Bulgaria's Steel Mill Buyer Faces Tax Probe

26-year-old Lachezar Varnadzhiev, whose purchase of the Kremikovtzi steel mill dismayed Bulgaria, is facing a tax inspection over how he came up with over BGN 300 M. Photo by Dnevnik

Bulgaria's state revenue agency said it has launched a thorough probe into the tax papers of the buyer of the country's biggest steel mill Kremikovtzi as many question marks surround the deal.

Bulgaria finally sold on Tuesday the production assets of Kremikovtzi steel mill in a fourth auction to a newly established local company, owned by 26-year-old Lachezar Varnadzhiev.

The deal was signed just a month after "Eltrade company" was established on March 8, 2011 with a capital of mere BGN 20 000, a check in the Trade Registry shows, triggering suspicions who stays behind it. It is Varnadzhiev's only company and it is supposed to be a black and colored metal dealer.

"Eltrade company" has the same address as Nadin - N, a well established scrap dealer. Vladimir Todorov, member of Nadin – N's board of directors, was present at Tuesday's auction.

Bulgaria's privately-owned First Investment Bank (FIBank) said it had provided all the funding for Kremikovtzi steel mill, amounting to nearly BN 320 M.

The probe, which has been initiated personally by the head of the revenue agency Krassimir Stefanov, will track down the origin of the money used for Kremikovtzi purchase, the company's transactions with other companies and physical persons and the taxes submitted before and after the deal.

"I initiated this probe because huge flows of money are involved here and this company has no trading or tax record. What the state should do is check the origin of the money and make sure that all taxes and social securities have been paid," Stefanov said in an official statement to the media on Friday.

There is no official information about the revenues and expenditures of Eltrade Company.

The probe is expected to be wrapped up within a few weeks. It will focus on the value added tax, as well as corporate tax and social security installments.

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