Банкеръ Weekly



There is nothing sweeter and more lucrative than the management of state-owned assets. This dictum, which became a symbol of Bulgaria's economic transition, can be illustrated by the entirely state-owned mining company Panagyurski Mini. By Decree No 140 of the Council of Ministers, dated July 23, 1992, it was included in the list of non-efficient companies, slated for decommissioning and technical liquidation or conservation of production capacities. However, the company's preparation for liquidation started as late as in 1998.In the beginning of 1999, the mines' management, assigned to proceed with their winding down, registered a private company of its own, named Elshitza 99 AD. The new company's subject of activities reads: privatisation deals for purchase of shares in commercial companies, including Panagyurski Mini, deals in intellectual property, and all kinds of trade deals permitted by law.The private company's Board of Directors and that of the state-owned company included almost the same persons as members. Thus, by its very establishment Elshitza 99 violated the provisions of the Commercial Code. The BoD of Panagyurski Mini EAD included: Vladimir Stanev - Chairman, Evgenii Angelov - Deputy Chairman, Georgi Shalski and Atanas Kochev - members. The latter was Executive Director as well. In Elshitza 99 Evgenii Angelov is BoD Chairman, Atanas Kochev and Boiko Penin (former executive director of Panagyurski Mini) - members. Vladimir Stanev and Georgi Shalski are among the biggest shareholders, owning 400 stocks each. Mr. Angelov and Mr. Penin hold the same number of shares, and Mr. Kochev has 450 stocks. The state-owned company's Chief Accountant Tsvetanka Radoulova holds 150 shares in the private Elshitza 99. The other shareholders are employees of Panagyurski Mini, but each of them has 3 stock only. This is the distribution of the 10,000 registered shares of BGN5 par value in Elshitza 99.In 1999 the private company started its business, buying from Panagyurski Mini a digger for BGN25,200, of which 30% had to be paid by March 31, 1999, and the remaining 70% - by April 30, 1999.A curious circumstance is that other companies were also interested in the purchase of the same digger but they gave up due to the excessive price of BGN200,000, set by the consulting bureau SIDON Consult 4, managed by Chavdar Uzunov. According to pundits, the company is still evaluating all long-term assets of Panagyurski Mini EAD, at that, without inviting a tender for the evaluation. Direct assignment is the preferred practice.A little beforeselling the digger to their own private companythe heads of Panagyurski Mini EAD ordered a new evaluation to SIDON Consult 4, by which the price was decreased 8-fold to BGN25,200 (i.e. the price at which the sale was effected). For comparison, in 1998 a digger of the same type was evaluated and sold by State Mines - Pernik at BGN300,000. A still more curious fact is that before the private Elshitza 99 paid off the digger, Panagyurski Mini EAD got it back. The mines hired the utility, although they had another digger of the same type in good technical order. But it was intentionally not used. The same scheme was used for the purchase of the second digger (again for BGN25,200), and for other long-term assets of the state-owned company.In September 1999 (this time through a tender) Elshitza 99 bought part of Panagyurski Mini EAD's assets against BGN50,000 only.Among the new acquisitions of the managers' private company are:the Tsar Assen pit, the ore-dressing plant Elshitza, the Autotransport workshop with more than 20 dumpers and an overshaft facility for the Elshitza pit. According to experts and employees of the company, the balance sheet value of the sold assets is not less than BGN500,000. The commission for holding the tender included ... Atanas Kochev, Vladimir Stanev, Evgenii Angelov and Georgi Shalski. None of them, as it could be guessed, has signed a declaration for non-alignment with the buyer, simply because they are among the biggest shareholders in the company. The sold assets were again evaluated by SIDON Consult 4.The management of Panagyurski Mini EAD has also rented a number of its capacities at symbolic prices. Moreover, the private company began to take over the activities of the state-owned company (against payment of course). Panagyurski Mini EAD paid BGN2,960 to Elshitza 99 for investigating the possibilities to utilize the empty spaces of the undergroung mines. The contract was again closed without holding a tender.By these actions the managers of Panagyurski Mini EAD have not only violated the effective Bulgarian legislation, but have also inflicted to the State losses exceeding BGN1MN, the enterprise's employees claim. Seven hundred and fifty workers have been sacked. Back in the beginning of 2000 some of them approached the Supreme Court of Cassation (SCC) about the abuses. The SCC on its part ordered an investigation of the case to the National Service for Combating Organized Crime. What is known so far is that on June 14, 2000 Major Lyubomir Lyubomirov, Director of the Regional Police Department of Pazardzik, demanded from the District Court information about the current state of Elshitza 99 AD. In the recent months, however, MPs from the National Movement Simeon II sumbitted to the Supreme Cassation Prosecutor's Office documents and data about the malpractices in Panagyusrki Mini EAD.

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