Oct 16 2008
Mob Muscles Its Way Into Politics in Bulgaria
SOFIA, Bulgaria — Politics is played to the death in Bulgaria, where the lives of politicians can be as cheap as spent bullets and murky business groups wage a murderous struggle for their cut of everything from real estate deals to millions in European aid.
During a furious political season last year, the home of the chairwoman of a municipal electoral committee was set on fire, and the garages of mayors were firebombed. The mayor of a resort town in central Bulgaria was shot and killed with seven bullets, as was the wealthy City Council chairman in the outwardly idyllic Black Sea port of Nesebur.
“Other countries have the mafia,” said Atanas Atanasov, a member of Parliament and a former counterintelligence chief who is a magnet for leaked documents exposing corruption. “In Bulgaria, the mafia has the country.”
By almost any measure, Bulgaria is the most corrupt country in the 27-member European Union. Since it joined last year, it has emerged as a cautionary tale for Western nations confronting the stark reality and heavy costs of drawing fragile post-Communist nations into their orbit, away from Russia’s influence.
European Union membership has done little to tame the criminal networks in Bulgaria. It has arguably only made those networks richer, raising worries that if the union cannot tamp down criminal activity in a member like Bulgaria it may have little sway over other fragile nations that want to join.
The United States helped Bulgaria into NATO, has rotated troops through for joint exercises since 2004 and has tried to encourage commerce, education and democracy. It has just announced that it will invest more than $90 million in facilities and equipment for joint use in military exercises.
The European Union, eager to improve the lives of the 7.5 million Bulgarians, has promised 11 billion euros, or nearly $15 billion, in aid.
Far from halting crime and violence, the money effectively spread the corruption. Once Bulgaria’s shady businessmen realized how much European Union money was at stake, said many of Sofia’s advocates for reform, they moved from buying off politicians to being directly involved in politics themselves.
And so European officials froze almost $670 million in financing this summer and may halt the flow of billions more, alarmed at freewheeling white-collar criminals with links to the very highest reaches of power.
The nation’s homegrown mobs of men in black — the “mutri,” or mugs — control construction projects in city halls. And questionable business networks have moved from declining black markets for smuggled cigarettes and alcohol to legal investments in booming real estate. They have made their mark on the capital’s atmosphere: men nicknamed “thick necks” for their muscular appearance linger in neon-lighted nightclubs like Sin City and Lipstick, or keep watch over Mercedes jeeps and Audis outside. Sofia guidebooks offer tips: Avoid restaurants that draw businessmen with four or more bodyguards.
Now, men like this are muscling into public office.
Ties to Top Officials
Investigators with the European Union’s antifraud office are focusing on the Nikolov-Stoykov group, a sprawling conglomerate of dozens of companies with interests from meat processing and cold storage to scrap metal and a Black Sea resort.
The group’s leading partners — both briefly detained last year on suspicion of fraud — boast top connections. Ludmil Stoykov helped finance the campaign of President Georgi Parvanov, organized a business group supporting him and maintained ties to a former deputy minister of foreign affairs.
Mr. Stoykov, who has not been charged with any crime since his arrest last year, denies knowing about criminal activities involving European Union funds. “I categorically object to these attempts to stain my name and to be treated as a criminal,” he said in answer to written questions.
He acknowledges giving 25,000 leva, about $17,000, as a campaign contribution to Bulgaria’s president. “I participated with a donation according to all requirements by the law,” he said. “And no one is saying the opposite.”
His partner, Mario Nikolov, who is scheduled to stand trial next week on fraud charges, forged discreet alliances to Prime Minister Sergei Stanishev, according to contracts and bank deposit slips turned over to prosecutors last week by Boyko Borisov, the mayor of Sofia, who is a fierce rival of the prime minister. Those documents show he steered more than $137,000 to Mr. Stanishev’s Socialist Party as contributions from his companies.
In an unusually blunt report leaked this summer, European Union fraud investigators accused the Nikolov-Stoykov group of being a front for a “criminal company network composed of more than 50 Bulgarian enterprises and various other European and offshore companies.”
Among the European Union investigators’ accusations were tax and subsidy fraud: taking development aid to buy new equipment for companies and then passing off ancient equipment from the former East Germany and pocketing the difference. The companies were also accused of illegally importing huge quantities of Chinese rabbit meat for export to France and Germany with fake health certificates from Argentina.
Reached at his office at Eurofrigo, a cold storage company in Sofia, Mr. Nikolov repeatedly declined to comment on the documents indicating contributions to the prime minister, which Bulgarian prosecutors said Wednesday were under formal investigation. After the European fraud report was leaked, Mr. Nikolov said: “I became public enemy No. 1. I am afraid for my life.”
Mr. Stanishev, the prime minister, did not respond to 10 attempts to seek comment over a six-day period. A former journalist educated at the London School of Economics, Mr. Stanishev was called “Mr. Clean” by President Bush last year for his efforts to fight organized crime. After other European nations started complaining about aid fraud, Mr. Stanishev said publicly that there was no “umbrella” of protection for rich businessmen or organized crime figures.
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