MONEY LAUNDERING IN BULGARIA - NOTHING NEW

Towards the end of 2012, a Bulgarian appeals court overturned money laundering convictions for six Bulgarians, including industrialist Mario Nikolov. In other parts of Europe, the trial had been seen as a test of Sofia's will to fight fraud and money laundering.

Seems that the Bulgarians failed.

In its 2012 report on money laundering around the world, the US State Department highlighted the dangers of Bulgaria:

"Bulgaria’s developing financial sector, large underground economy, prevalent use of cash transactions and lack of effective enforcement combine to make Bulgaria vulnerable to money laundering. The main sources of laundered money in 2011 were derived from domestic and foreign criminals engaging in drug trafficking, smuggling, human trafficking, tax fraud, credit card fraud, and increasingly, internet fraud. Bulgaria is a major transit point for the trafficking of drugs and persons into Western Europe. Corruption remains a serious problem and many still associate public tenders with kickbacks and money laundering. Financial crimes enforcement capacity is limited. The authorities opt for easy-to-prove, low-level corruption and related money laundering cases. As a result, progress on cases of high public interest, involving alleged siphoning of millions of taxpayer money, such as the public procurement of big energy infrastructure projects, have not generally been pursued."

The State Department pointed out, "Bulgaria is a transit country for heroin, as well as a minor producer of illicit synthetic narcotics," then added that the country was, "a source and, to a lesser extent, a transit and destination country for women and children who are subjected to sex trafficking, and men, women, and children subjected to conditions of forced labor. "

More recently, the Bulgarian police, aided by American agents from the  DEA, busted a $5 million international money laundering ring operating out of Sofia, leading many to suggest that Bulgaria is a new player worth watching on the money laundering scene.

Worth watching? Yes. But not because Bulgaria is a new player on the scene. Because it's one of the oldest.

This is an extract from the original publication of The Laundrymen, nearly 20 years ago.

 

===========================================================

The UN embargo in the former-Yugoslavia turned Bulgaria’s organized gangs into the nation’s most successful entrepreneurs. Sanction busting was rife and with it came money laundering. According to the Ministry of the Interior, Bulgaria is today in the throes of its worst crime epidemic this century.

When the government in Sofia announced that it would sell off 1600 previously state owned industries, it explained that, unlike similar sales in other former Communist countries, they would not be accepting scrip or vouchers, they would be selling everything for cash. Informed by European and American advisers that such a sell-off would be a field day for money launderers, the Bulgarians said they would prevent anyone from doing that by asking all investors to declare the origin of their funds, as if a Colombian drug dealer would admit that he was buying Balkan Airlines with $50 million worth of crack receipts!

For the record, the Bulgarians were one of the first Eastern bloc countries to comprehend the advantages of money laundering. Under 35 year regime of Todor Zhivkov, from 1954 to 1989, the government dealt drugs, washed the profits through shell companies that had access to Swiss banks, and then used that money to finance a major international illicit arms business.

Zhivkov's trading outlet was the state-owned import-export company, Kintex. Set up in 1968, it was operated exclusively by the KDS, the Bulgarian Security Service. It sold heroin and morphine base to Turkish drug traffickers and with that money was able to build up its gun running. Kintex became so adept at converting drugs into weapons that it furnished the Nigerians with guns to put down the Biafra civil war in the 1960s; it furnished various Christian militias with guns to escalate the civil war in Lebanon in 1975; it furnished South Africa with guns in direct violation of various embargoes; and, for more than 20 years, it was the primary outfitter of guns to the PLO. For their efforts, the Bulgarians reputedly earned up to $2 billion a year in much-needed hard currency.

The extent of Kintex's The UN embargo in the former-Yugoslavia turned Bulgaria’s organized gangs into the nation’s most successful entrepreneurs. Sanction busting was rife and with it came money laundering. According to the Ministry of the Interior, Bulgaria is today in the throes of its worst crime epidemic this century.

When the government in Sofia announced that it would sell off 1600 previously state owned industries, it explained that, unlike similar sales in other former Communist countries, they would not be accepting scrip or vouchers, they would be selling everything for cash. Informed by European and American advisers that such a sell-off would be a field day for money launderers, the Bulgarians said they would prevent anyone from doing that by asking all investors to declare the origin of their funds, as if a Colombian drug dealer would admit that he was buying Balkan Airlines with $50 million worth of crack receipts!

For the record, the Bulgarians were one of the first Eastern bloc countries to comprehend the advantages of money laundering. Under 35 year regime of Todor Zhivkov, from 1954 to 1989, the government dealt drugs, washed the profits through shell companies that had access to Swiss banks, and then used that money to finance a major international illicit arms business.

Zhivkov's trading outlet was the state-owned import-export company, Kintex. Set up in 1968, it was operated exclusively by the KDS, the Bulgarian Security Service. It sold heroin and morphine base to Turkish drug traffickers and with that money was able to build up its gun running. Kintex became so adept at converting drugs into weapons that it furnished the Nigerians with guns to put down the Biafra civil war in the 1960s; it furnished various Christian militias with guns to escalate the civil war in Lebanon in 1975; it furnished South Africa with guns in direct violation of various embargoes; and, for more than 20 years, it was the primary outfitter of guns to the PLO. For their efforts, the Bulgarians reputedly earned up to $2 billion a year in much-needed hard currency.

The extent of Kintex's connections with organized crime in the West came to light only in the early 1980s. Italian police raided a Mafia drug refinery in Trapani Province, on the western tip of Sicily, and uncovered a laboratory that, to their surprise, was stocked with Bulgarian machinery and Bulgarian-supplied morphine base. This one lab alone was capable of producing a staggering 4.5 tons of refined heroin per year. At wholesale prices, in those days, that represented $1.125 billion. Over the next few years, no fewer than 15 refineries were uncovered in Sicily and on the Italian mainland, most of them with Bulgarian supplies.

By this time, the CIA had plenty of evidence to prove Kintex's role in international drug trafficking. When the Reagan administration formally protested, Zhivkov cracked down on every amateur drug dealer in the country. Largely to placate Washington, tons of marijuana were seized and assurances were given that the business had been ended. But Kintex continued to trade. Five years later, as a result of continued American protests, Kintex finally became too much of an embarrassment. So, for all intents and purposes, Zhivkov put Kintex out of business. In its place he installed son-of-Kintex, a state-owned import-export company called Globus. But the KDS was still in charge and its primary mission was still drug trafficking, arms dealing and money laundering. In effect, the only change was the company stationery.

========================================================

excerpt from The Laundrymen (c) Jeffrey Robinson, 2008 Now available as an eBook: Kindle (US): http://amzn.to/Vu7Xy8 Kindle (UK): http://amzn.to/Vu83WH