US imposes penalties on Bulgarian government officials for "extensive involvement in corruption"

Five current or former Bulgarian government officials have been sanctioned for involvement in corruption by the United States.

The Office of Foreign Assets Control (OFAC) of the US Department of the Treasury sanctioned the following individuals "for their extensive involvement in corruption in Bulgaria":

- Rumen Stoyanov Ovcharov (Ovcharov),

- Aleksandar Hristov Nikolov (Nikolov),

- Ivan Kirov Genov (Genov),

- Nikolay Simeonov Malinov (Malinov), and

- Vladislav Ivanov Goranov (Goranov)

In addition, OFAC blacklisted four entities owned or controlled by Malinov and one entity owned or controlled by Goranov.

The designations are made pursuant to Executive Order (E.O.) 13818, which builds on and executes the Global Magnitsky Human Rights Accountability Act and targets offenders of serious human rights abuse and corruption around the world.

Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson stated, "The United States supports our NATO ally Bulgaria in its fight against both entrenched corruption and Russian influence, which undermine democratic institutions."

"The behavior exposed today spans political parties and administrations, highlighting the urgent need to dismantle the networks that have for years perpetuated illicit activities, especially in the energy sector. Corruption robs the Bulgarian people of hundreds of millions of dollars and hinders investment and economic growth in the country."

The action taken today expands upon previous OFAC sanctions against Delyan Peevski, Vassil Bojkov, Ilko Zhelyazkov, and connected businesses.

The United Kingdom designated Peevski, Bojkov, and Zhelyazkov under the UK Global Anti-Corruption Sanctions Regime to reinforce these efforts. These steps underscore the sustained commitment of the U.S. government to multilateral partnership and to holding accountable those responsible for perpetuating corruption in Bulgaria.

In accordance with Section 7031(c) of the annual Department of State, Foreign Operations, and Related Programs Appropriations Act, Ovcharov, Nikolov, Goranov, and their immediate families are now subject to visa limitations imposed by the Department of State.

In accordance with section 7031(c), foreign officials and their immediate family members are inadmissible to the United States if the Secretary of State possesses credible evidence that they have engaged in serious corruption or gross violations of human rights. 

OFAC stated that the people named today have cumulatively held public service for many years and across multiple administrations and political backgrounds. "Their diverse profiles and longstanding prominence in Bulgarian politics illustrate the extent to which corruption has become entrenched across ministries, parties, and state-owned industries and demonstrate the critical need for the political will to implement rule of law reform and to fight corruption"

Rumen Stoyanov Ovcharov is a member of the Bulgarian Socialist Party (BSP) National Council. Ovcharov was also the energy minister in the late 1990s and again in the middle of the 2000s.

Aleksandar Hristov Nikolov is a former CEO and deputy director of Kozloduy Nuclear Power Plant (KNPP), the only nuclear power plant in Bulgaria controlled by the government through Bulgarian Energy Holding, where he served in a variety of roles for 30 years.

Ivan Kirov Genov was a member of the Bulgarian Parliament for the BSP from 2017 to 2019. He is also a former CEO of KNPP.

Ovcharov engaged in corrupt energy contracts with Russian energy corporations on multiple occasions, accepting bribes and other kickbacks in exchange for fixed-price contracts for Russian gas and nuclear fuel and support contracts at KNPP. Since serving as Energy Minister, Ovcharov has received more than five million euros in offshore bank accounts.

Russian-based nuclear fuel contracts brokered by Ovcharov's intermediaries resulted in tens of millions of dollars in illicit earnings for participants. Ovcharov further profited from the increased energy costs in Bulgaria by inserting superfluous middlemen into the electrical market. For instance, despite the fact that KNPP had a contract to sell electricity directly to the Bulgarian National Electric Company (NEK), Ovcharov coordinated with Nikolov to obtain contracts to purchase electricity from KNPP, which they then resold to NEK for a profit at the expense of the Bulgarian government and people.

Ovcharov, Nikolov, and Genov organized personal commissions by corruptly diverting KNPP service contracts to their own economic interests, so bypassing the scrutiny of Bulgarian officials. The business relationships that resulted from these corrupt contracts lasted until at least 2020, when enterprises promoted by Ovcharov won a service contract with KNPP and gave him a portion of the proceeds.

In exchange for KNPP contract guarantees, Nikolov and Genov agreed to accept five million Bulgarian leva in bribes from foreign nuclear power executives. Even after leaving his post as Executive Director of KNPP, Genov solicited payments of three million Bulgarian leva from Bulgarian business executives in order to enable the reconsideration of KNPP contract awards in their favor.

