Trying to corrupt a tarnished image

Bulgaria is fighting its reputation as a place where anything goes in terms of crime. Noel Baker reports from Sofia.

THE office block selected by Phil Flynn, Cork moneylender Ted Cunningham and others as their business base during their January stay in Sofia stands pristine against the bright sky.

A relatively new structure, growing from its wide base to a narrow, penthouse peak in the city's Lozenetz district, it towers over most other buildings in the area and conveniently has two banks set into the ground floor.

The doors of each has a sticker, common in Bulgaria, featuring a handgun with a red 'x' marked through it.

That Bulgaria has a bad reputation internationally is something of an understatement. On first appearance, Sofia is a place of unrelenting grey, of stark steel buildings and tower block hell. With the collapse of a previous property scheme last year, where up to 200 Irish people lost up to €50,000, Bulgaria was marked down as a 'no no'. Then there is its reputation as a place where anything goes in terms of crime fiscal or otherwise.

At the London-based Complinet Agency, which provides compliance services to the international financial services industry, it is widely felt that in Bulgaria, "due diligence is at a minimum".

Complinet's money laundering editor Chris Hamblin said it was possible the IRA had long-standing contacts in Bulgaria. "If the IRA visited Bulgaria after the (Northern Ireland) robbery, you can bet your bottom dollar that it was to launder money," he said.

He said Bulgaria has been involved in drug-trafficking since communist times and that the IRA's interest in drugs would overlap with this.

Bulgaria is "one of the most corrupt countries in the world" and any successful operation to combat a money laundering enterprise originating in Ireland would depend on the political will of those in the Eastern European state, said Mr Hamblin.

But the Bulgarian Government prides itself on the success of its war against drug-trafficking. According to a government source, Bulgarian border officials stop more heroin entering the country than any country in the EU, and therefore, in Europe.

Since 1996 the rate of drug seizures at previously vulnerable border points in the east of the country has grown exponentially to the stage where it can boast an enviable record of drug captures compared to the countries it will soon join in the EU.

Bulgarians are trenchant in their view that their country can no longer be perceived as a lawless, volatile state where every citizen is on the take.

Government officials point out that far from being the wild west of Europe, Bulgaria has already signed up provisionally to all the required rules and regulations needed to join the EU.

At a press conference yesterday at the Ministry of the Interior, a Sofia journalist said that in the preceding days he had spoken with a government official who had been "most annoyed" at the current situation. "He used coarse language," he said. It seems that some in the government are piqued at what they perceive as a slur against their country for a situation not of their own making.

Instead, according to a top government official, any potential transgression relating to money laundering in Bulgaria would have first been brought into the light by a bank, solicitor, or another financial institution, simply through suspicion being aroused by the transfer of money.

The network of government agencies might seem, on paper, like an over-elaborate family tree, but in effect it means that each level of Government maintains "suspect indices". This means that from the Ministry of Justice down to the various wings of authority charged with keeping a hold on illegal activity, notes are taken relating to any activity deemed suspicious or open to abuse.

Whether it is the National Police Service, the NSCOC, the National Border Police Service or even the Gendarmerie, the various agencies are too many and too vigilant to allow for transgression of the laws.

The NSCOC, led by General Petkov, typically leads the way and, even then, that body has a number of subdivisions dealing with drugs, contraband and economic crime, to name a few.

In what Bulgarians point to as a prime example of joined-up-thinking, other wings of the state are tipped off by an agency which might not by itself have the power to deal with the problem at hand.

The Ministry of Finance can also call on a clutch of powerful state agencies, which monitor the flow of money into and out of the country, in particular, the Financial Investigations Agency. Such is the network of state agencies that in many cases, when the police uncover a crime, they can simply hand it over to someone else, such as the National Investigations Service, depending on the nature and scale involved. The Financial Investigations Agency (FIA), led by Dr Vasil Kirov, provides the muscle here.

State laws also decree that there be mandatory reporting for any transaction involving sums exceeding 10,000 leva (€5,100); forms must be filled, stating why such an amount of money is being moved or brought into the country. The formation of any company requires that directors must be vetted and registered, while other large transactions require court documentation.

But even the Bulgarians admit that chinks can appear in some cases. It could be a native with illegal business interests, maybe smuggling cigarettes, who would love an infusion of cash. Or maybe a legitimate business person unaware of any wrongdoing on the part of his or her new business partner.

However, these exceptions simply illustrate that when it comes to the possibility of establishing a fraudulent operation which acts as a front for behind-the-scenes money laundering, there are usually too many obstacles in place for it to succeed in the long-term.

Yesterday, the Bulgarian Interior Minister Georgi Petkanov said he was not disappointed with the Irish response to the alleged money laundering operation. But he conceded: "It's not pleasant that the name of Bulgaria is interpreted in such unpleasant things. It is absolutely in our interests that this is clear and that your society to understand the real facts."

The growing Irish involvement in Bulgaria, primarily through property, is not going to go away. Less than a kilometre from the Cacao building, along a potholed street, another Irish property concern is set to move into its new offices. In this quiet residential area, this has made the news. A young boy out walking with his grandfather, explains that while the office is now empty "they will be moving in in a few days".

He asks, wide-eyed: "Do you want to buy a house?" all the while tugging on a leash, restraining his pet canine. It seems even the dogs in the street know about it.