The Anti-Corruption Fund (ACF) urged the Minister of Interior and the National Assembly to look into reported serious violations of the law surrounding the project for the deepening of the Varna Port, executed by the Bulgarian Ports Infrastructure Company (BPIC).
ACF claims that BPIC violated the Public Procurement Act (PPA) by awarding in-house the execution of the deepening of the port’s navigable canals to the state-owned company Transport Construction and Reconstruction EAD (TCR EAD), even though it was clear that TCR EAD did not have the capacity to perform such services, as its scope of business is quite different. Subsequently, TCR EAD also violated the applicable legislation by outsourcing the activity to private contractors for the price of BGN 393 million.
The case was first investigated in 2019 by the journalist Spas Spasov  following the Third Borisov Cabinet’s decision to allocate BGN 220 million to BPIC for the deepening of the fairways in the entire water area of the Varna port.
Instead of organizing a public procurement procedure, BPIC awarded the project through in-house procurement to Transport Construction and Reconstruction EAD (TCR EAD) — a company that is, like BPIC, managed by the minister of transport. However, TCR EAD does not carry out, nor does it have the capacity to carry out dredging work for the purposes of increasing seaway depth, and the awarded services do not fall within the company’s scope of business. TCR EAD’s main business activities include railway track repairs and reconstruction, routine maintenance, as well as excavation and embankment works for new railways, tram and trolleybus lines .
Owing to the highlighted lack of capacity, TCR EAD outsourced the work to the consortium S Build, concluding a contract for the amount of BGN 393 million , nearly 370 million of which have already been paid. TCR EAD concluded additional contracts with other contractors for the amount of BGN 43 million. In the end, the work in the Varna Port was not completed by S Build, but by specialized Russian dredgers owned by the company Gidrostroy, registered in Kaliningrad, Russia. There is no public information regarding the contract concluded between TCR EAD and S Build, or the contract between S Build and Gidrostroy. In fact, the 100% state-owned company TCR EAD refuses to provide information about these contracts even to its principal, the minister of transport .
“Awarding the contract through in-house procurement would only have been lawful if TCR EAD had been able to prove that it possessed the necessary resources and capacity to execute the assigned activities. In the case of in-house procurement, the law does not allow contractors to outsource the work (partially or in whole) to subcontractors,” comments Daniela Peneva, legal expert at the Anti-Corruption Fund. “TCR EAD violated the law by outsourcing the assigned activities multiple times, as a result of which the contractor on the initial contract was practically replaced, thus giving rise to justified doubts about the legality of the awarding, execution and control processes.”
TCR EAD also violated the Public Procurement Act by concluding a contract with the consortium S Build, once again without organizing a tendering procedure, but by “applying internal rules” and selecting a contractor from a previously prepared list.
“This type of awarding represents another serious violation of the PPA”, says Daniela Peneva. “TCR EAD is an organization governed by public law, and as such, it is legally obliged to organize tendering procedures when it awards construction works. The awarding process cannot be based on internal rules and cannot involve the selection of contractors from a ‘list’. We have no information as to how many subcontractors were approached following TCR EAD’s decision to outsource, and how many contracts were concluded down the line to finally get to the company Gidrostroy, which completed the work. The numerous violations of the PPA in this case necessitate an inquiry into the legal grounds for all the financial transactions executed under the project.”
An inquiry is even more exigent given the indications in the public space that TCR EAD does not have the technical capacity to execute the deepening of the canal. The project does not include deepening of the entrance to the canal near the Asparuhov Bridge, or deepening of the quay sites in the harbor, which require the development of embankment projects and additional funding. During his hearing in Parliament, the Minister of Transport, Nikolay Sabev, stated that the deepening works have been completed up to the harbor of the Varna TPP — owned by the honorary chairman of the MRF party, Mr Ahmed Dogan — but not up to the remaining 15 terminals.  The subsequent deepening of the canal up to the terminals in the Varna Lake, including the Varna West Port Terminal, is technically impossible due to the existence of underwater communications and the geology of the sea bottom, which is preventing their relocation. All these factors seriously call into question the expediency of the project.
“We are referring the case to the Minister of Interior, insisting that evidence should be collected to ascertain whether the identified circumstances support the conclusion that violations or crimes have been committed,” states Boyko Stankushev, Director of the Anti-Corruption Fund.
“We are also appealing to the National Assembly with a request to refer the case to the National Audit Office, as there are indications of financial violations that require a full audit. The results of the inquiry will clarify whether the payments under the project were lawful, and will facilitate the assessment whether crimes have been committed. We will inform the public in due course about the institutional responses to our reports.”