Bulgaria and the Panama Papers: Lost in investigation

Article published on April 21, 2016
Article published on April 21, 2016

The Panama Papers unveiled a world of universal greed where the law simply doesn’t apply to everyone. The leaked documents serve as yet more proof of what we have long known – many rich, privileged people may love to talk about solidarity, but they fail to demonstrate it when paying their taxes. Is it legal? Probably. Is it moral? Definitely not! Opinion piece.

11.5 million files revealing over 214,000 companies in 21 offshore zones from 204 countries. In short – the Panama Papers. At least 50 of these companies, 6 mediator firms, 16 owners and 78 shareholders originate from Bulgaria.

They relate to offshore registration in areas considered to be tax havens, such as Panama or the British Virgin Islands. A further 100 directors, attorneys and liquidators of such companies are named; some of them were foreign nationals residing in Bulgaria or having Bulgarian passports. The information is provided by newspaper 24 Chasa, Bulgarian partner of the US-based International Consortium of Investigative Journalists (ICIJ) who broke the news along with German paper Sueddeutsche Zeitung.

26 years later

In time it became clear that only one journalist from 24 Chasa has been granted access to the files – Aleksenia Dimitrova. Recently she publicly admitted that it would take her 26 years to go through all of them. This is probably one of the reasons why the paper has adopted a slow and according to many observers selective approach to publishing the identities of Bulgarians whose offshore companies are managed by Panama-based legal firm Mossack Fonseca. Basically – one name per day. So far there are no records implicating local politicians and we only know about a few well-known Bulgarian businessmen.

The Banev family, for example, along with several other recurring names, are reported as shareholders or representatives of companies in the Seychelles, Bahamas and Panama between 2005 and 2015. In a recent interview for 24 Chasa, Evgeniya Baneva stated that the Panama Papers were an international conspiracy aimed at distracting from the important problems of mankind: "If there really is some important information, related to politicians and drug traffickers and so on, that affects the whole world," Baneva said. "So far, however, I do not see information that would mean: 'Wow, something’s really been discovered here'."

It’s true that offshore companies are not illegal, but they are commonly used for tax evasion and money laundering. According to local analysts from the Institute for Market Economics, Bulgaria has low personal income and corporate tax rates. Therefore offshore companies are more likely to be used for hiding the origin of money than for tax evasion. Furthermore Bulgarian law still allows offshore companies to participate in public procurements, considered as one of the main corruption mechanisms due to the anonymity of owners.

"I know that I know nothing"

When asked about the scandal the Bulgarian minister of economy Bozhidar Lukarski made an assumption that "big names" from the country will be unveiled in the leaked files – not bothering to elaborate further. He was asked to comment on Bulgaria's biggest tobacco holding – Bulgartabac (previously state owned, though the current owner is unknown) – that suspended work on the 1st of April, leaving several hundred people jobless.

Provoked by questioning the minister explained that "the owner of Bulgartabac is well-known, but it's not known who owns the owner". He added that the real owner was based in an offshore zone, and that the name was not mentioned in the privatisation contract "for some reason". 

According to the "Panama Papers" the list of rich Bulgarians that have offshore companies include prominent figures from a number of big cities across the country. On a global scale ICIJ claims that 140 political figures from more than 50 countries are connected to offshore companies. We just have to wait 26 years for Mrs. Dimitrova to read and reveal the names of all those Bulgarians connected.

The aims of those behind the unprecedently leak remain unclear. It wasn’t long ago that there was a similar media attack against the British Virgin Islands. But it turns out that such negative campaigns almost never end with a permanent suspension of an offshore territory. What they achieve is a simple diversion of big capital to other "havens". So it remains to be seen what will be the next most tempting destination – DelawareNevada, or maybe Wyoming?

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This article is part of our East Side Stories project. Through fighting the most common clichés levelled at Southern and Eastern Europe, it aims to keep the European idea alive by raising awareness, creating dialogue, exchanging ideas and reporting beyond the mainstream media.