The Mayor's Apartments: ACF Sheds Light on Shady Property Deals of Pencho Milkov

Within less than two years and under questionable circumstances, Pencho Milkov, the mayor of the city of Ruse, has acquired two attractive properties in his hometown and Sofia.

The latest jewel in the mayor’s property crown is an apartment – spanning nearly 100 sq. m. – in a boutique six-floor building near the G. M. Dimitrov metro station in Sofia. The purchase was made in June 2024 and the property is located at 102 Nikola Gabrovski Str. The property deed, which is public information, clearly shows that, compared to his neighbours, the mayor got a 100 per cent discount on the purchase.

The investor, private company Aspen Invest Ltd., sold Milkov a 95.55 sq. m. apartment (shell condition) and a parking space for BGN 204, 996.

Just a few months prior, the owners of a property located on the same floor as Milkov’s flat paid BGN 400,945.15 for 99.22 sq. m. (shell condition) and a parking space. The owners of the apartment located directly above Milkov’s also appear to lack the mayor’s negotiating skills since they paid BGN 420,503.45 for a property of the same size (shell condition) and a parking space.

“Nearly six years after the Apartmentgate scandal, we see high-level public officials continuing to make attractive property investments at prices that defy market logic,” said Sofia Zheleva, a legal expert with the Anti-Corruption Fund Foundation (ACF).

“We call on the relevant authorities to investigate all possible hypotheses such as influence peddling, tax evasion and possible attempts to conceal the origin of funds.”

Another interesting detail pertains to Aspen Invest, the company behind the Sofia residential building. One of the three investors in the company, Stefan Vladimirov Tutberidze, is the son of Svetlana Sharenkova, a member of the National Council of the Bulgarian Socialist Party and an honorary professor at the University of Library Studies and Information Technologies.

Stefan Tutberidze’s father is the Georgian citizen Vladimir Tutberidze who was expelled from Bulgaria in 2001 for participation in an organized criminal group dealing with arms trafficking. The transaction between Aspen Invest and Pencho Milkov was registered in the notary office of Vesela Ivcheva who became notorious for her participation in the Eight Dwarves scandal.

Prior to purchasing the attractive Sofia property, Milkov also acquired a 258.93 sq. m. penthouse and a parking space in a new building in a central area in Ruse. The property was donated to Milkov by his sister. Milkov received the donation less than three weeks after he was elected for a second mayoral mandate following the local elections at the end of 2023.

News of the donation broke earlier this month when a reporter from the Bulgarian National Radio revealed that the mayor had filed an asset declaration containing false information with the Commission for Countering Corruption (CCC). In the declaration, the spacious penthouse is listed as a property of just 63 sq. m.

The ACF reviewed the transaction and identified several red flags which should be relevant for the CCC, which compiles and monitors the asset declarations of high-level public officials, and other anti-corruption institutions.

Milkov assumed ownership of the spacious Ruse property after he accepted a donation from his sister Petya Yordanova and her husband Yordan Yordanov, co-owner of the development company EXTREME Ltd. from which the property was purchased in 2001 under curious circumstances.

Signed on 28 September 2021, the deal is more than advantageous. Yordanova acquired the penthouse and a garage from EXTREME Ltd. for BGN 174,600 including VAT, an amount which is not only far below market rates, but also well below the tax assessment of the property which amounted to BGN 212,871. For comparison, in the period from 2020 to 2022, EXTREME Ltd. sold five more apartments of different sizes and stages of construction. All of these transactions involved prices which were two to 3.6 times higher (per sq. m.) than the price offered to Petya Yordanova.

At the end of 2023, the spouses donated to Milkov the penthouse and garage located in a building on Kiril Startsev Str. The notary deed of the transaction, dated 24 November 2023, explicitly states that the donation is being made because “the only home belonging to Petya and Pencho’s parents had been transferred to the donors’ daughter, leaving Pencho Milkov without a share of his inheritance”. The garage which Yordanova had also purchased was donated a week later, on 1 December 2023.

According to Art. 225(1) of the Obligations and Contracts Act, by signing the donation contract, the donor, immediately and without expecting anything in return, cedes something to the donee who in turn accepts it. In the case concerning the mayor of Ruse and his sister, the key issue is that donations are not supposed to be transactional,” said Zheleva.

“The only motive the donor should have is making a gift. However, in this case, it is clear from the donors’ statements that the donation of the property appears to be compensation for the fact that Petya Yordanova and Pencho Milkov’s parents’ home had been transferred to Petya’s daughter some time ago.”

Indeed, on 7 February 2001, more than twenty years before Milkov accepted his sister’s donation, the mayor’s parents sold their 76-square-metre flat to his niece. The child, under a year old at that time, bought the property from her grandparents for BGN 23,000. At the end of 2023, a month after Petya Yordanova donated to her brother the penthouse she had bought at a bargain price, her daughter in turn donated to her the apartment she purchased in 2001.

On 20 December 2023, Milkov purchased for BGN 8,000 another parking space in the building. What is curious is the agreed manner of payment of the sum, namely that “it will be paid within one year”.

The circumstances surrounding Milkov’s property transactions raise a series of questions:

1. What is the motivation of a private company, whose main goal is profit, to sell to the wife of a co-owner of the company (and therefore to the co-owner himself) a property at a price significantly lower than the market price and the property’s tax assessment?
2. Why did the mayor of Ruse accept the donation? Does this not contradict the legal framework and the ethical standards of conduct that high-ranking officials should adhere to?
3. Could the donation and the preferential price of his Sofia property represent a return of favours on behalf of EXTREME Ltd. and Aspen Invest Ltd. or an “investment” in the future goodwill of the mayor? Could these transactions have other illegal objectives?

ACF approached Pencho Milkov for a comment but did not obtain answers from the mayor.

“Without a doubt, high-ranking officials such as the mayor of Ruse, should not accept expensive gifts and benefits as this puts into question their impartiality and ability to perform their duties independently,” said Zheleva. “In this particular case, accepting the penthouse in Ruse at the end of 2003 and purchasing the Sofia apartment at a very attractive rate six months later raises the question of whether the property transactions aimed to favourably predispose the mayor to the donors’ specific future plans, or whether they served to express gratitude for favours already rendered.”

There is also the question of whether the donation and the large discount on the Sofia property served as a screen for the acquisition of expensive properties with funds of unexplained origin.

In June 2020, during his first term in office, Milkov, introduced a Code of Conduct for Employees in the Administration which states that “employees should not allow themselves to be placed in economic or other dependencies, nor should they ask for or accept gifts, favours, money, rewards or other benefits that may influence them in their professional duties.”

According to the code, employees who fail to comply are liable to disciplinary action. ACF asks what consequences Milkov will face for his actions.