BULGARIA'S CRACKDOWN ON ORGANIZED CRIME: BUSINESS

C O N F I D E N T I A L SECTION 01 OF 03 SOFIA 002054

SIPDIS

E.O. 12958: DECL: 12/08/2015
TAGS: PREL PINR ECON KCOR KCRM BU
SUBJECT: BULGARIA'S CRACKDOWN ON ORGANIZED CRIME: BUSINESS
AS USUAL

REF: SOFIA 1882

Classified By: AMBASSADOR JOHN BEYRLE, FOR REASON 1.4 (C).


1. (C) Summary: The Bulgarian government has little to show
for its effort to crack down on organized crime six weeks
after the killing of controversial banker Emil Kyulev. The
police and Interior Ministry have yet to conduct a thorough
investigation of the murder, possibly out of concern about
revealing Kyulev's links to prominent political figures. The
authorities have boasted that 1,200 suspects were detained
during the national police operation following the Kyulev
shooting, but most have been subsequently released due to a
lack of evidence. The Interior Minister told the Ambassador
December 13 that 43 organized crime-related cases will be
submitted for prosecution before the end of the year.
Although we believe that some GOB officials have the sincere
will to launch a real crackdown on the crime and corruption
problem here, systemic and political problems will continue
to hinder their efforts. End Summary.

Kyulev Case Loses Steam
--------------


2. (C) More than a month after the high-profile killing of
Emil Kyulev, the police and Interior Ministry have made
little progress in solving his murder. The GOB still has not
seized key pieces of evidence, such as Kyulev's computer
harddrive, bank and phone records, or taken advantage of the
U.S. offer to exploit such evidence. According to our Legatt,
the police have failed))either by design, apathy or lack of
effective judicial process))to do basic victimology
investigative work (where investigators try to establish a
crime's motive based on the victim and his relationships).
The MOI at one point appeared ready to seize Kyulev's bank
records, notifying our Legatt that the police would act the
next day. The seizure, however, was called off at the last
minute. MOI officials are blaming judges and prosecutors,
who will not issue them the necessary search warrants, and
Bulgaria's "restrictive" laws. (However, we have worked with
MOI on less politically sensitive cases where such obstacles
were easily overcome.) The fact that authorities are facing
obstacles in the Kyulev case is suspicious, and potentially
convenient, given the high-level political interest in the
case. Other reasons given for the delay are a lack of
cooperation from Kyulev's widow and the GOB's fears that a
seizure of Kyulev's bank records could lead to the collapse
of DZI bank, one of Bulgaria's largest.


3. (C) Our suspicion, however, is that the GOB is avoiding a
thorough investigation of Kyulev out of fear that a
disclosure of his shadowy past could potentially embarrass
prominent political figures, including the President. Kyulev
was a former economic advisor to Parvanov, and is widely
rumored to have helped fund his 2001 campaign. Kyulev,
however, reportedly did not limit his largess to the
President or the Bulgarian Socialist Party; a thorough
examination of his financial records would likely reveal
links to the National Movement Simeon II as well. Our
British counterparts share this view: they express
frustration that the Kyulev killing has almost completely
disappeared from the local press, and have advised the MOI on
the need to keep the public's attention on the case in order
to generate leads. They note a sharp contrast between
President Parvanov and Prime Minister Stanishev's initial
strong calls for action and the current lack of action
surrounding the case.

Operation "Respect" Merely A Show of Strength
-------------- --


4. (C) The GOB's broader effort to crack down on organized
crime in the wake of the Kyulev killing also appears to have
lost momentum. Almost all of the people detained in
Operation "Respect"))nation-wide police raids launched
after Kyulev's shooting))have been reportedly released. Of
the more than 1,200 people detained during Respect only 80
were held for more than 48 hours and most of these were later
released due to a lack of evidence. One suspect in
Blagoevgrad died after being beaten by police. (The incident
has lead to the dismissal of three police officials and an
official apology from Interior Minister Petkov.) The
notorious Marinov brothers, founders of the SIC organized
crime group, remain in custody, although the case against
them is reported to be weak, according to our Legatt, and
possibly politically motivated.


5. (C) We continue to hear speculation as to why the brothers
have been singled out. Yovo Nikolov, an investigative
journalist and leading expert on Bulgaria organized crime,
told us one theory is that Mladen Mihalev (a.k.a. Madzho),a
rival of the Marinov brothers within SIC and, like the
Marinovs, one of its last surviving original members, has
close ties to Interior Minister Petkov and pressed for the
arrest of the Marinov brothers. We have no way of verifying
this specific claim, but it is likely that the Marinov
brothers were chosen at least in part because they do not
have a high-level political patron.


