Seven questions to Prosecutor General Ivan Geshev on the concluded Prosecutor’s investigation of the swaps in the Apartmentgate case

With a copy to the Executive Director of the National Revenue Agency (NRA), Galya Dimitrova.

Dear Mr. Geshev,

From the signallers of the Civic Movement “BOETC,” we have learned about the decision of 25.02.2021, by which the Supreme Cassation Prosecutor’s Office (SCP) confirmed the refusal of the Specialized Prosecutor’s Office, confirmed by the Sofia Appellate Prosecutor’s Office, to initiate pre-trial proceedings against Mr. Tsvetan Tsvetanov in the case “Apartmentgate.” In practice, the opinion on the case of the Specialized Prosecutor’s Office from the time when you were its administrative head is confirmed. For us, there is no surprise in this negative opinion, including in the way it is not loudly announced in the media or on the website of the Prosecutor’s office. There is also no announcement on Twitter, as is usual.

As we know the facts of the Apartmentgate case well, we would like to ask the following important questions, which remain unanswered:

1. The decision makes it clear that the NRA’s inspections have not found any violations in the activities of the builder “Artex Engineering” Ltd. However, the journalists’ investigations have revealed that the company was selling its apartments in several buildings in the capital’s Iztok district at prices ranging from EUR 2,600 to 3,500 per square meter. How then would the Prosecutor’s office and the NRA explain the fact that the same “Artex” has concluded, in addition to this exchange, transactions with several high-ranking politicians at four times lower prices, documented in the relevant notarial deeds?
2. The decision confirms that the swap of real estate between the developer and Tsvetan Tsvetanov at tax valuation price, at a serious discrepancy with market prices (at least double), is a perfectly legal practice. The decision quotes “the expertise of a licensed appraiser at the Privatization Agency.” Still, it is unclear who commissioned and paid for the expertise, when, who the expert is, and what his conclusions are. At the same time, if the swap had been carried out at market prices, Mr. Tsvetanov would have had to pay at least twice as much as he paid, according to the official documents known to us. How would you explain this discrepancy, and how come the amount of the additional payment is precisely the same as the declared savings of the person under investigation?
3. Another important question in these swaps of “old” for “new” real estate – how do you think this typical scheme for avoiding the payment of mandatory value-added tax is legal in this case? And if this is legal, what would be the loss to the budget if, from now on, all developers start implementing this scheme?
4. The decision of the Supreme Cassation Prosecutor’s Office cites an inspection of the National Revenue Agency, according to which the amounts paid under the transactions correspond to the incomes declared by the politicians. This fact has been known since the very beginning of the scandal. The question arises, is this the only verification based on which the NRA concluded that there were no violations? How detailed was this inspection? Why were the standard appraisal examinations in the practice of the NRA not appointed in this case? Why were the hypotheses of transactions between ‘related parties’ within the meaning of the VAT Act not examined?
5. If Mr. Tsvetanov and the other politicians involved in the scandal have indeed received apartments at prices several times lower than the market prices, have they not placed themselves in financial and other dependence on the builder who provided them with these apartments? Have any suspicions of corruption and influence-peddling been investigated?
6. Has any investigation been made into how the preferential price paid relates to the legislative amendment to the Spatial Planning Act, which has become known as the ‘Artex amendment,’ for which the same politicians voted? The relevance of this question is exacerbated given the repeated pronouncement (in the summer of 2019 and the autumn of 2020) by two different chambers of the Sofia Administrative Court that this amendment still applies to the construction of the Golden Century skyscraper.
7. Finally, and perhaps most shocking to us in this important three-instance review, why is there no report of even one on-site inspection in the record? Thus, there is no information whatsoever about the cost of the furnishings on the swapped properties (particularly the building at 8 Latinka Street), including the adjacent private elevator and the security systems visible from the outside. It is not even clear what the actual area and construction parameters of the dwelling are, and whether this is not the phenomenon of “shared terraces for private use,” familiar to us from the property scandals of 2019, or the other widely known phenomenon of “floors in the roof,” which is precisely what is shown by the publicly available satellite images.

Mr. Prosecutor General,

In the inspections carried out by the Prosecutor’s office entrusted to you, we do not see any efforts being made to dispel the reasonable doubts that the Apartmentgate scandal is about properties many times more expensive in the most luxurious segment of the market, disguised on documents as something much more modest.  All of these questions will obviously remain unanswered now that the probe is effectively over. For us, as a civil society organization, the only thing left to do is to ask the questions that the Bulgarian Prosecutor’s office is either unwilling or unable to answer.