, the premises for Moldova's exit from Russian sphere influence were created 7 years ago, after the outbreak of the war between Ukraine and Russia, in the spring of 2014. The result of the vote indicates a social demand from society to move towards West, to support radical change, 30 years after independence.”

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No clear winner emerges from Bulgarian parliamentary election

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A woman walks past election billboard of Democratic Bulgaria party in Sofia, Bulgaria, July 8, 2021.  REUTERS/Stoyan Nenov
A man votes during a snap parliamentary election, at a polling station in Sofia, Bulgaria, July 11, 2021. REUTERS/Spasiyana Sergieva

Bulgaria's parliamentary elections failed to produce a clear winner on Sunday (11 July), exit polls showed, with the new anti-elite party There Is Such a People (ITN) narrowly ahead of the centre-right GERB party of former premier Boyko Borissov, writes Tsvetelia Tsolova.

Bulgaria's second election since April reflects deep divisions in the European Union's poorest member state over the legacy of Borissov's decade-long rule.

Many have turned to anti-establishment or anti-graft parties in hope of more resolute action against pervasive corruption, blaming Borissov, 62, for turning a blind eye or even supporting powerful oligarchs.

But GERB continues to benefit from public support for its efforts to modernise the crumbling infrastructure and road network and to bolster public sector pay.

A survey by Gallup International showed ITN, led by popular TV host and singer Slavi Trifonov, on 23.2%, ahead of GERB who were on 23%. Alpha Research put also ITN ahead on 24% and GERB at 23.5%.

Even if official results confirm GERB as the largest party, its chances of forging a ruling coalition are slim, political observers say. GERB came in first in an inconclusive election in April, winning 26.2%, but was shunned by other parties.

ITN may be better positioned, with the support of its likely partners, two small anti-graft groupings, Democratic Bulgaria and Stand Up! Mafia Out!

But weeks of coalition talks, or even another election, are now possible, meaning Bulgaria may face difficulty tapping the European Union's multi-billion euro coronavirus recovery package or approving its 2022 budget plans.

GERB was quick to concede its chances to return to government were slim.

"We will continue to work for what we believe in, no matter what role the voters have decided for us. Actually, to be an opposition is a fair and an honourable way to defend one's principles," GERB deputy leader Tomislav Donchev told reporters.

Daniel Smilov, a political analyst with Centre for Liberal Strategies, said a coalition led by ITN may be 5-10 seats short to be able to govern without the support of long-established groupings such as the Socialists or the ethnic Turkish MRF.

"Forming a government will be very difficult," he said.

The protest parties, which want to foster close ties with Bulgaria's allies in NATO and the European Union, have promised to revamp the judiciary to cement rule of law and ensure proper use of funds due to pour in as part of the EU's coronavirus recovery package.

Bulgaria has had a long history of corruption, but a number of recent scandals and the imposition of U.S. sanctions last month against several Bulgarians for alleged graft have dominated the campaign.

The current interim government, appointed after the April vote, has accused Borissov's cabinet of spending billions of levs of taxpayer money without transparent procurement procedures, among other shortcomings.

GERB denies wrongdoing and says such accusations are politically motivated.

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Bulgaria

Eastern Europe has some of EU’s most polluted cities - What are the challenges facing the region and what solutions exist?

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According to Eurostat, the highest concentration of dangerous fine particles is in urban areas of Bulgaria (19.6 μg / m3), Poland (19.3 μg / m3), Romania (16.4 μg /m3) and Croatia (16 μg / m3), writes Cristian Gherasim.

Among EU member states Bulgaria’s urban areas hold the highest concentration of fine particles, way above the levels recommended by the World Health Organization.

On the opposite end of the spectrum, Northern Europe holds the lowest levels of fine particle pollution with PM2,5 in the EU. Estonia (4,8 ľg/m3), Finlanda (5,1 ľg/m3) şi Suedia (5,8 ľg/m3), hold the top places for the cleanest air.

PM2.5 is the most dangerous of the pollutant fine particles, with a diameter of less than 2.5 microns. Unlike PM10 (ie 10 micron-sized particles), PM2.5 particles can be more harmful to health because they penetrate deep into the lungs. Pollutants such as fine particles suspended in the atmosphere reduce life expectancy and well-being and can lead to the appearance or worsening of many chronic and acute respiratory and cardiovascular diseases.

Romania has some of the hardest hit areas in the European Union by various air pollutants.

