Hristo Kovachki, believed to be Bulgaria’s second-wealthiest man, was charged with VAT fraud last month on allegations that he evaded taxes and took unlawful VAT refunds for machinery between 2005 and 2008.
Bulgaria’s Asset Forfeiture Commission, meanwhile, found that while Kovachki’s assets acquired between 1994 and 2008 – including real estate, vehicles, company shares and other assets – were worth 143 million leva ($107 million), his declared income between those years was only 2.2 million leva. A Bulgarian court this week agreed to the Commission’s request to temporarily seize all 143 million leva worth of assets. If Kovachki is found guilty the seizure could be permanent.
Kovachki has interests in more than 40 companies – coal mines, thermal power plants, heating utilities and other companies including an insurance company – and is thought to be worth around $700 million. He also founded a political party, Lider, which barely missed gaining a seat in parliament in the July election.
Kovachki Says He’s Innocent
Kovachki said earlier that the charges only served to undermine his image and that of his companies. He said a trial would help him prove his innocence. He posted €150,000 bail last month and remains free.
The charges against Kovachki are reminiscent of allegations a European anti-fraud body made against a Bulgarian group of companies in a report last year. The body, OLAF, reported that the Nikolov-Stoykov Group had sold old meat-processing equipment to German accomplices, and then imported the same equipment as new. Five companies in the group, which OLAF called “a criminal company network,” used European Union subsidy money to pay for the equipment and pocketed the multi-million-euro difference. OLAF also said that one of the people involved in the criminal network financed the election campaign of the then-Bulgarian president.
Around the same time as the release of the OLAF report, the European Union froze more than €600 million in EU funds as a punishment to Bulgaria for failing to crack down on crime and corruption. The new government that replaced the Socialist-led government in July has since said that both crime and corruption are a priority.
--Beth Kampschror
