The head of an audit agency certified his wife’s EU project. But there was no conflict of interest

The Executive Agency “Certification Audit of European Agricultural Funds” was established in 2016. This body is the certifying body for the financial statements of the Paying Agency handling funds from the European Agricultural Guarantee Fund and the European Agricultural Fund for Rural Development (EAFRD). The Agency is also the audit authority for the European Maritime and Fisheries Fund.

Director of the Executive Agency is Lachezar Spasov, who is presented as part of Tomislav Donchev’s team, but is also considered close to the MRF. He is in a de facto cohabitation with Ralitsa Evtimova, with whom he has two minor children. Until recently Evtimova was the managing director and sole owner ofAR&G Helty MarketLtd. On 31 May this year the company was transferred to Sonya Blazheva Spasova, Spasov’s mother. “R&G Helty Market Ltd. is a commercial company, which implements projects financed by the European Agricultural Funds under Measure 6.1.

Lachezar Spasov told bird.bg that there is indeed such a project – to breed bee colonies. The cost of the project was 25 000 euro, which was paid in two instalments. In Spasov’s words, however, the project was approved before he headed the Executive Agency “Certification audit of EU agricultural funds”. The Director confirmed that his agency was the body that should have certified the reports of the RDP project verifications, but argued that there would have been a conflict of interest if he had been in the agency at the time of approval, which was months earlier.

“Don’t think it’s some complicated project, I told you, 130 bee colonies are applied for. In 3 years you have to make 190 of them. There are no complicated projects or investments to be made here,” Spasov said.

Spasov also said that the project had been audited, but had been given to an external auditing firm so that the audit would not be carried out by his colleagues. A small but significant need is that Spasov, as director of the executive agency, has entrusted the work to the external auditors, but he has accepted the work they have done. The man confirmed that in his capacity as a director he had signed (certified) the report which included the data from the R&G Helty Market inspection.

According to Spasov, there is nothing wrong in the fact that he certified the results of the inspection of a company that was managed by the woman with whom he lives on a married basis. ” I signed the report or the cover letter, I should look it up, it was a long time ago. In this case there were alerts and checks by the KPKONPI and the prosecutor’s office, I have gone, I have explained, I have written. I think they finally wrapped it up that there was no conflict of interest.”

The conclusion of the competent authorities is disturbing to say the least, but it is not a precedent. For Vladi Goranov, for example, it also turned out that there is no conflict of interest. In such cases, it is common practice for reports concerning the activities of close relatives of the heads of audit and certification bodies to be certified by their deputies. In this case, however, this was not done. Spasov certified the inspection report on an entity project led by his life companion. The only one who could exercise control over him, whether he has done his job conscientiously, is only the Minister of Agriculture.

According to Spasov, however, the doubts are unnecessary “Do not you think that against the background of the billions we are checking I will put my head in the bag for 25 000 euros? The man stressed that before the pandemic the Bulgarian auditors were in the top 4 of the EC.

“Nobody calls us to ask, how come you are the best in the EU, everybody is looking for some sensations, for 25 000 euro you understand, I am a professional, one of the best in Bulgaria in this field.”

However, it is very questionable to what extent the situation is acceptable. Hypothetically, if there were any irregularities in Spasov’s wife’s project, the inspectors would hardly find them, because then her husband would have to accept their audit reports and here it does not matter whether the inspectors are employees of the SFA, the Ministry of Agriculture or an external company.

The situation in which Spasov finds himself, as a director, is very reminiscent of the one in which Yanaki Chervenyakov was exposed, whose mother-in-law was generously financed by the SFA to build a guest house while he was a high-ranking official in the fund. But in this situation Spasov is not the authority that approves the financing of the project, but verifies the reports of the inspections that have not found any irregularities.

The woman next to Spasov – Ralitsa Petrova Evtimova, was also the managing director and sole owner of the capital of AFC Consulting Ltd. In 2016, her father Petar Evtimov took over her rights. The scope of activity of AFC Consulting Ltd. includes consulting services, services for preparation, management, implementation and audit of projects, preparation of documentation for the conduct of procedures for the selection of contractors, conduct of procedures for the selection of contractors, all of which are directly related to the activities of the Executive Agency managed by Lachezar Spasov.

The active activity developed by Ralitsa Evtimova is also expressed in the management of a company called “Beekeeping Center Iskarsko Defile” Ltd., which is no longer active. For 2019 and 2020, R&G Helti Market receives subsidies for organic beekeeping.

When checking Lachezar Spasov’s conflict of interest declarations, we do not find that he has declared any income from his partner’s activities. The senior official commented that he used the option to hide Evtimova’s identity and if he received permission from the KPKONPI he would send us his declaration “and you will see that everything is there”. At this stage, our team does not find any income from the activities of Spasov’s partner registered in his tax return.