Air pollution

According to a study published in March by the global air quality platform IQAir, Romania ranked 15th amongst the most polluted countries in Europe in 2020, and the capital city of Bucharest ranked 51st worldwide. The most polluted capital in the world is Delhi (India). On the other hand, the cleanest air can be found on islands in the middle of the ocean, such as the Virgin Islands and New Zealand, or in the capitals of the Nordic countries Sweden and Finland.

Bad news regarding Romania comes also from the air quality monitoring company, Airly, which singled out Poland and Romania for some of the highest levels of pollution on the continent. The report also found that Cluj, another city in Romania is no listed amongst the most polluted cities in the EU and even holds top spot when it comes to nitrogen dioxide pollution.

According to the European Environment Agency air pollution is the highest health risk in the European Union, with around 379,000 premature deaths due to exposure. Power plants, heavy industry and increased car traffic are the main causes of pollution.

The European Union has appealed local authorities to better monitor air quality, to spot sources of pollution and promote policies that limit pollution by cutting down on traffic.

Brussels has already targeted Romania over air pollution. It launched legal action over excessive air pollution levels in three cities: Iasi, Bucharest and Brasov.

A London based NGO that specializing in sustainable behavior change says in urban areas people have to make decisions for a lifestyle favoring better air quality and the environment: choosing to travel by car sharing, with bicycles or electric scooters, instead of cars.

Waste management

In Eastern Europe, air pollution together with poor waste management and low levels of recycling has created a dangerous concoction. In Romania, next to air quality, the low level of recycling requires local authorities to step in.

It’s infamous that Romania is one of the European countries with the lowest levels of waste recycling and local authorities are required to pay significant amounts of money annually in fines for non-compliance with EU environmental regulations. Also, there is a legislative proposal that would mean that a certain tax for plastic, glass and aluminum packaging would be applied from next year.

EU Reporter previously presented the case of Ciugud community in central Romania that aims to reward recycling by using a locally developed cryptocurrency.

The virtual currency, eponymously named CIUGUban – putting together the name of the village with the Romanian word for money- will be used in its first stage of implementation solely to repay citizens that bring plastic containers to recycling collection units. CIUGUban will be given to locals bringing plastic, glass or aluminum packaging and cans to the collection centers.

Ciugud community is indeed answering EU’s call that local communities to step in and take change of their environmental issues.

As previously reported, in Ciugud the first such unit that gives cash for trash has already been set up in the local schoolyard. In a post on the Facebook of Ciugud Town hall, authorities mentioned that the unit is already full with plastic waste collected and brought there by kids. The pilot project is implemented by the local administration in partnership with an American company, one of the world's leading manufacturers of RVMs (Reverse Vending Machines).

When the project was launched earlier this month, officials mentioned that the deft approach is meant to particularly educate and encourage kids to collect and recycle reusable waste. According to the press release, children are challenged to recycle as much packaging as possible by the end of the summer holiday and to collect as many virtual coins as possible. At the beginning of the new school year, the virtual coins collected will be converted so that children will be able to use the money to finance small projects and educational or extracurricular activities.

Ciugud thus becomes the first community in Romania to launch its own virtual currency. The endeavor is part of a larger local strategy to turn Ciugud into Romania’s first smart village.

Ciugud is planning to go even further. In the second phase of the project, the local administration in Ciugud will set recycling stations in other areas of the commune, and citizens could receive in exchange for virtual coins discounts at village shops, which will enter this program.

Ciugud Town Hall is even analyzing the possibility that, in the future, citizens will be able to use virtual currencies to receive certain reductions in taxes, an idea that would include promoting a legislative initiative in this regard.

"Romania is second to last in the European Union when it comes to recyling, and this means penalties paid by our country for not meeting environmental targets. We launched this project as we want to educate the future citizens of Ciugud. It is important for our children to learn to recycle and protect the environment, this being the most important legacy they will receive," said Gheorghe Damian, the mayor of Ciugud Commune.

Speaking to EU Reporter, Dan Lungu, town hall representative, explained: “The project in Ciugud is part of several other endeavors designed to teach recycling, green energy and protecting the environment to kids. In addition to CiugudBan, we also set up an “Eco Patrol”, a group of school kids that go into the community and explain people about the importance of recycling, how to collect waste, and how to live greener.”

Dan Lungu told EU Reporter that only through getting kids involved they managed to collect and recycle more from Ciugud citizens. The second phase of the project will get a local vendor involved as well, offering in exchange for CiugudBan goods and services to locals.

“And in the third part of the project we want to use CiugudBan to pay taxes and public servicec,” he told EU Reporter.

It remains to be seen is such small scale projects throughout Europe would be enough the efficiently tackle the environmental challenges facing Eastern Europe.

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