Page 58 - bne magazine July 2022_20220704

58 I Southeast Europe bne July 2022
€511.3mn of funds for roads in Bulgaria spent on luxury properties, interior minister says
Denitsa Koseva in Sofia
Around BGN1bn (€511.3mn) of the funds provided by the former government of Boyko Borissov for road construction were spent on the construction of private luxury properties, Bulgaria’s Interior Minister Boyko Rashkov said on June 9.
The announcement came a day after There Are Such People (ITN) leader
Slavi Trifonov said he is pulling out his ministers from the government and withdrawing from the four-party ruling coalition, throwing the country in a deeper political crisis than that in 2021 when three general elections were held.
Trifonov clashed with Prime Minister Kiril Petkov when the latter accused
ITN of demanding to get control of BGN3.6bn additional funds for the regional development ministry, headed by ITN’s Grozdan Karadzhov. Petkov said that the party wanted to give the money to companies that stole millions from road construction projects during Borissov’s time in power.
At a press conference, live broadcasted by the Dnevnik news outlet, Rashkov said that the BGN1bn was transferred to bank accounts of companies and individuals who had then withdrawn the money and spent it on the construction of luxury homes, villas, residential complexes and other buildings in Sofia and near the capital.
Rashkov refused to name the companies and individuals, saying this was still under investigation.
The Road Infrastructure Agency (API) paid BGN400mn to state-owned company Avtomagistrali for lots 7, 8 and 9 of the Hemus motorway without a detailed development plan. Of that sum, BGN84.5mn was transferred in advance to another company for Lot 8. That company used BGN27mn to buy a property
in the centre of Sofia where construction works are in progress, Rashkov said.
Avtomagistrali transferred around BGN15mn to another company. These funds, according to the interior minister, were used for the construction of buildings, with BGN1mn of the sum being transferred directly to bank accounts of the owners of the unnamed company as a dividend. Part of that money was subsequently transferred to accounts in the UAE.
BGN6mn were transferred to bank accounts of other daughter companies, while BGN12mn for Lot 8 were paid to a company, which subsequently transferred BGN8.5mn to the personal account of an unnamed individual who had a contract with that company. The contract was terminated several months later, Rashkov said.
The interior minister showed reporters photos of properties acquired with money for road construction but declined to provide details.
API also transferred BGN670mn to Avtomagistrali for Lot 5 of the Hemus motorway, paying more than BGN100mn in advance without construction contracts. These funds were subsequently transferred to five other companies. Several bank transfers for BGN10mn-15mn each were made to each of these five companies and subsequently withdrawn in cash. One of these companies has subsequently built a luxury residential complex.
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capital outflows, Turkey was already contending with official inflation of 73.5% and a currency, the Turkish lira, that had lost 24% against the dollar in the year to date, following on from the 44% drop in value it suffered last year.
On June 16, bne IntelliNews reported that Turkey’s ‘despair rating’ score is worse than that of war-torn Ukraine. Babacan, who from 2002 to 2015 served as economy minister, foreign minister and deputy prime minister, quit Erdogan’s Justice and Development Party (AKP) in 2019, citing “deep differences” over the party’s direction. He founded DEVA in 2020, with an eye on the next national elections, which must take place by June 2023.
“What is default for Turkey, what is bankruptcy? It means that the Republic of Turkey cannot pay for the natural gas and oil it imports. Bankruptcy means that basic needs such as gas and diesel cannot be met even with money. You have money, you can't get more than half a gas tank, or you wait in a queue for three hours. That is bankruptcy,” Babacan reportedly added.
“Bankruptcy means widespread and long-lasting power cuts throughout the country. Imagine that electricity is out for six hours, 10 hours per day. That's the danger. They don't know. Bankruptcy means total economic and financial collapse. Bankruptcy means chaos.”
He challenged Erdogan: “Make up your mind immediately. Do what is necessary for the management of the economy and finance based on reason and science. Appoint qualified staff
to the central bank and the Turkish Statistical Institute [TUIK, or TurkStat] immediately and do not intervene in these independent institutions."
Erdogan, claiming he is working to a new economic model in which fuelling growth and exports will deliver Turkey from its woes, is under fire for refusing to countenance interest rate hikes despite rampant inflation and the collapsed lira. Last week, he indicated more rate cuts could be on the cards.