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Bulgaria Launches Probe Into Fake Bed-And-Breakfasts Funded By EU

Deputy Economy Minister Aleksandar Manolev denied that he owned this house built on his land in Sandanski, which received 200,000 euros in EU funding. He resigned on April 17 over the scandal.
Deputy Economy Minister Aleksandar Manolev denied that he owned this house built on his land in Sandanski, which received 200,000 euros in EU funding. He resigned on April 17 over the scandal.

SOFIA -- The Bulgarian Prosecutor-General’s Office has launched a nationwide investigation into “many” suspected fraud cases involving an EU rural-development program that has provided more than 100 million euros ($112 million) to build bed-and-breakfast lodgings across the country.

The prosecutor’s spokeswoman, Rumiana Arnaudova, said on April 24 that a criminal case has been filed against former Deputy Economy Minister Aleksandar Manolev, just one of the suspected fraud cases being investigated.

In a statement issued on April 24, the Prosecutor-General’s Office said it ordered police to check the registries of all bed-and-breakfast projects that have received funding since 2007 under the EU’s Development of Rural Areas Program.

The idea of the EU program was to inject funds into rural areas of Bulgaria to help create small, sustainable businesses and employment opportunities in the tourism sector.

For each project, the EU disbursed 200,000 euros ($224,000) to help applicants build bed-and-breakfast accommodations.

Those who received the funds were obliged to operate as a bed-and-breakfast for at least five years.

But an investigation by RFE/RL’s Bulgarian Service discovered many projects that received the EU funds have never worked as bed-and-breakfasts.

The full extent of fraud involving the scheme is not known, and the Prosecutor-General’s Office has not offered a specific estimate.

But Arnaudova said on April 24 that prosecutors “have suspicions there are many.”

According to RFE/RL’s investigation, at least 746 projects were completed under the EU program since 2007 – with Bulgaria’s Agricultural Ministry to distribute 101 million euros ($113 million) of EU funds.

Arnaudova on April 24 confirmed that authorities are investigating “about 750” projects.

As an example of how widespread the number of fraud cases may be across the country, the RFE/RL investigation discovered that in just one small municipality -- Garmen, near Bulgaria’s southwestern border with Greece -- 51 projects took more than 10.2 million euros ($11.4 million) in funding under the EU development program.

But the Bulgarian Ministry of Tourism’s public registry lists only 37 registered guesthouses in and around Garmen – a difference of 14 lodgings that had apparently received 2.8 million euros ($3.1 million) without meeting the program’s obligations.

In 2016, then-Agriculture Minister Desislava Taneva halted the disbursement of EU funds under the program, announcing that there were many “signals of wrongdoing.”

But authorities never launched a nationwide investigation into the extent of the possible fraud. Authorities focused on individual cases that came to their attention via media reports.

On April 12, Bulgaria’s investigative journalism website reported that a house used only as a private dwelling on land owned by then-Deputy Economy Minister Aleksandar Manolev had received 200,000 euros ($224,000) from the EU development program.

Manolev, who served as deputy tourism minister in 2015-16, denied that he owned the house in the town of Sandanski. Nevertheless, he resigned from office on April 17 as a result of the scandal.

“We have checked the guesthouse, and we did not find anyone there. But the premises looked like it had been cleaned recently,” Arnaudova, the prosecutor’s spokeswoman, told journalists at a Sofia press conference on April 24.

Arnaudova said that on April 17, the same day Manolev resigned, “someone dropped by the municipal administration and left a key asking them, ‘Do not break in.'”

She said the Prosecutor-General’s Office has not received any cooperation from the Sandanski municipal government in its investigation.

“They did not provide the documents we asked for, and the employees do not want to make any witness statements for us,” Arnaudova said. “They say they do not remember who left them the key.”

Media reports on April 23 revealed that the father-in-law of Elena Yoncheva, a member of the Bulgarian Socialist Party and a leading candidate to represent Bulgaria in the European Parliament, had constructed two houses near the Black Sea under the EU program but turned the houses into private villas instead of operating them as tourist accommodations.

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    RFE/RL’s Bulgarian Service relaunched in 2019 after a 15-year absence, providing independent news and original analysis to help strengthen a media landscape weakened by the monopolization of ownership and corruption.