Former minister sends letter with instruction on how to sell EVN
According to a witness’s testimony, the deal should not have gone through the stock exchangeMonitor News Agency
In 2011 former Minister of Economy, Energy and Tourism Traycho Traykov sent a letter to the Privatisation and Post-Privatisation Control Agency (PPCA), instructing that the state’s minority stakes in electricity distribution companies should be put for sale on the stock exchange.
This was revealed in a witness testimony before the Specialised Criminal Court during a hearing of the case looking into the privatisation of the remaining state-owned shares in EVN. The defendants are oligarch Ivo Prokopiev; the former ministers of finance and energy Simeon Djankov and Traycho Traykov, respectively; and three individuals connected to Prokopiev’s company Bulbrokers – managing director Radoslav Rachev and shareholders Petar Vassilev and Lyubomir Evstatiev.
The deal under scrutiny involved the sale of the remaining 33% state-owned stake in EVN Bulgaria Electricity Distribution AD on the Bulgarian Stock Exchange in 2011 at a detrimentally low price that the Prosecutor’s Office estimates defrauded the coffers of nearly BGN 21m. Traykov’s letter had the power of an order, according to the witness Antoaneta Atanasova, who still serves as head of the Deals Directorate of the PPCA.
“The public offering method was predetermined. The agency had freedom to choose the platform only,” Atanasova said. The energy supplier E.ON was first in line to have its state-owned minority stake sold, but the company asked for the move to be pushed back, as it was in the process of selling the majority stake at the time. So the agency started preparing the sale of the EVN shares.
In the courtroom, the witness confirmed the statements she gave to the authorities in the pretrial proceedings during a questioning on 20 May 2015. “Minister Traykov instructed that the sale be conducted via a public offering on the stock exchange. We did not have the power to choose,” she said then. On the witness stand she added: “We defer to the positions of the ministers. This is our practice – we do as the minister says.” Traykov’s letter of 14 July 2011, filed under outgoing number №12-00-1170 and addressed to the PPCA director, was immediately referred to the competent structures and actions were taken to execute the instruction.
The Specialised Criminal Court also heard the testimony of witness Petya Aleksandrova, which is the incumbent executive director of the PPCA and in 2011 was the head of the Legal Directorate there. Aleksandrova also confirmed the existence of Traykov’s 2011 letter to the agency, in which the minister says he approves the privatisation of the electricity distribution companies and recommends that the sale be conducted via a public offering on the stock exchange.
The court also heard the testimony of witness Petar Petrov, who is currently deputy executive director of the PPCA and in 2011 was a member of its Supervisory Board as a representative of the Ataka political party. “According to the provisions of a National Assembly-adopted strategy for the privatisation of the electricity distribution companies, the state has to allow itself the opportunity to sell its remaining stakes at the highest possible price. According to the Supreme Court of Cassation, once a strategy is approved with a decision of the National Assembly it has the power of a law. It is my personal view that conducting the sale of the remaining stakes via the regulated market makes it impossible to get the highest price. Once the procedure is taken over by the deal’s investment broker on the stock exchange, the deal can no longer be influenced, and that is why I voted ‘against’,” Petrov told the court.
The witness testimonies also confirmed the suspicion of another instance of exerted pressure in the sale of EVN shares – by the finance minister at the time Simeon Djankov. Before the court, Petya Aleksandrova told about “a tense meeting” at the Ministry of Finance she attended to discuss the criteria for selecting an investment broker for the sale of the EVN shares.
“At the beginning of 2011, Minister Djankov’s advisor Doroteya Pandova summoned the PPCA director Emil Karanikolov to a meeting in the ministry, to which he took me with him. We discussed the specific criteria to be used in selecting an investment broker and their ranking of importance. What caused tension in the room was the matter of whether there should be subjective criteria or not. We wanted strictly objective ones,” Aleksandrova told the court. However, Pandova had something else in mind. Aleksandrova also explained that, for example, a subjective criterion is when the wording only says that experience is required; an objective one would specify the number of deals overseen by the broker and its turnover.