The Sofia Appellate Prosecutor’s Office (SAPO) overturned the refusal of the Sofia City Prosecutor’s Office (SCPO) to investigate the sale of „Varna“ TPP EAD to a company controlled by Ahmed Dogan. The decision comes after a complaint by the Anti-Corruption Fund (ACF) and Czech Senator Lukasz Wagenknecht.
The Appellate Prosecutor’s Office ruled that the SCPO’s inspection was incomplete and that „all the data set out in Wagenknecht’s signal had not been answered“. The SAPO revoked the decree refusing to investigate the SCPO as „incorrect and illegal“ and returned the file to the SCPO for implementation of the given instructions, the press center of the ACF clarified.
„The decision of the Appellate Prosecutor’s Office confirms the arguments set out in our complaint that SCPO practically neglected the data on serious irregularities in the sale, operation and provision of cold reserve in the case of “Varna” TPP.„, said lawyer Lora Georgieva from ACF.
The first signal to the prosecutor’s office of ACF and eng. Wagenknecht is from November 2019 and alerts about suspicious circumstances around the sold at the end of 2017 „Varna“ TPP EAD. Then the state-owned Czech company CEZ sold the plant to the small company “Sigda” Ltd,, owned by the children of Danail Papazov (Minister of Transport in Oresharski’s government) without any previous experience in energy. CEZ, which has invested at least 306m euros in the plant, is selling it at a loss – for 48m euros, with 20m euros in cash and an adjacent port of strategic importance – „Port TPP Ezerovo“. The official reason for the suspiciously low selling price is the poor technical condition of the plant and its inability to operate and make a profit in compliance with environmental standards.
3 months after the sale, “Varna” TPP magically solves the environmental problems that underlie its suspension and sale. According to the public statements of its management, it already has some of the best environmental indicators among the power plants in Bulgaria. At the same time, according to tender documentation from 2019, prepared by the management, the most modern unit of the plant is defined as „unmanageable„. In a flash after the change of ownership, port activity was also started, and in August 2018 „Port TPP Ezerovo“ was a licensed and functioning port.
Months after the sale, the company „Sigda“ Ltd, related to the former transport minister and long-time head of Port Varna Danail Papazov, was acquired by Ahmed Dogan. On 07. 08. 2018 Dogan acquired 70% of the capital of “Sigda” Ltd. for an unknown price. Shortly thereafter, the thermal power plant started receiving millions of leva from the Bulgarian state to serve as a „cold reserve“ for the Bulgarian energy sector.
According to the Decree of the Appellate Prosecutor’s Office, in 2016 and 2017, several on-site inspections by the Privatisation Agency, the Minister of Environment and Water, and the Minister of Energy found that the plant was not operating at that time and no action had been taken to green it. At the same time, the greening of the plant, in accordance with European and national legislation, was a mandatory condition for its operation.
Despite these facts, as set out in the ACF and Senator Wagenknecht’s alert, the GPO refused to open an investigation and concluded that there was not even a suspicion of wrongdoing. Similarly, the prosecution concludes that there is no evidence of money laundering, because according to the State Agency for National Security (SANS) there is no evidence of transfers between related parties in the acquisition of TPP Varna EAD. There is no evidence that SANS has carried out an investigation of the deal between CEZ and “Sigda”, nor of the subsequent transactions a few months later, in which Ahmed Dogan acquired 70% of “Sigda” Ltd, given that the persons involved in these transactions are undoubtedly related to each other.
In its ruling, the SAPO confirmed that the lower court’s ruling left a number of key issues outstanding:
- What is the technical condition of Varna TPP before and after the sale by CEZ to “Sigda” Ltd? Was the plant operational and producing electricity? If so, on what basis and with what fuel? Has the problem of meeting environmental standards been solved, when and how?
- Has the plant complied with its obligations under the cold reserve agreement with the Bulgarian state, under which for 2018 alone it has received at least BGN 28 million?
- Are there any data on the transfer of significant funds between related parties in concluding a transaction between CEZ and „Sigda“?
- Have dividends been distributed to the shareholders of Varna TPP for 2017, to which persons, in what amount and have the respective taxes been paid?
- Have Stanislav Papazov and Ivelina Papazova sold shares of the capital of „Sigda“ Ltd. to the honorary chairman of MRF Ahmed Dogan and at what value? Are documents evidencing the source of funds for the acquisition of the relevant shares available at the time of sale?
The Appellate Prosecutor’s Office has given instructions for questioning the owners of “Sigda” Ltd. as well as a representative of the management of CEZ in Bulgaria.
„The ruling of the SAPO for the return of the case file on the “Varna” TPP case to the SCPO opens the opportunity for the Bulgarian citizens to receive the real investigation of a case of suspected serious abuse related to possible tax evasion and money laundering, with the participation of prominent political figures such as Dr. Ahmed Dogan, Danail Papazov and their close relatives.„, commented ACF Director Boyko Stankushev and added:
„We will closely monitor the institutional actions of the Sofia City Prosecutor’s Office from now on and will do everything in our power to ensure that this opportunity is not missed once again.“
