Ex Economy Minister Accuses Bulgarian PM of Orchestrating Bulgartabac's Sale

Business » INDUSTRY | August 31, 2011, Wednesday // 15:28

Powerful economic circles in Bulgaria featuring the participation of Prime Minister Boyko Borisov are behind the privatization deal of cigarette maker Bulgartabac, according to Rumen Ovcharov, a Socialist MP and former Economy Minister.

Ovcharov, who was the Economy and Energy Minister between 2005 and 2007 in the Stanishev Cabinet (2005-2009), criticized Wednesday in Parliament the decision of the Bulgarian Privatization and Post-Privatization Control Agency to approve the sale of Bulgartabac for EUR 100.1 M to BT Invest, a firm registered in Austria by the bank owned by the Russian government.In his words, the privatization procedure was drafted in a way that scared away foreign strategic investors on purpose.

"This is one of the most brutal deceptions in the Bulgarian economy in the past 20 years," Ovcharov declared in Parliament Wednesday, demanding together with the rest of the MPs of the Bulgarian Socialist Party that the deal be immediately terminated.

Ovcharov, who was largely discredited in 2007 when he had to resign his Cabinet seat over corruption suspicions, now claims that PM Borisov is involved with a circle that "was supposed to" get Bulgartabac for a minimum price.

On Monday it became clear that BT Invest – the only entity to make it to the final stage of the privatization tender – offered a price of EUR 100.1 M for the purchase of 5 881 380 shares, which are 79.83% of Bulgartabac's capita or EUR 100 000 above the minimum asking price set by the Privatization and Post-privatization Control Agency.

According to the former Economy Minister, neither the Bulgarian tobacco growers, nor the workers of Bulgartabac have any reason to rejoice over the parameters of the deal.

He pointed out that BT Invest's commitment to buy 5000 metric tons of tobacco per year is actually smaller than the current annual quantities of tobacco that the state company buys since in 2011 it bought over 6 000 metric tons of tobacco.

Ovcharov further slammed the investor's promise to put in about BGN 7 M for the next few years saying that Bulgartabac's annual investments amount to about BGN 25 M.

The one ones who stand to benefit from Bulgartabac's sale, according to the Socialist MP, are the new buyers who "are hiding their names below the umbrella of one of the large Russian banks."

Ovcharov has cited Russian reports rejecting the claims that the Russian state is behind the purchase of Bulgaria's cigarette maker by VTB, a bank owned by the Russian government, which is the second largest in Russia.

"Certain economic circles in Bulgaria are behind the privatization of Bulgartabac," he declared.

Another Socialist MP, Korneliya Ninova, who was the CEO of Bulgartabac back in 2008, said the best way to find out if the Russian state was actually about to acquire the Bulgarian cigarette maker was to check the status of the Russian claims for the company dating back to the communist period.

She asked if the Russian Presidency had filed a suit against Bulgartabac with the Sofia City Court. Her logic is that if the Russian government was to acquire the company through the state-owned bank VTB, it would have no motivation to claim compensations; on the other hand, if a suit had been filed, this would be taken to mean that somebody else is moving to take over Bulgartabac via the Russian bank.

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Tags: Rumen Ovcharov, Korneliya Ninova, Bulgarian Socialist Party, BSP, Dimcho Mihalevski, Atanas Bostandzhiev., protest, trade unions, syndicates, Podkrepa, Privatization and post-Privatization Control Agency, Privatization Agency, sofia, Blagoevgrad, Austria, Austria, Graz, BT Invest, CB Family Office Service, King's Tobacco, cigarette producer, binding offers, strategic, tobacco, Japan, JTI, JT International, Economy Ministry, Citigroup Global Markets Ltd., Citigroup, privatization, cigarettes, cigarette-maker, Bulgartabac Holding, Bulgartabac, Bulgaria, Bulgaria, stock exchange, Korea, КТ&G, KT&G, Philip Morris, financial investors, Russia, bank, BAT

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