2011-08-28 Forbes - Bulgaria Glorifies "Bulgaria's Energy Mafia" Leader Exposed By WikiLeaks

This week edition of Forbes - Bulgaria features Bogomil Manchev on the cover page. Manchev who's presented by Forbes as an "energy innovator" has been exposed in a secret diplomatic cable from Sofia, revealed by WikiLeaks. Bivol reminds the excerpts about Manchev from the cable named DIRTY ENERGY: CORRUPTION AND LACK OF TRANSPARENCY PLAGUE BULGARIAN ENERGY SECTOR [06SOFIA1691], sent 2006-12-20 by the chargé d'affaires in the US Embassy in Sofia - Alex Karagianis

BULGARIA'S ENERGY MAFIA: BOGOMIL MANCHEV

¶7. (C) Three names always mentioned as key players in Bulgaria's so-called
"energy mafia"  are Bogomil Manchev from Risk Engineering, Krassimir Georgiev
from Frontier and Hristo Kovachki.  Manchev and Georgiev have been
omnipresent in the sector since the early 1990s, while Kovachki
is considered a new player.

¶8. (C) Bogomil Manchev's presence in the energy field, particularly
the nuclear sector, is pervasive. His engineering and consulting company,
Risk Engineering, founded in 1992, got its start working as a subcontractor
for Westinghouse for a EU Phare project related to Kozloduy's Units 1-4.
From there, Manchev and Risk's influence grew as he won successive
Phare projects for improving safety and security measures at Kozloduy
Units 3 and 4, preparing documents for the development of Bulgaria's
uranium mines in Simitli and Dospat, assessing a potential national
storehouse for radioactive waste, etc.

¶9. (C) By the time of Prime Minister Simeon Saxe-Coburg Gotha's
government (2001-2005), Manchev's power in the energy sector was
rumored to be all-encompassing.  XXXXXXXXXXXX, told us that Manchev
controlled all public procurements in the sector, and others have echoed this.
Manchev held himself out, and was regarded, as the "shadow Energy Minister,"
with significant influence over then Energy Minister Milko Kovachev (Kovachev
graduated from Sofia's Technical University three years before Manchev and
the two were colleagues at Kozloduy).  Manchev controlled personnel
decisions regarding state-related energy associations, according to
XXXXXXXXXXXX, and advised Kovachev what actions to take related
to government tenders.  Manchev's influence, driven in part by
Kovachev's lack of political support within the coalition, earned the Ministry
the nickname--"Ministry of Risk Engineering."

¶10. (C) According to XXXXXXXXXXXX, Manchev receives most of the
work in the energy sector.  Manchev has an ownership stake in 10 different
firms and is the sub-agent for hundreds of other firms.  XXXXXXXXXXXX,
told us that Manchev controls "everything" at Kozloduy.  Manchev possesses
the first license for trading electricity in Bulgaria, holds the sales quota for
Kozloduy's (domestic) electricity, and is responsible for all of the plant's
service and repair contracts.  The common joke among many journalists
is that he has "privatized" even the exit and entrance of Kozloduy.

¶11. (C) Manchev is believed to have strong influence over the directors
of Kozloduy and NEK, whose previous deputy chairman was a former Risk
employee.  Likewise, NEK uses the Commercial Corporate Bank for much
of its business, which according to XXXXXXXXXXXX has a secret partnership
with Risk (Ref B).  Further corroboration came when a respected U.S. energy
company recently complained to us that Kozloduy's management is trying
to force them to use Risk Engineering as a sub-contractor or partner in
areas where Risk Engineering is not qualified.  Company officials told us
they fear that failure to do so will jeopardize this and other contracts,
but they are concerned that working with Risk Engineering in this specific
capacity could harm the product and the company's reputation.