6. (C) The police continue to maintain a large presence on
the streets and randomly stop and inspect suspicious luxury
vehicles as part of Operation "Respect." But, as this name
suggests, these actions are little more than a show of force
by the police, and do not appear to reflect any effective or
long-term strategy to fight organized crime. According to
Nikolov, organized crime figures do not view Operation
Respect and the latest government crackdown as a serious
threat to their activities. The only thing Respect has
accomplished is to force these groups to keep a low profile
for now, with the result that street-level crime has
declined. He agreed the operation lacked any real teeth. Our
British colleagues, however, have heard from various sources
that Operation Respect is having an effect and that many
organized crime groups are concerned by the higher level of
police scrutiny. Despite appearing to be a hastily contrived
action by the MOI, Interior Minister Petkov told us that
Respect had been conceived prior to Kyulev's murder, but was
initiated earlier than planned.


7. (C) Apart from Operation Respect, Chief Prosecutor Filchev
has said that the government is currently working on 43
organized crime cases to be submitted to the courts sometime
in late December. Filchev has not specified the likely
suspects in the cases but has said the crimes are in the
sphere of financial fraud, VAT fraud, and drug trafficking.
Interior Ministry Petkov admitted to us that the key problem
for MOI in pursuing organized crime is that many officers at
all levels are "working for the other side." He said several
major operations in the past few months have failed because
the leader of the targeted criminal group was tipped off by
someone inside his ministry. Petkov told us his main priority
is to reorganize the ministry and clean up its structures.

Attention Shifts to Customs
--------------


8. (C) In recent weeks the attention of the police and MOI
appears to have shifted away from organized crime and to
corruption in the Customs Agency. The MOI announced in late
November it was launching an investigation into high-level
corruption in the Customs Agency. The Customs Agency
attracted higher scrutiny after a former high-level customs
official, suspected of being involved in smuggling, was
gunned down in Sofia in October. According to the press, the
MOI sent a list of six senior-level Customs officials
believed to be involved in criminal smuggling channels to the
Prime Minister and Finance Minister (who oversees the
Agency). Despite media speculation that all six would soon be
relieved of their positions, only the Deputy Director of
Customs, Dimitar Tolev, has resigned.

GOB Sees Progress in Fight Against Organized Crime
-------------- --------------


9. (C) Interior Minister Petkov requested a meeting with the
Ambassador December 13 to update us on the GOB's progress in
the fight against organized crime and corruption. Petkov
noted a number of recent successes both on the legislative
and operational fronts. He mentioned that parliament had
approved the first reading of the new Ministry of Interior
Act and said the act would hopefully pass the second reading
by early next year. According to Petkov, most of the
recommendations in the European Commission's monitoring
report have now been implemented.

10. (C) In terms of operational measures, Petkov noted the 43
organized crime cases that will be submitted to the courts
later this month. He expected all of the cases to result in
prosecution, saying the MOI had agreed "we should only take
on commitments we can fulfill." He also mentioned that the
police on December 9 had dismantled an "organized crime
group" consisting of customs officers and other civil
servants involved in falsifying customs documents to cover up
the illegal import of Chinese goods. As part of the
operation, the director of a local customs office in
Sofia))who was among the six senior-level Customs officials
suspected of corruption))was arrested in the act of
accepting a bribe and five others were detained. Petkov said
the police and MOI have shut down a number of smuggling
channels that were importing cement, powdered milk and
cigarettes without paying duties, and smuggling drugs and
counterfeit trademark goods. On the Kyulev murder, MOI Chief
Secretary Ilyia Iliev said the MOI was focused on three

SIPDIS
possible theories--the Marinov Brothers, Michael Chorny and
Kyulev's activities in the insurance sector))but still had
not received the necessary court orders to fully investigate.


Comment
--------------


11. (C) It may be too soon to draw conclusions about the
GOB's willingness to confront organized crime, but the signs
so far are not encouraging. Part of the problem clearly lies
in the technical incompetence and lack of solid investigative
skills, resources, and cooperation among the law enforcement
services. But we also believe that some in the GOB are
unwilling to see a real investigation go forward that would
shine a light into the darker corners of political activity
here, especially regarding party funding. As one analyst in
the leading think tank Center for the Study of Democracy put
it, "the Prime Minister has the will to pursue crime and
corruption but has no levers; the Interior Minister has the
levers, but no vision." (And, we would add, questionable
incentive.) We will have more opportunity to assess the
government's intentions on organized crime in the upcoming
case against the crime boss Ivan Todorov (a.k.a.,
Doktora)))a case U.S. law enforcement assisted on that is
currently awaiting action at the prosecutor's office.
BEYRLE