Ralitsa Evtimova currently works as an employee of Toro Groups. Our team attempted to contact her through the company’s phone number, but was told that she was not in the office. We left a contact number for feedback but none followed. By contract dated 19/06/2020, the MoEW entrusted Toro Groups to provide technical and expert staff for the needs of the Operational Programme “Environment”.

Bird.bg’s registry shows that Toro Groups has won almost 3.5 million through 2 public procurement contracts for the provision of technical and expert staff for the management and implementation of the OPHRD and to support the activities of the Ministry of Labour and Social Policy. The company is also a partner in the implementation of 6 European projects, including a project of the Ministry of Environmental Protection, under which it provides external expert and technical assistance in support of the management and implementation of the CFSP 2014-2020.

According to Bird.bg’s sources, Ralitsa Evtimova works for the needs of the CFSP, secured as an expert by Toro Groups. Coincidentally or not, lately Lachezar Spasov has been conducting anti-fraud training for MOEW employees. Spasov denied that these trainings were organized by Toro Groups.

“We were invited by the MoEW, my colleague and I, who have led it, are among the best experts in Bulgaria. We have international certifications with an American certification company, we have international experience in this field. My colleague and I have been invited to train the Macedonian Audit Authority”. The auditors were hired by the Association of Certified Fraud Examiners for the training. They had civil contracts with the association, which in turn had relations with the Ministry of Environment. Thus, the eco-ministry turns out to be an institution that needs the expertise of both Ralitsa Evtimova and Lachezar Spasov.

EU funds as an inexhaustible source of scandals

The absorption of EU funds and the audit of beneficiaries in our country is an inexhaustible source of scandals. At the beginning of the mandate of the caretaker government, the hot topic is Valeria Kalcheva – Director of the Directorate General “CFSP” and her mother. It was “submitted” to the Bulgarian and European Prosecutor’s Office for investigation by former Minister of Ecology Emil Dimitrov. Thus, the absorption of money under the Operational Programme “Environment” turned out to be the first case to be checked by the European Public Prosecutor’s Office.

The auditing of projects that have been funded with EU money in recent years has a reputation as a tool for “amnesty” of political partners or to pressure opponents. Back in 2018, the former Auditor General of the Executive Agency for the Audit of EU Funds (EAECF) Daniela Lazova told of flawed practices and “loopholes” in the system for auditing the spending of EU funds. Among the examples she gives are a fish pond without fish in the Northwest and a wind turbine cut for scrap, which is owned by a company associated with NFSB MP Yordan Apostolov.

Lazova’s attempts to enforce the rules and stop the misuse of European taxpayers’ money failed and she was fired. The auditor alarms that the audit agency has established a vicious system of career and material incentives for obedient employees, who do not sanction projects related to the government, and the inconvenient are removed – she says. In her words, Dobrinka Mihailova, whose family is sanctified as a large depositor in the CCB, started replacing the composition of the Agency because at the beginning of the first term of GERB some of the auditors in the EAEC showed that they would not accept to be pressured. They have formed a core of people who do not agree to unilaterally set rules for their LTC, deadlines for work and ignore their opinion.

To date, Mihailova is the Director of the Regional Policy Audit Directorate. In 2015, during a caretaker government, the management contract as executive director of the EA “Audit of EU funds” was terminated and Mihailova became an adviser to Tomislav Donchev. With the return of GERB as the ruling party, the agency was restructured. The Audit Directorate is divided into 3 directorates. Mihaylova returned to the agency in 2018 as director of the directorate.

Over the years, the ministries of Lachezar Spasov and Dobrinka Mihaylova have consistently failed to identify any irregularities in the distribution and absorption of agricultural funds, even after videos of Minister Taneva were published in which she admitted irregularities. Subsequently, irregularities with the “mother-in-law houses” and non-compliance with the evaluation criteria for projects related to organic farming, among others, were detected. Regarding the guesthouses, Spasov said that they were the responsibility of an external auditing firm, and as for the coupled support, there were no areas found in recent years without plantations to receive a subsidy. However, our team has investigated and identified numerous reports of abuse of projects funded under the RDP, both for subsidies to non-existent plantations and for “virtual” animals.

***

Разследващата журналистика е разузнаването на гражданите. BIRD се финансира от дарения. Ние не публикуваме реклами. Не получаваме държавни субсидии. Не разчитаме на грантове. Финансирането чрез малки дарения от читатели е гаранция за нашата независимост. Включете се, за да продължим да разкриваме злоупотреби и да държим отговорни властимащите. Използваме Вашите пари за хонорари на журналистите, командировки, изграждане и поддръжка на нашите информационни системи, такси за фирмени и имотни регистри у нас и по света, придобиване на техника и специално оборудване, осигуряване на нашата безопасност и други важни работни мисии. Важно: Ако дарявате всеки месец това ще ни даде възможност да планираме и организираме нашата работа. Благодарим Ви! Нас ни има, защото Вас Ви има!

This post is also available in: Български (Bulgarian)