Investigation reveals government agreements benefiting foreign company at the expense of Bulgarian state – Sofia City Prosecutor’s Office

Ministers in various governments over the years have made additional agreements with Dundee Precious for the Chelopech gold deposit that favor the concessionaire and that the state’s interest is not protected. This is the decision in the order of the Sofia City Prosecutor’s Office after the DANS investigation.

These additional contracts have allowed the foreign company to earn even more from the extraction and export of Bulgarian gold, paying a concession fee of only 1.5% of the value of the resources under mined land.

The keeper’s profit is impressive. The share of “Dundee Precious Metals Chelopech”, registered in Luxembourg, with the sole owner of “Dundee Precious Metals Chelopech” EAD, for 2022 is BGN 241.5 million, showing reference in the Commercial Register.

Who changed the contract and how

The concessional contract for the Chelopech investment was concluded for 30 years on 19.05.1999, with the donor – the Council of Ministers – represented by the Deputy Prime Minister and Minister of Industry Alexander Bozhkov.

Subsequently, on 19.09.2000, Supplementary Agreement No. 1 to the concession contract was concluded, signed by the Deputy Prime Minister and Minister of Economy Petar Zotev.

On 27.02.2004, additional agreement No. 2 to the concession contract was concluded, signed by the Deputy Prime Minister and Minister of Economy Lidiya Shuleva.

On 10.07.2008, Supplementary Agreement No. 3 to the concession contract was concluded, signed by the Minister of Economy and Energy, Petar Dimitrov.

On 28.12.2009, Supplementary Agreement No.

On August 11, 2015, Additional Agreement No. 5 to the concession contract was concluded, signed by the Minister of Energy, Temenuzka Petkova.

Sofia City Prosecutor’s Office: there is evidence of a crime

In the order of the Prosecutor’s Office of the City of Sofia from 2020, it is written: “When searching for the agreements of the discounted contract historically, it is confirmed that all additional agreements / 5 to total in number / to do in favor of the laser.

For example, with the changes in Supplementary Agreement No. changed to date -8 302 857 US dollars. The control board was suspended, as well as the lodger’s duty to provide access to the site for control. There is no guarantee of reliability of the data submitted by the lighter, and in addition, the discovery protocols do not contain information about the control actions and procedures carried out.

By Art. 16 a, para. 1 of Supplementary Agreement No. they were available”. At the same time, however, it is clear from the report of the Ministry of Energy that the increase in production from 2004 to 2010 was from 624,310 tons to 1,088,431 tons, which at least contradicts the justification for reduction wages of concessionaires.

By Additional Agreement No. 2, normal Art. 8, para. 1, item 5 of the original contract, through which the donor (Council of Ministers) was able to request an update of the technical project for the operation of the investment, as well as to change the concession fee. While when the contract was concluded in 1999, the price of gold was around US$300 per troy ounce, it is currently at US$1,769 per troy ounce. Therefore, through the elimination of Article 8, Paragraph 1, Item 5 of the original concession agreement, the state does not have the opportunity to protect its interest, and in practice there are significant lost benefits.

A major problem is created by deleting item 2 of Art. 7, paragraph 2 of the original contract, which stated that the ore would be processed on the territory of the country at economic efficiency or that these rights would be given to third parties, on the condition that they process the ore on the land of the country. After canceling this text of the contract, the state does not have the ability to control the amount of compression that is sent out of the country, how much gold, silver and copper it contains, does it contain any other precious metals.

In this way, the control is based only on data submitted by the subscriber, which cannot guarantee reliability and which shows formality in the implementation of the control actions. From the report on mined ore and concentration from the Chelopech deposit, it is clear that from 2000 to the present day, there is no data on the amount of drugs mined from the deposit. In the inspection protocol No. 1 of 07.06.2020, for example, it is noted that the gold content in the gravity concentration was around 50-55% in 2000, which means that the state was damage also by the density of gravity in form. lost profits.

From the copies of acts for the Uniform Administrative Document for the export of “Dundee Precious Metals Chelopech” EAD provided by the “Customs” Agency, it is clear that, in addition to copper and pyrite concentrate, consumables work- Shihta blade, which is a combination. of raw materials, also exported from the country. It is not clear what the exact contents of this mixture are, which will be taken out of the country by the lodger.

It should also be noted that, following an investigation by the Audit Chamber in 2013, a proposal was made to the Ministry of Energy to develop a financial and economic analysis of the flare and take measures to balance the economy balance between the benefits and the risks for the tenant. and the state. So far, this proposal has not been implemented, because after several calls there were no takers, according to the official opinion of the Ministry of Energy. These situations also raise doubts.

It can be summarized that all additional agreements to the first concession contract for the Chelopech field so far have been made in favor of the concessionaire and do not establish a defense of the state’s interest. As a result of the changes made, it is not possible to control either the content or the quantity of the concentrates and mixtures from the Chelopech deposit sent out of the country, since it is obvious that there is a tendency to increase output when the discount rate is reduced, for example. for the period from 2004. to 2010, as well as the inability to renew the discounted tax, although there has been a significant increase in the price of gold.

All these agreements were concluded over the years by the energy ministers in the individual types of the ministry structure over the years as a representation of the Council of Ministers. Commissioning research activities were carried out by several officials in the Ministry of Energy, but they did not ultimately make the policy decisions related to the additional agreements to the concession contract, and did not nothing to clarify the issues described above, after these changes. , the powers of the state authorities were taken away,” the prosecutor’s file reads.

“I believe that, as a result of the above, data is available to commit a crime under Article 219, Paragraph 4 in conjunction with Paragraph 3 in conjunction with Paragraph 1 in in conjunction with Article 26 Paragraph 1 of the Criminal Code of the People. which has entered into the specified additional contracts, as it is clear that the lack of sufficient care continues to this day, “read the order of the prosecutor Krasimir Kirilov. He sent the file to the Special Prosecutor’s Office, which was closed by the parliament in 2022. Before it was closed, however, it was ruled that the investigation be returned to the Sofia City Prosecutor’s Office. The reason: yes the 10-year statute of limitations for filing a case has expired, and there is no information that the ministers committed a crime with intent.

The statute of limitations only applies to Supplementary Agreement No. 5 of 2015, signed by Temenuzka Petkova. It includes the requirement of Art. 14, paragraph 1 of the Law on Underground Resources that the parties to the contract treat information and documents about the concession as confidential information, which, according to the prosecutor’s office, is not a crime.

In addition to the statute of limitations that has expired, the Office of the Special Prosecutor points out that the ministers were implementing the decision of a collective body – the Council of Ministers, and that “there is criminal liability in the Republic Personal Bulgaria, which is why it can not be sought. by members of the Council of Ministers when they make a general decision”.

However, according to the prosecutor Todor Denkov from the Office of the Special Prosecutor, there is evidence of “failure or violation of official duties by employees of the Department of Control at the Directorate of Natural Resources, Concessions and Control” of the Ministry of Energy. They carried out “formal control during the inspections carried out on the spot and on documents and did not recognize in good time the existing non-fulfillment of part of the obligations of the lodger under the contract” .

According to a report from the State Financial Audit from 2021, the laser did not fulfill its obligations under the investment program under the contract, which was subject to a penalty of 10% of the incomplete part of the investment amount for the relevant year. time However, these violations were not discovered by the investigating civil servants, who submitted reports over the years that everything was accomplished. Therefore, the Special Prosecutor’s Office returns the file to the City Prosecutor’s Office. Although there is evidence of wrongdoing, there is still no case and no guilty parties, and the abatement continues until 2030.

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