The Bulgarian Prosecutor's Office is Investigating Collusion and Illegal Schemes around TurkStream

The Sofia City Prosecutor's Office (SCP) is starting operations on the Anti-Corruption Fund's revelations about violations related to the selection of a contractor and the accelerated construction of the Turkish Stream gas pipeline through Bulgaria.

The non-governmental organization published an investigation that described unregulated contracting between subcontractors and contractors to circumvent the Public Procurement Act.

Schemes prohibited by law, such as hiring a contractor candidate as a subcontractor for part of the project, were also discussed, the SCP said.

The state prosecution explains that the supervising prosecutor, chosen on the principle of random selection, should take actions at his discretion, in accordance with his powers under the Law on Judicial Power and the Code of Criminal Procedure.

A few days ago, the Anti-Corruption Fund published a document from the hacked mail of the Russian politician and adviser to the Russian President Vladimir Putin, Alexander Babakov, who was implicated in several corruption scandals.

According to the document, in addition to Istanbul, the two candidate contractors of the Turkish Stream project also secretly negotiated in the Sofia office of Tsvetelina Borislavova's bank - Bulgarian-American Credit Bank (BACB). For many years, Borislavova lived on a family basis with the then Prime Minister of Bulgaria, Boyko Borissov.

The ACF presented a letter from her in her capacity as chairman of BACB's supervisory board to Alexander Vorobyov. He is an adviser to Babakov and is also a sanctioned person by the EU. It is clear from the email that BACB is the investment bank chosen by the contracting parties for the implementation of the project. "Who are these 'contracting parties' is not clear, since the procedure on paper is a public order for the construction of infrastructure, and BACB cannot be anything other than a servicing bank of the contracting authority, the state company Bulgartransgaz", ACF notes.

The procedure for selecting a financing bank for this project was launched only a year later, in June 2020. In the email in question, Borislavova politely requests that Babakov and "Gazprom Export" be warned that there will be a delay in construction due to the appeal of the procedure by one of participants - "Consortium - Gas Development and Expansion in Bulgaria". Officially, this consortium has participants "Consorzio Varna 1" (founded by Bonatti S.P.A and Max Streicher S.P.A) and "Compliance Development" (S.A.R.L - Bulgaria branch).

However, in the hacked emails, including this one, the appellant consortium is referred to by the name of its apparently main hidden participant - the Russian TMK.

"There is no progress in the negotiations that took place in the offices of our bank in Sofia between Arkad and TMK", that is, between the first and second ranked participant after submitting the documents for participation in the procedure. According to the email, the negotiations were "on our initiative", leaving open the question of who is "we" - the bank or it acting on behalf of the Bulgarian authorities, which at that time was GERB.

The Anti-Corruption Fund pays particular attention to another sentence that causes bewilderment, and that is the warning that "the government has certain plans to protect national interests".

Thus, the question is again raised who is the real contractor of this project and whether the entire construction procedure is not just a cover for geopolitical commitments made at a higher level.

At the end of May 2019, it became clear that the "Arkad Consortium" from Saudi Arabia will not build the Bulgarian part of TurkStream, even though it won the Bulgartransgaz tender to build the pipes from the Turkish border to the Serbian border.

Then it became clear that the state company "Bulgartransgaz" had changed the contractor after a contract was not signed with the consortium chosen in April.

Instead, Bullgartransgaz announced its decision that a contract would be awarded to the second bidder for the construction, which was initially expected to win (because of its Russian connection) but offered a much higher price.

The decision of "Bulgartransgaz" to replace the outcome of the tender was appealed by "Arkad". The court, on the other hand, prohibited the state company from signing a preliminary contract with the consortium ranked second in the public procurement, as requested.

While the case is ongoing after an appeal of the last decision in favor of "Arkad", one of the participants in the dissatisfied second consortium withdrew from the claim. The court has no choice but to dismiss the case. After that, it is understood that the company "Completion Development S.A.R.L. Bulgaria branch" from the loser of the public construction contract concluded a contract with "Arkad" for the supply of the pipes for the gas pipeline. The company itself was registered in Bulgaria immediately before the announcement of the tender for the so-called "Balkan Stream", which is actually a second pipe of the Russian "Turkish Stream" project, intended for the transit of gas to Europe.

Even while the whole saga was going on, on August 31, 2020, then Prime Minister Boyko Borissov announced that a contract for the construction of "Balkan Stream" would be signed on September 5. It is not clear with whom the contract will be signed - given that there is a legal battle going on at the moment - the termination of the case is at a later date.

"Completion Development S.A.R.L. Bulgaria branch" is directly related to the Russian pipe manufacturer TMK, according to inquiries in the Trade Register. Even while the public order for a contractor was in progress, information appeared in the Russian media that it was TMK that would deliver the pipes in question. Although officially the Russian company did not appear anywhere in the documentation and documents submitted for the tender.

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