Bulgarian tycoon charged with tax fraud, out on bail

13/11/2008

Bulgarian prosecutors charged one of their country's richest businessmen Wednesday with gross tax crimes and conspiracy to commit property fraud.

(Dnevnik, American Chamber of Commerce in Bulgaria - 13/11/08; Reuters, AFP, SNA, Sofia Echo, Dnevnik, Mediapool, BNR - 12/11/08)

Bulgarian Hristo Kovachki was recently named one of the 100 richest people in Central and Eastern Europe, ranking 98th with an estimated fortune of 560m euros. [File]

Bulgarian energy tycoon Hristo Kovachki was accused of major financial crimes Wednesday (November 12th) but paid a record bail of about 150,000 euros after a brief interrogation.

A statement by the prosecutor's office said the charges against the 46-year-old multimillionaire included large-scale tax fraud and involvement in a conspiracy to commit property fraud, but did not elaborate. Police searched 17 properties belonging to him. Citing unofficial information, Bulgarian media reports said the businessman allegedly committed tax fraud worth more than 6m euros, between 2005 and 2007.

According to Bulgarian National Radio (BNR), Kovachki owns 13 companies and sits on the management boards of 22 others. He is considered the second-richest person in his country. Given his estimated personal fortune of 560m euros, Polish magazine Wprost recently placed him 98th on its list of the 100 richest people in Central and Eastern Europe.

Kovachki's main business interests are in the energy sector. Through one of his firms, he also controls 70% of Atomenergoremont, which maintains the facilities at the Kozloduy nuclear power plant. An unknown gunman murdered the company's executive director back in April.

Several years ago, Kovachki managed to acquire the controlling stake in the Sofia-based Municipal Bank. He shows interest in further expanding his business empire.

Following questioning Wednesday, Kovachki denied all accusations against him and promised to co-operate fully with investigators.

"I don't know on what evidence the authorities have based their accusations of tax evasion since we do not currently have any unpaid taxes," he said to private Darik Radio.

Kovachki also ruled out the investigation could be politically motivated. Known as the informal leader of the recently formed Lider party, he supported the creation of a new political alliance, Napred (Forward), with two other small parties last month.

"I simply refuse to believe that what happened today is a form of political pressure," Kovachki told reporters. "It would be really sad for Bulgaria if such methods are used to settle issues."

The country has come under strong pressure from the EU and other Western partners to step up its fight against organised crime and high-level corruption.

Kovachki linked the authorities' move Wednesday to Sofia's attempts to convince the EU that it was not protecting influential businessmen.

Speaking on Wednesday, US Ambassador Nancy Nancy McEldowney said Bulgaria has a chance of establishing the most attractive business climate in the Balkans. It needs to address three factors to achieve this, she said: attracting more foreign investors, improving the economy, and ending corruption and organised crime.

McEldowney added "The oligarchs who behave like they are above the law must be put behind bars."