Nouveaux Riches in Bulgaria

IS A NEW G-13 POSSIBLE?

AIM Sofia, September 7, 1998

G-13 is something like G-8, but only Bulgarian style. Top brass in the Bulgarian business circles have tried to create their own circle similar to the seven world super powers, which after Russia joined in are now eight.

In the first stages of post-communist era the unproven qualities of some G-13 members have caused its quick disintegration. The businessmen failed to fulfill their most important task - to secure joint action during the redistribution of the national markets and instead of that fought among themselves. The life of G-13 was rather short. Some of the participants stepped out as they no longer shared business interests with other members of the group. Now most of the businessmen from G-13 have either gone bankrupt or are in prison, or are have the state on their backs because of unpaid customs duties or taxes. One of the most prominent representatives of that group was Ilija Pavlov, President of "Multigroup", who had serious problems with the new anti-communist government of the Alliance of Democratic Forces (SDS) in the past year. A week ago, evidently irritated by constant attacks on his corporation, he announced his intention to establish a new formation similar to G-13. "A group of people, including some ministers, is trying to privatize the state behind the back of Ivan Kostov, Prime Minister. It seems to me that a new "blue" G-13 is in the making" declared Pavlov, front man for the "Multigroup".

There are several aspects to the question of the possibility of forming a new association of large capital holders. The first and basic requirement is for these people to have truly solid capital. In that respect at first glance their predecessors from 1993 seemed very stable indeed. They all got rich very quickly - in only 3-4 years after the disintegration of the totalitarian regime - they all drove latest models of shiny Mercedes, worked in luxurious offices and threw around their money. To people who had only opened their eyes and were making first steps in market economy, they were an example of successful men.

Only a few years later this proved to be nothing else but a mirage. It turned out that the majority of G-13 members were millionaires in credits who took advantage of the chaos in the banking system to transfer millions of dollars to their personal accounts. Some of them, like Hristo Aleksandrov and Hristo Danov, businessmen from Plovdiv, were sentenced to prison because they ruined the Agro Business Bank. Before they plunged into business waters they were both ordinary waiters. Just a week ago Ivan Evlogiev was arrested. He was the main debtor of the International Bank for Investments and Development whose main shareholder was his firm "Kompakt Holding".

Another important element in the creation of G-13 was the wish of these businessmen to participate in the development of the Bulgarian market. Some Years later it became clear that very few of them really knew how to handle their own money. Even those among them who were credit millionaires mostly invested their money in unprofitable economic activities. Even Evlogiev, whose main trading partner was Russia, was nevertheless ruined. Not a single firm of Danov and Aleksandrov proved profitable. In 1996 a newspaper publisher Petjo Blaskov was forced to sell an exceptionally profitable group "169 hours" to the German concern "Westdeutsche Allgemeine Zeitung" (VAC) because he short-sightedly invested enormous funds in the construction of a printing house.

Two banks - The First Private and "Molov" Bank - went bankrupt because of his patron, Valentino Molov. None of the media projects of Krasimir Stojcev from the "Tron" group, once the main rival of "Multigroup", fulfilled the plans of its investors. The paper "Standard" did not manage to win the targeted positions in the market and the printing house never started working, same as a private national television station "Tempo" and GSM operator "Citron". Until now the gentleman in question has managed to stay out of prison despite his outstanding debts only thanks to his close connections with Prime Minister Kostov who is even rumoured to be his adviser.

In essence, G-13 proved to be a group of rich men whose common characteristic was illegal accumulation of wealth and inability to handle their own money. Now they are mostly forgotten, while some, like Ilija Pavlov and "Multigroup" are waging an inequitable fight with the government which is tearing apart the shady side of the "Multi" business. "If 'Multigroup' has broken the law, then the state will break the 'Multigroup", stated recently Prime Minister Kostov.

Who are new major businessmen and will they be able to form a new group similar to G-13? For the time being there are fewer of them. Only two of the old G-13 members are here - Emil Kjulev, banker, and Vasil Boskov, the king of games of chance. Apart from successfully running two banks, Kjulev is also close to the ruling circles. He is the head of "Roseksim Bank" and figures prominently as the main opponent of the "Multigroup" struggling to win over Russian business sharks. Kjulev already has good positions in business circles and it is expected that his partners will be the main protagonists in the privatization of the largest Bulgarian refinery "Neftohim".

Vasil Boskov, better known as the "Skull", owns a number of bingo-halls and casinos, as well as a share in the "Eurofootball" (privately organized game which has pushed the state sports lottery to the background).

Other major businessmen are mostly new. Names of three politicians are being mentioned for the first time - Bogomil Bonev - Minister of the Interior, Muraev - Minister of Finance and Nikola Nikolov, President of the Economic Commission. All three of them are close to Kjulev's group which also includes Ivo Prokopiev and Filip Harmandzijev, publishers of the paper "Kapital". A year ago this paper bought Kjulev's shares in the Bulgarian-Russian Investment Bank. In addition to papers, these businessmen are very interested in the privatization of state enterprises.

Other important sharks of the present Bulgarian economy have strong financial backing thanks to which they have managed to develop their operations. Vladimir Grasanov is head of "Mobitel"- mobile phone operator - which Krasimir Stojev left on a verge of bankruptcy. It took 20 million dollars for this company to get back on its feet again within one year. It is claimed that the money has come from abroad and that the businessman Michaelorni is behind it.

Borislav Dionisijev is handling the money of the Greek tycoon, Vardinoyanis. He is probably good at it as he has not attracted anyone's attention till now.

For the time being this group has no intention of forming anything like G-13, probably because of the bad reputation of its predecessor. In addition, most of them prefer to remain far from the public eye and keep their potentials a secret. It could be otherwise claimed with a great degree of certainty that these are the men who will be in the front lines of the Bulgarian business operations in the years to come.

AIM Sofia

GEORGI FILIPOV