The Bulgarian Army has lost BGN 76 M in default payments because of its failure to meet its obligations under contracts with helicopter producer Eurocopter.

Bulgaria’s Defense Minister Anyu Angelov announced Wednesday that the Bulgarian Army may lose as much as EUR 240 if it fails to reach a settlement with Eurocopter.

In 2005, the Bulgarian government signed a EUR 383 M deal with Eurocopter for the purchase of 12 Cougar helicopters for the Bulgarian Air Forces and 6 Panther helicopters for the Bulgarian Navy.

Under the contract, if the Bulgarian state fails to pay the entire due sum, the bank servicing the deal can withdraw 60% of the value of each of the helicopters whose delivery has not been paid for from the EUR 240 M deposit made by the Bulgarian government.

By the end of 2008, Bulgaria received 9 of the 12 Cougar helicopters and paid EUR 184 M. Last year it received two more of the helicopters but managed to pay only 40% of their value. The 12th Cougar helicopter was produced by Eurocopter but has not been delivered to Bulgaria, which has not paid any money for it.

As a result of the failure of the Bulgarian Defense Ministry to meet its obligations under the contract, in 2009, the French bank Societe General withdrew about BGN 76 M from the deposit.

According to Minister Angelov, the Bulgarian Army has lost this money which has to be subtracted from the budget of the Defense Ministry for 2010 thus threatening the sustenance of the armed forces.

“If we don’t manage to terminate the contract with Eurocopter, we might lose the entire deposit under it amounting to EUR 240 M. Thus, we will literally pay for all the helicopters without having even seen them. What is more, we are not allowed to use the helicopters which have been delivered but have not been fully paid for. They remain property of the company, and our armed forces cannot touch them,” explained the Defense Minister.

He has asked for a meeting with President Georgi Parvanov, the Commander-in-Chief of the Bulgarian Army, over the emerging financial collapse of the armed forces because of the Eurocopter deal.

Angelov and Finance Minister Djankov are likely to meet with representatives of Eurocopter in order to seek a way to reach a settlement by paying for everything that has already been delivered, and terminating the other obligations.

Bulgaria's Defense Ministy has been hit particularly hard by financial woes and mismanagement, according to the Borisov government, which in October 2009, shortly after taking over announced that the institution had only BGN 1 000 in its bank account.