Who and How Held Illegal Secret Negotiations with TurkStream Tenderers in 2019?

The hacked emails of Aleksander Babakov – a Russian politician featured in several corruption scandals, including a 2013 attempt, reported by The New York Times, to bribe a Bulgarian Deputy Minister of Energy in relation to the cancelled South Stream gas pipeline – raise important questions in Bulgaria.

In 2019, Babakov received the short memo pictured here, following negotiations between the “Bulgarian, Russian and Arab sides”. The original text most likely refers to Saudi Arabia which owns Arkad Consortium DZZD, the tenderer subsequently chosen to build the Bulgarian section of the TurkStream gas pipeline. The negotiations were held in Istanbul on 1 July 2019 after bids for the projects had already been submitted.

Such a meeting was never announced in Bulgaria, although it can be traced based on the travel itineraries of ministers or executives of Bulgartransgaz, a state-owned company supposedly in charge of the tender to expand its network. The project was initially called Balkan Stream and was presented as an attempt to increase the capacity of Bulgaria’s gas transmission network although this is not evident from the Russian memo following the meeting from 1 July 2019.

The memo refers to an agreement between two of the participants in the tender procedure: Arkad and TMK-Bonatti-Streicher. It should be noted that the Russian side has given prominence to TMK, the Russian participant in the consortium which, for political reasons, is not mentioned in the company name used in Bulgaria. The entity was registered as Consortium – Gas Network Development and Expansion in Bulgaria with participants Consortio Varna 1 (set up by Bonatti S.p.A. and Max Streicher S.p.A.) and Completions Development S.a.R.L. Bulgaria branch.

Also under discussion was funding from Russian banks and Gazprom which was later presented by the Bulgarian side as a beneficial commercial decision rather than a pre-existing arrangement. In an unknown capacity the Russian side poses “a list of questions to Arkad” and in the end states that they have “reached a joint agreement with Arkad” on some of them. It is apparent that also under discussion is a deadline for the project which has been outlined by another party, at a different level, and is different from the parametres set out in the tender documents. What is striking is the discussion of schemes which are expressly forbidden under Bulgarian law, for example, the hiring of a tenderer as a subcontractor. This practice is forbidden under the Public Procurement Act which states that all subcontractors should be announced in advance.

The main question is what is the high-level agreement between then Prime Minister Boyko Borisov and Russian President Vladimir Putin about the project in the name of which parties are entering secret negotiations. In addition, the secret negotiations between awarding parties and contractors (since the negotiations involved Arkad, the tenderer that was ultimately chosen to execute the project) are criminally liable under the Public Procurement Act.