¶12. (C) Moreover, Manchev and Risk have a close working relationship
with the Australian-U.S. firm WorleyParsons.  In 1998, Manchev and Risk
formed a business partnership with

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Parsons, specifically its regional director in Europe, Djurica Tankosic, an
American citizen.  The partnership, called GCR, was formed to modernize
Kozloduy's Units 5 and 6, which has been conducted by Westinghouse.
The relationship between Manchev and Tankosic is reportedly very close;
the address for Parsons E & C Bulgaria is the same as Risk Engineering.
It is this relationship that Manchev is likely referring to when, according to
XXXXXXXXXXXX, he tells people that he is working for the United States--which,
of course, has no basis in fact.

MANCHEV'S REACH IN THE SECTOR

¶13. (C) In 2004 NEK issued two contracts related to the building of
Belene--an environmental impact assessment report and a technical-economic
study))with the goal of preparing a document for the parliamentary energy
committee.  The contracts were valued at around 8 million dollars and
were given)) without a public tender--to Parsons, with Risk Engineering
doing much of the work, particularly on the environmental report.
A similar technical-economic study for Belene was conducted in 2000 by
Energoproekt, the former state institution for developing energy projects,
for 150,000 USD, as was an environmental impact study for Kozoloduy in 1999.
According to energy experts who worked on the former studies,
Parsons and Manchev's reports were not significantly different from the
earlier reports and were largely just "cut and pasted" from the old studies.
This should be no surprise since Manchev now owns the archives of Energoproekt,
according to XXXXXXXXXXXX.

Moreover, such reports in Europe and the U.S. cost no more than one million
dollars, according to XXXXXXXXXXXX.  As one critic of the deal said,
"you don't have to be an economist to realize that NEK could have gotten
a better price for the study."  In 2004, Evdokia Maneva, former environment minister,
tried to raise alarm bells about the deal and requested prosecutors investigate
the matter. Minister Kovachev maintained that the contracts were legal and fell
under Article 19 of the public procurement law, which states that research
and development projects can be negotiated directly.

¶14. (C) Bulgaria is the leading exporter of electricity in the Balkans,
supplying power to Kosovo, Albania, Serbia, Macedonia, Greece, and others.
In 2005 NEK (which still maintains a monopoly over electricity exports)
exported a then record 7.5 billion Kilowatts of power, making Bulgaria
the fourth largest electricity exporter in Europe (after France, the Czech
Republic and Poland).  However, 90 percent of these exports are not sold
by NEK but by Bulgarian and foreign intermediaries, who receive the electricity
from NEK at a low price and then resell it for a huge profit.

¶15. (C) XXXXXXXXXXXX, argues that the use of intermediaries is clearly
disadvantageous for the Bulgarian state.  According to XXXXXXXXXXXX,
NEK)) through this arrangement--loses 47 million USD of potential profit
a year.  Moreover, the firms to which NEK chooses to sell its electricity
are the same questionable ones.  In 2005, the main exporter of Bulgarian
electricity was the Serb company EFT, which through its sister company,
EFT Bulgaria, accounted for 70 percent of exports. Interestingly,
EFT Bulgaria is owned by Manchev's firm, "Energy Finances Group."
Tankosic is likewise active in electricity exports; firms linked to him
have exported power to Albania.  Similarly, Manchev is the main
intermediary responsible for the coal imports Bulgaria depends
on to fire its thermal plants in Ruse and Varna.

The "innovator" Manchev is also one of the protagonist in another cable listing the "bad apples" in the Bulgarian banking sector (i.e. banks "funneling money for known criminals in money laundering schemes and involved in connected lending", according to the US Ambassador in Sofia John Beyrle [06SOFIA1652].

--Corporate Commercial Bank.  This bank is also known as "The
Bank of Risk Engineering," the most important ) and
notorious - player in the energy field, participating in
almost all energy consultancy projects.  For its close ties
with Risk Engineering, owned by Bogomil Manchev, the bank is
expected to be strongly positioned in the financing of the
Belene project.  The state-owned National Electric Company,
which conducts non-transparent electricity sales through
middle-men such as Manchev and Kovachki, deposits its funds
there.  The main shareholder of the this bank is Bromak Ltd.,
owned by Tsvetan Vassilev, which in 2004 was involved in a
controversial privatization deal when it purchased the Sofia
state railway plant for far lower than market value.