The OFAC has designated Ovcharov, Nikolov, and Genov in accordance with E.O. 13818 for being foreign persons who are current or former government officials, or persons acting for or on behalf of such officials, who have directly or indirectly engaged in corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, or bribery.

Former BSP parliamentarian Nikolay Simeonov Malinov now heads the pro-Russian lobbying organization Russophiles National Movement. He is also the founder and chairman of the political party Russophiles for the Revival of the Fatherland, which pushes for deeper relations with Russia and is the political extension of the Russophiles National Movement.

After being arrested, charged with espionage, and barred from international travel in September 2019 for spying for Russian-backed interests, Malinov bribed a Bulgarian judge to allow him to travel to Russia to personally receive the Friendship Medal from Russian President Vladimir Putin, along with a 2.5 million ruble award.

OFAC has designated Malinov in accordance with E.O. 13818 for being a foreign person who is a current or former government official, or a person acting for or on behalf of such an official, who has directly or indirectly engaged in corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, or bribery.

In accordance with Executive Order 13224, OFAC is also designating four organizations: Inter Trade 2021 EOOD, MS Konsult 2016 EOOD, Russophiles National Movement, and Russophiles for the Revival of the Fatherland Political Party. 13818 for being directly or indirectly owned or controlled by Malinov.

From November 2014 to January 2017 and again from May 2017 until July 2020, Vladislav Ivanov Goranov served as a Bulgarian lawmaker and Minister of Finance in the second and third administrations led by the Citizens for European Development of Bulgaria (GERB) political party. Additionally, Goranov has ties to the OFAC-designated oligarch and former Bulgarian lawmaker Delyan Peevski. Goranov utilized his position as Minister of Finance to promote the bribery of Bulgarian authorities and to rob the Bulgarian government of tax revenues to the benefit of Bulgarian oligarchs.

As Minister of Finance, Goranov took part in a corruption operation that resulted in the payment of tens of millions of euros to Bulgarian officials in exchange for favorable legislation for gaming sector interests.

For the advantage of Bulgarian oligarch interests, legal challenges to tax assessments following additional revisions to corrupt laws revealed a five-year loss of about 600 million Bulgarian leva (roughly $300 million) from tax authorities.

OFAC has designated Goranov in accordance with E.O. 13818 for being a foreign person who is a current or former government official, or a person acting for or on behalf of such an official, who has directly or indirectly engaged in corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, or bribery.

In accordance with E.O., OFAC additionally designates Trilemma Consulting Ltd EOOD, a sole proprietorship consulting firm. 13818 for being directly or indirectly owned or managed by Goranov.

As a result of today's action, all property and property interests of the above-described designated persons located in the United States or in the ownership or control of U.S. persons must be reported to OFAC.

Additionally, any entities held directly or indirectly, individually or collectively, by one or more blocked persons for at least 50 percent are also blocked. Unless allowed by a general or special license issued by OFAC, or exempt, OFAC's regulations prohibit all transactions involving property or interests in property of designated or otherwise blocked people by U.S. persons or within (or transiting) the United States.

Furthermore, financial institutions and other individuals that participate in particular transactions or activities with sanctioned businesses and individuals may be subject to sanctions or enforcement action.

The restrictions include any donation or provision of monies, commodities, or services by, to, or for the benefit of a designated person, as well as the receipt of such contribution or provision.

The Executive Order builds upon the Global Magnitsky Human Rights Accountability Act. On December 20, 2017, Executive Order 13818 was issued in recognition of the fact that the prevalence of human rights violations and corruption originating in whole or in substantial part outside the United States had reached a level of scope and gravity that threatens the stability of international political and economic systems.

Abuse of human rights and corruption undermine the values that form the essential foundation of stable, secure, and functional societies; have devastating effects on individuals; weaken democratic institutions; diminish the rule of law; perpetuate violent conflicts; facilitate the activities of dangerous individuals; and destabilize economic markets.

The United States seeks to impose tangible and significant consequences on people who commit grave violations of human rights or participate in corruption, as well as to protect its financial system against abuse by such individuals.

The power and integrity of OFAC sanctions rely not only from OFAC's ability to designate and add individuals to the Specially Designated Nationals and Blocked Persons List (SDN List), but also from OFAC's readiness to remove individuals in accordance with the law. The purpose of sanctions is not punishment, but rather to induce a positive change in conduct.

By fLEXI tEAM