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Bulgaria subsidises its own political corruption

Delyan Peevski [L] and his party boss Mustafa Karadaya [R] proposed parties to be sponsored by business. [Dnevnik]

By Krassen Nikolov

Could the country the political elite of which is the most corrupt in the EU and is above the law, become even more corrupt? It turns out that it is possible. In the last few weeks, the Bulgarian parliament has been discussing a change in the Political Parties Act, which could lead to the complete abolition of parties’ subsidies from the state budget. The party GERB and the Turkish minority party DPS agreed that the business will support the parties instead with “transparent donations”. The change in law is advertised to the public as introducing the “American model” of party funding. This would be a complete change of the current model, given that the law now prohibits companies and religious organisations from financing politicians.

The idea is relatively simple, but if applied to the Bulgarian conditions it would not end up well. The business would finance best the party that promises the most and make commitments to it. The American model includes the legalisation of lobbyism.

This model has been working for decades in the US, but it has caused many problems there too. Some Americans criticise this model, claiming that it turns political leaders into corporate players.

But there is at least one huge difference between Bulgaria and the US – there is no rule of law in the Balkan state.

Bulgaria is still under the CVM monitoring of the European Commission because there have been no convictions for high-level corruption for the past 20 years. The country has no democratic traditions, and no system like the US system of checks and balances between the authorities that guarantee that the power would not be abused. There is no effective prosecutor’s office that can track the funding of the parties. All this would lead to total impunity for even greater corruption.

How come?

In 2016, the majority of voters supported a referendum on a proposal to reduce the state subsidy for the parties in Bulgaria from €5.5 to €0.5 (per valid vote obtained in parliamentary elections). The referendum was organized by the popular TV star Slavi Trifonov. The result of the referendum was not respected by the state because of the insufficient turnout that did not make the vote binding. The parliament refused to consider the result of the popular vote with the argument that the abolition of state subsidies would increase political corruption.

The people voted emotionally because they were highly disappointed with the political elite. The Bulgarians are convinced that the high-level corruption is grand. And there comes the logical question – why should they pay twice – once through corruption and second time through budget subsidies.

In May 2019 the question was raised again by Trifonov. He revealed that the parties actually received an illegally high subsidy of €6.6 per vote instead of €5.5. The illegal funding system has existed for the last 15 years. In this situation, Prime Minister Boyko Borissov tried to put an end to the scandal by proposing the parties’subsidy to be reduced to €0.5 per vote obtained.

Why now?

Borissov’s proposal is a demonstration of populism. It was done at a time when the prime minister began restructuring his GERB party. He got rid of his right hand Tzvetan Tzvetanov, who was responsible for the operational leadership of GERB and was organising the election campaigns. Now Borissov is determined to organize the party around himself. To do this he needs good results in the upcoming local elections. So it seems that he is ready to take actions that he does not believe in.

“We had enough of populism. Finally, it will be like in the Czech Republic, the billionaires and oligarchs will rule. The parties will become the property of businessmen. But I will not tolerate GERB being criticised (for the subsidies)”, the prime minister said after proposing a reduction of the subsidies to €0.5 per vote.

Two weeks later the famous DPS MP, businessman and media mogul Delyan Peevsky came up with the idea of ​​the “American model”. He explained that parties can not be funded with such a small subsidy and therefore it is not needed at all. He proposed “transparent” business financing model instead of the insufficient state financing.  Only a week later it became clear that GERB would probably support this idea.

Blow to the opposition

Changing the party’s funding model won’t particularly affect the parties in power. They have enough illegitimate ways of obtaining financing. The three main political parties – GERB, BSP and DPS – also have significant savings that will help them survive without donations over the next few years. Borissov’s party has nearly €12 million in deposits.

DPS can be supported by its own businessmen. Its honorable leader Ahmed Dogan recently acquired for the sum of €1,800 (no-error) a power plant the assets of which are valued at €43 million. Dogan will build a huge harbor near Varna. The founder of the DPS has long admitted that his party has “circles of companies”. Delyan Peevski is also a multimillionaire.

The biggest nationalist party – VMRO, has many properties that ensure its financial stability. Last year VMRO was also involved in a scandal of illegal sale of documents that provide Bulgarian citizenship. The Party “Volya” functions tanks to the fortune of its leader – the businessman Veselin Mareshki.

In this situation, the change in the party’s funding model strikes only the parties that are not in the parliament.

BSP claims that the idea of ​​the ruling party is to crush the opposition before the local elections. The socialist party predicts that the state subsidy model would be restored after the elections. “The ruling parties in Bulgaria do not need a subsidy because they are financed directly by the government and they do not even hide it,” said the country’s president Rumen Radev.

How business finances parties

“Bulgaria without censorship”, the party of former MEP Nikolay Barekov, is a striking example of a corporate political project. The Corporate Commercial Bank had subsidised Barekov’s party with nearly €1.5 million before the European Parliament elections in 2014. This was brought to light by a witness during the hearing of the bank bankruptcy penal case.

The money was given to people close to Barekov. First it was contained in envelopes, and finally – in  bags, reveals the witness Bisser Lazov. He was an associate to the majority owner of the bank Tzvetan Vassilev. Barekov himself financed his own political project with nearly €240,000. He received much of this money while managing TV7 – a media supported by Tzvetan Vassilev.

Three years ago, the prosecution started a criminal investigation of the Barekov’s party financing. The party received some big donations. And the donors that filled in the declarations of origin of their money had suspiciously similar handwriting. The investigation did not lead to anything.

This year, the chairman of GERB parliamentary group Tzvetan Tzvetanov had to leave politics because of suspicions of corruption in a deal with the construction company “Arteks”. While he was leading the GERB group in the National Assembly, the MPs changed the law so that the company was allowed to continue building a skyscraper in Sofia. Then Tzvetanov bought a luxurious penthouse, built by “Arteks” at price far below the market one.

The changes to the law on party financing discussed in Sofia can only be compared with the notorious changes in the Romanian Penal Code. In 2017, the Social Democratic Party proposed decriminalisation of corruption if the damages are less than €44,000. At that time, the leader of the party, Liviu Dragnea, was accused in a €24,000 corruption case. Thousands of Romanians came out to protest and managed to block the changes. The Social Democrats have lost the European elections, and Dragnea has been sentenced for three years. Such civil activity seems impossible in Bulgaria for now.

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