The money the Bulgarian state got from the highly controversial sale of its dominant tobacco company has not been transferred to the silver fund as required, a check has shown.

Bulgaria's sale body, the Privatization agency, told Dnevnik daily that the price of EUR 100.1 M has been paid by the buyer and transferred immediately to the account of the state budget in the central bank.

Under local legislation them money should next be transferred to the Silver fund, but this does not feature in its end of October report, the daily reported.

After wrapping up the deal in the middle of October the sale body said that the money will be directed into the state budget, and will then be fully transferred into the so called Silver Fund, a state retirement fund set up in 2008 in order to cover future pension system deficits caused by Bulgaria's aging population.

The money in the Silver Fund comes from privatization deals, concessions, and budget surpluses (if any).

Bulgaria's privatization agency hurriedly sealed the deal to sell cigarette maker Bulgartabac to a unit of Russia's VTB Bank on September 13 even before the competition watchdog delivers its ruling.

BT Invest, owned by Russia's second-largest bank VTB, won at the end of August a tender to buy a 79.8% stake in Bulgartabac for EUR 100.1 M.

The deal was finalized after the buyer paid 20% of the EUR 100.1 M selling price (a mere EUR 100 000 more than the minimum price set by the Bulgarian government in the privatization tender) on the day of the signing of the purchase papers, and a month later paid the remainder of the sum.

The contract bans the resale of the holding in the next ten years, a condition which can be skipped through a change in the ownership of BT Invest, analysts say.

Austria-registered BT Invest, behind which stands Russia's second-biggest bank VTB, remained the only bidder for the Bulgarian tobacco monopoly after British American Tobacco and Austria-based CB Family Office Service dumped the sale.

The deal has sparked protests by Bulgartabac workers, who oppose the sale of the cigarette maker to the only remaining bidder in the public procurement procedure and insist that the Governing Board rejects the offer.

Two of the less profitable plants of Bulgartabac holding - in the cities of Plovdiv and Stara Zagora - were sold in 2009 through the Sofia Stock Exchange - for BGN 31 M and BGN 18 M respectively.

The holding currently owns the two larger and more consolidated factories in Sofia and Blagoevgrad as well as a number of commercial brands.

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