Orion Holding from the Inside: Testimony from a High-Level Manager Reveals Systematic Abuses in Hristo Kovachki's Hidden Conglomerate
The Anti-Corruption Fund Foundation (ACF) has published the second part of its investigation, Mr. Grass Head’s Holding Company, which sheds light on oligarch Hristo Kovachki’s hidden energy network.
Part II, titled Veselin Todorov: Orion Holding from the Inside, features an interview with Mr. Todorov, who was in charge of gas trading at the holding from April 2019 to December 2023. Todorova managed the Bulgarian Gas Company, one of the key gas trading companies within Kovachki’s secretive empire. Previously, Todorov was a natural gas expert at the Energy and Water Regulatory Commission.
His account provides comprehensive and systematic inside information on the functioning of Kovachki’s holding company, its mechanisms for control and coordination, its financial practices, and its numerous violations of Bulgarian and European law.
“Veselin Todorov’s account must be carefully examined by the European Public Prosecutor’s Office (EPPO) and the Bulgarian law enforcement authorities, as it contains specific direct evidence of numerous crimes and points to leaks of information about upcoming and already conducted procedural actions by the Bulgarian office of the EPPO,” said Andrey Yankulov, senior legal advisor of the ACF.
The EPPO owes Bulgarian citizens detailed information about the fate of this investigation, which has been ongoing for some time now. Citizens have the right to know who led the investigation, who oversaw the proceedings, what procedural steps have been taken, and what the results of these actions were,” said Yankulov.
How Orion Holding is managed: Structure, Dependencies, Control
“Everything in the holding company happens through offshore companies and front men,” said Todorov. “I myself was a front man for one of Kovachki’s companies.”
Upon joining Holding Orion, Veselin Todorov was formally appointed as an employee of the Pleven TPP. He was responsible for coordinating the activities of the holding’s thermal power plants (TPPs) running on natural gas and the companies trading in gas.
While it is not possible to find links between most of the entities in the holding, it is managed in a highly centralised manner, with all decisions — from those about strategic deals to those about routine expenses for consumables in individual companies — personally approved by Hristo Kovachki.
The holding’s seemingly unrelated companies also have joint accounting. The operations are carried out at a central level by a small number of accountants who collect all the electronic signatures of the formal senior managers and then transfer funds between the various companies.
“For four years, I did not have access to my electronic signature,” said Todorov. “The only time I had access to it was when I had to renew it. Once this was done, they would take it from me again. This happened to all company managers.”
Another way of controlling senior managers is forcing them to sign promissory notes for large sums, which, according to Todorov, is a routine practice in the holding company.
“Right next to Hristo Kovachki’s office is that of his attorney, Vanya Milcheva, where a large number of promissory notes are kept in a steel safety box. Each manager signs a document stating that they owe a certain sum of money to a natural person or, in the more common scenario, a legal entity. These ‘debts’ ensure that individuals are always compliant. The amounts in the promisory notes vary from two to three million levs for those managers at the very top.”
In the interview, Veselin Todorov outlined the relationships between the different entities within the holding, which comprises hundreds of companies linked in an opaque network of mutual loans and coordinated accounts.
At the heart of the holding company are TPPs (the largest ones are Bobov Dol TPP and Brikel TPP), which also provide district heating. Surrounding these entities are numerous companies that provide them with goods and services or sell their products. Through these traders, it is possible to manipulate the turnover of the heating companies, making it seem that they are operating at a loss or minimal profit. Thus, their real profits are hidden, and the prices for the customers of district heating companies are kept artificially high. All raw materials, consumables, and services for the operations of the district heating companies are purchased at inflated prices from suppliers (including mines) within the holding and then sold at low rates to related traders.
“This scheme is designed to generate maximum profit,” says Todorov. “But at the expense of consumers who pay the highest rates possible. In all cities where Kovachki owns district heating companies, the end consumer pays higher rates for their heating bills in winter.”
“The profits leave the TPPs and go instead to the companies trading in electricity and natural gas. If the TPPs were functioning as regular companies, prices for the end consumers would have been much lower than they are at the moment.”
Cartel Practices, Manipulation, and Abuse of Market Position
Todorov claims that the holding company maintains an active cartel structure in the energy sector, with at least two companies with similar scopes of activity in each of its strategic markets. These companies’ overlapping expertise allows them to manipulate prices among themselves.
“Such companies, which are de jure independent of each other, can together agree on deals that influence the market. Which is an example of a cartel practice.”
The joint accounting, which effectively unites all the supposedly independent companies into a single entity, provides improved coordination and conceals the real financial flows.
Carbon Emissions Fraud and Obstruction of an EPPO Investigation
Todorov has confirmed the information from the first episode of ACF’s investigation and an earlier investigation into carbon emissions fraud, known as Pelletgate.
According to Todorov, Kovachki typically received warnings of upcoming inspections, including searches initiated by the EPPO. Kovachki responded to this information by ordering his staff to destroy documents by shredding, burning, or disposing of them by other means.
“While I was working at the holding company, there were several occasions when the order was given to ‘burn’ or ‘throw away’. All our documents were shredded, burned, or thrown away. This was done when Kovachki had been informed that there would be a raid the following day targeting the premises of one of the entities.“
”In the case of the EPPO investigation into carbon emissions fraud, the same approach was used. On Monday, investigators entered the premises of the TPPs and the offices, but the warning had already been received on Friday. For two or three days, they managed to clear everything.”
Coercion, Control, and Pressure on Employees
According to Todorov, Hristo Kovachki receives information not only about the upcoming searches led by the EPPO in 2023, but also about the testimony his employees had provided during the subsequent interrogations.
“Those of my colleagues who were interrogated then received from Kovachki the transcripts of their own statements so they could read them. He had been informed of the statements made by everyone who had been questioned, even when the questioning only happened in the presence of EPPO representatives.”
This creates an atmosphere of fear among the majority of employees. Todorov himself was subjected to intimidation and pressure when he decided to leave the holding company.
“When I decided to leave, since I was very well-acquainted with what was going on there, he asked me to sign a promissory note to guarantee my silence. When I refused, he sent people to ambush me at home.”
Once Todorov left, Hristo Kovachki initiated legal proceedings against him, freezing his accounts with a claim worth BGN 350,000.
Despite the threats against him, Todorov is willing to cooperate with any Bulgarian or European institution that wishes to investigate his revelations.
“I am ready to respond to any institution that contacts me. If no one talks about these things, Bulgaria will never change.”
Boyko Stankushev, director of the ACF, said that the information disclosed by Todorov is of exceptional importance to the public.
“Veselin Todorov’s testimony, together with the documents published so far by the ACF, reveal mechanisms that distort the energy market, harm consumers, threaten energy security, and undermine trust in public institutions. Urgent, effective, and independent action per the Bulgarian and European legislation is needed,” said Stankushev.
The ACF calls on the competent authorities — the European Public Prosecutor’s Office, the Prosecutor’s Office of the Republic of Bulgaria, the Commission for Protection of Competition, the Energy and Water Regulatory Commission, and other responsible institutions — to familiarize themselves with the investigation and take the necessary steps to follow up on the presented facts.
Watch Veselin Todorov: Orion Holding from the Inside here: https://www.youtube.com/watch?v=c8P7byObBPU&feature=youtu.be
