A wealthy Bulgarian businessman, whose political party was at the edge of winning a seat in the European Parliament, is accused of VAT fraud to the amount of €8 million, reported Dnevnik, the EURACTIV partner in Bulgaria.
Borislav Djambazov, chief prosecutor of the city of Sofia, announced on 18 August that Hristo Kovachki, a secretive businessman with a main interest in the energy sector, has been charged for tax evasion and unlawful VAT refunds for machinery, which took place between 2005 and 2008.
According to the Polish magazine Vprost, Kovachki is the second wealthiest man in Bulgaria, preceded by Vassil Bozhkov, a tycoon who made his first millions in the gambling business, before broadening his affairs. Bozhkov is reported to possess 1.3 billion dollars, while Kovachki’s fortune is estimated at $700 million.
Dnevnik quotes Kovachki’s spokesperson, who said his boss has been “cooperating with all relevant prosecuting authorities” during the last eight months.
This statement in fact discloses that Kovachki was under investigation while his recently established party ‘Lider’ ran for EU elections and obtained 5.7%, narrowly missing the 5,88% threshold for sending an MEP to Strasbourg. His party had then asked a vote recount, which was denied by the electoral commission.
Kovachki himself did not run for MEP. He reportedly said he does not have the desire and the ambitions to deal with politics and that he would retain his role as an expert and assistant to the party. Kovachki insists he wanted to continue focusing on his business, while commentators said he aims at using politics for lobbying purposes.
Kovachki and his ‘Lider’ party have also been accused of vote buying and of pressuring the workers of his coal mine at Bobov Dol to vote for him or else they would be fired. He has denied these charges.
Dnevnik warns that Kovachki may escape trial, by finding an arrangement with the prosecution and refunding the amounts appropriated, plus the interests. He remains free, having paid a bail of €150,000.
Tax fraud is a major economic challenge for the EU. In a 2006 memorandum, the Commission estimated the level of overall tax fraud at 2 to 2.5% of GDP, amountin as much as €200-250 billion. According to some sources, Bulgaria VAT tax fraud amounts to €300 million a year (EURACTIV 19/08/09).