/ world today news/ “Over 90 percent of international retail chains do not systematically publish their financial statements, as they are required by law, they refuse to make them public. And not only the reports – there are 6-7 documents that are legally published every year, by every single joint-stock company in France, in Germany, in Italy, everywhere in the world. In our country they don’t do it, they prefer to pay the fine of BGN 1,000-2,000. “The light is off” in the room, everything is done in the dark.”
Kancho Stoychev is one of the founders of the “Made in Bulgaria” Union and its deputy chairman. He commented on the relations between Bulgarian business and international trade chains – who lobbies for them and kills our production.
– Mr. Stoychev, how can we explain the statement that President Plevneliev is the main lobbyist of the large foreign trade chains? What is his interest if it is not about corruption, which sounds very startling?
– Corruption has many faces. It is not just about giving money from one person to another. There is something called political corruption, which is opaque, impure lobbying. Lobbying itself is not a dirty word as long as it is regulated and regulated. There are countries where this has been achieved. So in this case, I am far from accusing the Bulgarian president of monetary and financial corruption. No, it’s not about that. But I think that in all cases it is about political corruption. What can be the benefits for the parties, because in corruption, whatever it is, something is always exchanged. For example, relations with friendly circles are exchanged, orders of these circles are executed, and orders of friendly embassies are executed in a wrong way. Although embassies are not economic entities, those who do their jobs protect the interests of companies from their countries. And I am fully convinced that including Chancellor Merkel protects the interests of German companies – TIS, Metro, etc. So here it is more about political corruption for the purpose of political favors, but in any case it is a betrayal of Bulgarian interests, which is striking when it comes to the president of a republic, who should be the personification of the interests of this republic .
– At the press conference of the “Made in Bulgaria” Union, it became clear that there is a close analogy in the relations between the suppliers of the commercial chains and the customers of KTB. Could you explain these similarities?
– We are talking about an analogy between the chains and KTB in several directions. First, the financial resources: the large international chains make a turnover of over BGN 10 billion a year in Bulgaria, KTB was also around BGN 7-8 billion. So, with certain schemes we are talking about a very big risk, because the money is very big. Second, the fourth largest chain (Carrefour – Marinopoulos), which has a turnover of about half a billion, stopped paying suppliers, just as KTB stopped paying. What if this contagion spreads to the other chains with their turnover of more than 10 billion, won’t this be a blow greater than the one inflicted by KTB? The third analogy: CTB happened because there was no control – neither internal nor external. More precisely, the external control was corrupt and in some other way implemented, that is, the BNB and the financial control did not do their job, which no one can deny, after the bank went bankrupt without warning from the controlling institutions. In the case of the supermarkets of the international trade chains, we also have financial unrest. More than 90 percent of these chains do not systematically publish, as they are obliged by law, their financial statements, they refuse to make them public. And not only the reports – there are 6-7 documents that are legally published every year, by every single joint-stock company in France, in Germany, in Italy, everywhere in the world. In our country they don’t do it, they prefer to pay the fine of BGN 1000-2000. “The light is off” in the room, everything is done in the dark. They say because it was a trade secret! How is it that in Germany it is not a trade secret, but in Bulgaria it passes? And why do the Bulgarian producers and the Bulgarian trade chains publish everything by law, but they don’t? The following scheme, which was announced by the Bulgarian Prime Minister at a business forum two years ago – the Ministry of Finance presented data that there are violations in connection with the VAT Law, namely that known schemes are used by international trade chains to use hollow intermediary companies and tax avoidance or reduction accordingly. This is also a mente practice, as the KTB Mente bank turned out to be.
I am not saying that these are the practices of all retail chains in general. But when, among other things, racketeering against suppliers is used, it becomes very dangerous. For example, the practice of uncontrollably imposing in contracts the requirement that you provide the lowest price of your output to the chain and that you cannot sell to anyone below that price. This does not exist anywhere in the normal world and is called racketeering. The practice by which the chains built their material base is also a racket – a fee of BGN 2,000 per product, not per manufacturer. Because one product is nail polish, another is deodorant, hairspray, etc. We can imagine what amounts of entry fees are involved for a manufacturer in cosmetics. In order to start a supermarket, you need to put a minimum of 1000 product groups. And if you take BGN 2,000 each from these product groups, that’s 2 million. And then they say they invested.
– The defenders of the chains say that if they are expelled from Bulgaria, the customers will be harmed because of the low prices of the goods?
– I want to emphasize that the “Made in Bulgaria” Union is not against retail chains. They have their role, including a positive one, for the modernization of trade in Bulgaria. But the Union is categorically against Bulgaria being the last and only country in the European Union, where relations are not regulated and where all these unfair practices are possible, which are described very precisely in the European Green Book on producer-trader relations, and for which regulations is also being fought by the “Made in Bulgaria” Union.
– How did these chains get the relevant permits to enter Bulgaria and who was supposed to regulate these relations?
– The issue is not in stepping, but in the lack of strategy on the part of the Bulgarian state. For example, I can say how it is in Poland. There, the colleagues who protect the Polish interest are much stronger, as well as their state is stronger and more meaningful. In Poland, there are no retail chains on the inner side of the ring roads in the big cities. It is the same in France. If you go to Paris it is very difficult to see a supermarket in the city center. Because every country has an interest in protecting its small and medium-sized businesses – small grocers, small butchers, etc. – it’s a family business, it’s the backbone of every society. We have a broken yard and I will not be surprised if they turn Sofia University into a supermarket. And it almost happens if we look at the underpass in front of it. This is a policy of killing Bulgarian business by the Bulgarian state itself, due to the fact that it is unregulated. I will again quote a rule from France – you have the right to sell fresh goods if the goods originate from a place no more than 90 km from Paris. If we look at the map, we will see that exactly 100 km away is the Belgian border, that is, you can sell goods from Belgium, but you cannot write that they are fresh. This is an elegant protectionism, protection of domestic production. Everywhere in the developed European countries to which we aspire, it is so.
The problem in our country is that the so-called free negotiation, according to some Bulgarian economists and business organizations, was “the meaning of the market economy”, which is the greatest nonsense. A market economy can develop only on the basis of competition. And the rules of competition are the most important thing that a country has to protect. Because when these rules are not protected, we end up with monopolies. Therefore, the entire modern world, which develops a market economy, has extremely powerful antitrust legislation. It is monopoly that ruins and impoverishes the population. I repeat again, we are poor in Bulgaria because we live in the country of monopolies. Why don’t these international chains publish their reports? Well, because it will be seen that there is no profit tax in Bulgaria.
– However, since they are obliged by law, and they can afford to pay fines and drive it the same way, we should talk about the sanctions as protection of the law, as you say?
– Naturally. With a turnover of half a billion, paying a fine of BGN 2,000 is ridiculous. As I mentioned, the scheme is not complicated – through internal related companies, profit tax can be exported to the respective country of the parent company by ordering advertising materials, marketing, I don’t know what. Without regulation it is so.
– That is, the investment becomes meaningless?
– Absolutely. However, it is very good for them, because they are in excess of profit in this small and poorest Bulgaria in the European Union. I could list ten of the largest retail chains in the world and ask what they are looking for in this poor country. Well, they obviously have an interest in excess profit. It’s just that the yard is broken up. Why do they lobby through their embassies, through their prime ministers and presidents? Because of this – excess profit. Why are they preventing an amendment to the Competition Protection Act from being adopted? Because they want a monopoly, that’s the simple answer.
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