More Еvidence of Abuses Revealed in Third Part of ACF Investigation Mr. Grass Head’s Holding Company

The Anti-Corruption Fund Foundation (ACF) has published the third part of its investigative series on Hristo Kovachki’s hidden network in the Bulgarian energy sector, titled Mr. Grass Head’s Holding Company: Actions and Documents.

This episode explains the contents of 29 internal documents leaked from the archives of companies of the secretive Orion Holding. All documents have been published on ACF’s website.

Veselin Todorov, the main protagonist of the series’ second episode, is filmed commenting on the content of the documents in an interview with ACF’s Nikolay Staykov and Andrey Yankulov. Todorov managed the Bulgarian Gas Company, one of the key natural gas traders within Orion Holding, from April 2019 to December 2023. Before joining Kovachki’s structure, Todorov held the post of natural gas expert at the Energy and Water Regulatory Commission (KEVR).

While Kovachki has been persistently denying any links with Orion Holding, in three of the newly published documents, he is addressed as the actual owner and manager of companies belonging to the holding. The first document is a report from Petar Nikolov, Head of the Security Department at Bobov Dol Thermal Power Plant (TPP).  It starts with the salutation “Dear Mr. Kovachki” and contains the sentence: “Since your property,  Bobov Dol TPP, is of strategic importance to the national security of the country…”.

According to Lora Georgieva, senior legal advisor at ACF, the document contradicts Mr. Kovachki’s public statements that he is a consultant with no ownership interest in any of the companies of Orion Holding.

“The document leaves no doubt that Mr. Kovachki is the real owner of Bobov Dol TPP and that this fact is well-known to his employees,” said Georgieva.

Another document discussed in the episode is Annex No. 42 to the Framework Agreement for the Issuance of Bank Guarantees, which shows that 16 formally unrelated companies (including Bobov Dol TPP, Atomenergoremont, and Tibiel EOOD) entered into an agreement with Investbank AD, to increase the previously agreed total limit of bank guarantees. The companies jointly and severally undertake to be bound by the bank guarantees which secure the proper performance of contracts that some of them had signed with the state-owned Electricity System Operator and Bulgartransgaz.

“This means that all 16 companies are jointly liable for the obligations, and some guarantee performance with mortgages on their property. There is no logical explanation why economic entities that are supposedly independent of each other would jointly commit to a bank to secure a guarantee for an unrelated economic entity. The only explanation is that the companies in question are acting as an actual holding company with centralised management,“ said Georgieva. ”This is also evident from the agreed total limit for bank guarantees, which is worth more than BGN 22 mln.”

Among the documents is also Order No. 76/27.05.2021 Regarding: Negotiation of Prices for the Regulatory period from 1 July 2021 to 30 June 2022. The order is addressed to “all TPPs, mines, Tibiel, TBD – Freight Transport, Analytical and Modelling Department”. The subject of the order is “the creation of a market relations network” between the companies.  It sets the start of negotiations between the mines and Brikel TPP (where coal is further processed) “as a producer on the one hand” and the coal-fired TPPs “as a consumer on the other hand”.

“The order is evidence of cartel agreements between the seemingly unrelated companies of Orion Holding. Through these agreements, they merely imitate market relations, while manipulating prices to hide millions in profits. Ultimately, this harms all consumers of electricity and heating in Bulgaria by maintaining artificially high prices,” said Georgieva.

Another document reveals details of financial manipulations used to conceal millions in liabilities owed by Orion Holding to the public budget. The document confirms the liabilities of Tibiel EOOD to the Bulgarian Gas Company EOOD. According to Veselin Todorov, who managed the Bulgarian Gas Company for three years, this document is a “bogus invoice.”

“As of 5 December 5, TIBEL owed the Bulgarian Gas Company approximately BGN 1.5 to 2 mln. From this invoice, we can see that 25 days later, Tibiel owes BGN 34.5 mln. This is a fake invoice which serves to create expenses,“ said Todorov. ”The Bulgarian Gas Company has no goods or services that could generate BGN 32 mln. within 25 days. This is done to reduce profits, and with just one bogus invoice, BGN 3.5 mln, which is owed as corporate tax, instead of going to the public budget, goes into Kovachki’s pocket.”

Boyko Stankushev, director of the ACF, said: “Each of these 29 documents contains information about the workings of a prohibited cartel organisation, about manipulated price increases and about tactics that conceal serious financial flows that have not been reported and taxed.”

“We believe that the information revealed in these documents is sufficient for the responsible institutions to act and conduct thorough investigations. We will monitor their response and inform the public promptly.”

The third episode also contained Veselin Todorov’s account of the consequences he has faced for leaving Kovachki’s venture. Todorov states that his signature has been forged, that the holding has initiated legal action against him, and that the National Revenue Agency is applying institutional pressure on him with demands for payments worth more than BGN 5 mln.

Watch Mr. Grass Head’s Holding Company: Actions and Documents here: https://www.youtube.com/watch?v=Tgg3bNL1hII&feature=youtu.be

The leaked documents can be viewed here: https://acf.bg/bg/dokumenti-po-kazusa-chichko-trevich/