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Bulgaria: Dutch Investigate CD Pirates After Seizure

Prague, 26 March 1997 (RFE/RL) - Dutch authorities are investigating an international compact disc smuggling ring with ties to Bulgaria following the seizure last week in Amsterdam of a shipment of 100,000 Bulgarian-made pirate music CDs.

Authorities did not release details about their continuing investigation. But an official from the music industry's international anti-piracy watchdog group says that the size of the shipment illustrates the growing volume of pirate CD exports out of Bulgaria.

Bianka Kortlan, East European Director for the International Federation of the Phonographic Industry (IFPI), says the Amsterdam seizure also indicates that Bulgarian music pirates had been alerted ahead of raids on their factories last week. Bulgarian police found a total of only 2,000 pirate discs at CD factories in Botevgrad, Veliko Turnovo and Stara Zagora. Kortlan charges that the state-owned DZU factory in Stara Zagora was able to hide all of its pirate activities because of advance notice.

The IFPI estimates that more than 15 million pirate CDs were produced in Bulgaria last year, making the country second only to China in the CD black market. The group says Europe's music industry lost more than $100 million last year because of Bulgarian counterfeits. It says more than a million Bulgarian pirate CDs are exported every month through distribution hubs in Russia and Lithuania or directly to Western Europe.

During a visit to Sofia last week, European Union External Relations Commissioner Hans van den Broek told Bulgaria's caretaker government that it must put an end to rampant CD piracy. Avis Bohlen, the U.S. Ambassador to Bulgaria, also has joined the growing international call for Sofia to enforce its copyright laws. Kortlan says the ineffective Bulgarian raids were a "gut reaction" to this international pressure.

Since the dissolution of parliament in Sofia last month, Bulgaria�s anti-Communist caretaker government has been campaigning to convince foreign investors and international creditors that corruption is being cleaned up.

Bulgarian prosecutors yesterday began criminal proceedings against an alleged CD pirate in Veliko Turnovo. Marko Mihailov is charged with producing more than 200,000 counterfeit discs per month in 1995 and 1996 through his firm SMC. It is the first time that a criminal case for CD piracy has reached a Bulgarian court.

Kortlan says that the extent of piracy in Bulgaria, and the involvement of state-owned plants like DZU, show that previous Sofia governments viewed illegal CD production as a lucrative source of income. Bulgaria's Culture Ministry is responsible for verifying copyright holdings on all of the country's CD production.

A recent investigation by RFE/RL found that the illegal CD industry has continued to grow in Bulgaria during the past year. (See Pop Culture Piracy: How Eastern Europe's intellectual property pirates make millions with illegal CDs and videos ) Last month, shops in Bulgaria's private Unison chain were keeping stock lists with more than 400 pirated titles. The IFPI says Unison recently purchased new CD-producing equipment from Holland and installed it at the DZU factory in Stara Zagora. It is the third CD production line at DZU.

At another private music shop in Plovdiv, RFE/RL watched pirate CD distributors count out poorly printed paper labels as well as hundreds of discs from factory boxes. Pirate CD shipments are now sent directly on factory spindles with individual cases and labels being put together by the shops that place the orders.

The IFPI's Kortlan says the trend is reflected in exports to Western Europe. Bulgarian pirate CDs are now exported on the tightly stacked factory spindles. Labels are added only at destination points. So West Europeans now buy Bulgarian-made pirate discs with slick Western packaging that makes it difficult to distinguish them from legitimate products. By comparison, the inferior quality of pirate CD packaging within Bulgaria makes it clear that it is counterfeit.

Despite the failure of last week's raids in Bulgaria, Kortlan calls the investigation at DZU a "positive" development. DZU was a secretive military computer research center during the Soviet era. Last week marked the first time that investigators managed to get past guards there. Kortlan says future raids must be conducted with more secrecy and with better coordination among police, prosecutors and the government.

The IFPI says there are now nine production lines across Bulgaria that are being used to make pirate CDs. The group has charged that the previous government of Socialist (former Communist) Zhan Videnov knowingly engaged in CD piracy.