Why Otherwise Apathetic Bulgaria Is Furious About This Housing Scandal

Tsetska Tsacheva, the justice minister, stepped down amid the scandal shakeup.

Source NIKOLAY DOYCHINOV/AFP/Getty

Why you should care

A controversy involving top politicians is sparking rare outrage among Bulgarians, otherwise inured to corruption. 

An upmarket Sofia neighborhood has become the focus of anti-corruption campaigners who are probing how a group of prominent Bulgarian politicians and state officials were able to purchase luxury apartments at knockdown prices. 

The scandal, dubbed “Apartmentgate,” has infuriated ordinary Bulgarians, who normally shrug off corruption as an inevitable part of life in the European Union’s poorest member state.

“If we’d revealed price fixing in a public procurement project such as a highway, people wouldn’t have taken much notice,” says Nikolay Staykov, co-founder of the Anti-Corruption Fund. “But middle-class Bulgarians struggling to pay a mortgage on a small city apartment are deeply resentful that politicians were able to buy luxury homes so cheaply.”

They were suitable for rich Middle Easterners … way beyond anything a Bulgarian professional could dream of.

Dimitar, Bulgarian software engineer

The U.S.-backed group was the first to expose details of properties acquired at a fraction of the market price by senior members of the ruling GERB (Citizens for European Development of Bulgaria) party of Prime Minister Boyko Borisov. The fund’s discoveries were published on its website last month and quickly went viral on social media.

Tsetska Tsacheva, the justice minister, stepped down, while GERB’s powerful Deputy Chairman Tsvetan Tsvetanov resigned his parliamentary seat, plunging the party into turmoil. Two deputy ministers also stepped down. All four had bought luxury apartments in the Iztok neighborhood at cheap prices. The head of the state anti-corruption commission, Plamen Georgiev, who acquired an apartment in another wealthy Sofia neighborhood, allegedly underreported the size of his apartment to the tax authorities. He was told by the premier to take indefinite leave while his case was investigated. The four politicians and Georgiev have all denied wrongdoing.

 

Several senior officials, including judges and a prosecutor and former ministers, in GERB’s right-of-center government were revealed by Bivol, another investigative group, and BTV, a private television channel, to have bought apartments below the market price. Bulgaria’s prosecutor general has launched an official investigation into the purchases. All those involved in these allegations have also denied wrongdoing.

The scandal threatens to scupper GERB’s chances of winning an outright victory in next month’s European parliamentary elections. Borisov has distanced himself, saying he was “furious” over the property purchases. But his approval rating has fallen to 28 percent, according to Alpha Research, a Sofia pollster.

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GERB’s powerful Deputy Chairman Tsvetan Tsvetanov resigned his parliamentary seat, plunging the party into turmoil.

Source NIKOLAY DOYCHINOV/AFP/Getty

The sheer number of GERB politicians involved and the luxury of their apartments have shocked the public. Property prices are a hot topic among Bulgaria’s new middle class as Sofia experiences a residential building boom driven by strong population growth and a strengthening economy. Moving out of their bleak Communist-era apartment blocks that ring the city center is a priority for many families.

“From what we saw of these buildings on television, they were suitable for rich Middle Easterners …  way beyond anything a Bulgarian professional could dream of,” says Dimitar, a software engineer.

Apartmentgate has also undermined Borisov’s hopes of persuading his EU peers to remove a special monitoring mechanism aimed at reducing corruption in Bulgaria and Romania, which was imposed when the neighbors joined the union in 2007.

Lack of progress in combating graft prevents both Bulgaria and Romania from joining the EU’s Schengen program for visa-free travel in the union. In Transparency International’s annual corruption perceptions index Bulgaria, Romania and Greece rank lowest among the EU’s 27 members.

“GERB’s image in Europe will suffer even though the government is likely to weather this crisis,” says Mois Faion of the Center for the Study of Democracy, a Sofia think tank. “But this [scandal] will not easily be forgotten — it touches every Bulgarian. People can compare their financial capacity directly with that of the top leaders and realize how enormous the gap is.”

Anti-corruption groups are investigating reports by local media alleging that politicians from the Bulgarian Socialist Party also acquired cut-price apartments in upmarket neighborhoods while they were in office.

Stefan, a computer specialist who returned from the U.S. to set up his own company in Sofia, expresses the frustration felt by many Bulgarians. “Something’s wrong with our political system if ministers and judges get access to luxury accommodation without paying the going price. It seems to be a benefit that comes with the job,” he says.

Staykov’s team of investigators uncovered the controversy when they compared figures reported in the annual declarations of personal wealth made by MPs and high state officials with the official register of property purchases in Sofia, and property sales in the Iztok district. In particular, they scrutinized sales made by Arteks Engineering, a high-end Sofia construction company.

“At the very least, accepting the discount was unethical behavior by the politicians,” says Staykov. “It also makes them vulnerable to accusations of capture by special interests. And if the value of the purchase was under-declared, this raises questions about fraud and possible tax evasion.”

The sales took place last year after the government pushed through a law extending building permits that had already expired. These included Arteks’ license to build a luxury tower block in Iztok, which expired in 2016. After the scandal broke, the Sofia authorities this month halted construction of the 34-floor building, claiming building regulations were violated.

Arteks denied wrongdoing. A company statement said: “We are perfectionists in planning and carrying out construction work.… This is why we never needed a push from politicians to help execute our business.… The political allegiance of our clients is not a priority for us.”

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By Kerin Hope and Martin Dimitrov

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