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Cablegate: Bulgarian Government Makes Historic Oc Bust

VZCZCXRO1924
OO RUEHDBU RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSL RUEHSR
DE RUEHSF #0106/01 0430727
ZNY CCCCC ZZH
O 120727Z FEB 10
FM AMEMBASSY SOFIA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6708
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE IMMEDIATE
RUEAIIA/CIA WASHINGTON DC IMMEDIATE
RUEKJCS/SECDEF WASHINGTON DC IMMEDIATE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC IMMEDIATE
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC IMMEDIATE
RUEABND/DEA HQS WASHINGTON DC IMMEDIATE
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC IMMEDIATE

C O N F I D E N T I A L SECTION 01 OF 02 SOFIA 000106

SIPDIS

E.O. 12958: DECL: 02/11/2030
TAGS: PGOV KCRM KCOR BU
SUBJECT: BULGARIAN GOVERNMENT MAKES HISTORIC OC BUST

REF: A. SOFIA 103
B. 09 SOFIA 642
C. 09 SOFIA 548
D. 09 SOFIA 508

Classified By: Ambassador Warlick for reasons 1.4 (b)/(d)

1. (C) Summary: The Bulgarian public was stunned by the
February 10 arrest of one of the country's most notorious and
"untouchable" organized crime figures, Aleksi Petrov, and
twelve of his associates. Newspaper articles hailed the
arrest as the most important in the last 20 years, and
asserted that Deputy Prime Minister and Minister of Interior
Tsvetan Tsvetanov has "crossed the Rubicon" by moving against
one of the most influential organized crime groups, something
all previous Interior Ministers never would have dared.
Petrov is estimated to control a business empire with legal
and illegal operations worth hundreds of millions of dollars.
One of Bulgaria's best known oligarchs, Petrov has long been
considered above the law due to his wealth, political
influence and background in the Secret Services. Tsvetanov
told the Ambassador on February 11 that he was confident the
police already had sufficient evidence to ensure conviction
of at least seven members of the gang, including Petrov.
Prime Minister Borissov also stated publicly that he is
confident the evidence gathered will hold up in court. End
Summary.

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Operation Octopus
-----------------

2. (C) During the night of February 9, police launched
"Operation Octopus." Over 20 strip clubs and three other
businesses owned by Petrov and his associates were searched
and over one hundred people detained for questioning. Deputy
PM Tsvetanov told the Ambassador that police do not intend to
release at least seven gang members, including Petrov, who
are at the top of the criminal pyramid. These seven will be
charged with extortion, forceful debt collect, prostitution,
defrauding state-owned industries (including the Kremikovtsi
steel plant), VAT fraud, trade in influence, money laundering
and other crimes. Tsvetanov mentioned that in addition to
these seven at least four officials inside the Interior
Ministry are under investigation for cooperation with Petrov
and his group.

PETROV'S CRIMINAL EMPIRE
-------------------------

3. (C) According to police, Petrov's group has been in
operation for over 10 years and has used intimidation and
blackmail to acquire ownership of legitimate businesses.
Petrov has controlling interest in the largest taxi company
in Sofia (TAXIS EXPRESS) and is an "advisor" to one of the
three largest insurance companies in Bulgaria (LEVSKI SPARTAK
INSURANCE aka LEVINS), receiving a large share of its profit
each year without clear responsibilities. Petrov also owns a
stake in the tabloid newspaper "Weekend" and is the founder
of a second, "Galleria."

4. (C) In addition to his public enterprises, police allege
Petrov controls the largest share in Sofia's escort and
intimate services businesses, which are known fronts for
prostitution and trafficking in women. Tsvetanov told the
Ambassador that during the raids scores of prostitutes agreed
to testify to police on Petrov's prostitution ring which is
estimated to take in 40,000 dollars a night.

5. (C) Petrov is also accused of racketeering and extortion
of legitimate companies, forcing them to pay regular fees or
give up a share of ownership in exchange for protection.
Tsvetanov said Petrov uses his insurance and taxi companies
to launder the massive flow of illegal profits.

POLITICAL FALLOUT BEGINS
---------------------------

6. (C) According to Tsvetanov, Petrov began to gain
political influence in the earlier part of the decade,
particularly due to his close association with the former
Prosecutor General Nikola Filchev. Petrov was also linked to
numerous other Socialist Party members in the previous
government. In 2008 a leak revealed to the press that Petrov
had been hired by the State Agency for National Security
(DANS) as an undercover agent. Despite an outcry from the
public and the international community, Petrov was kept on as
the "political advisor" to the former DANS Chairman. After
taking office in 2009, Prime Minister Borissov forced Petrov
to resign from his position.

7. (C) While Petrov's arrest is a major political coup for
Borissov, Tsvetanov and the whole GERB government, hard
evidence that top figures in the previous government were so
closely linked to an organized crime figure has thrown the
opposition Socialist Party into convulsions. Tsvetanov told
the Ambassador that in searching Petrov's businesses police
found numerous secret files that they believe Petrov stole
from DANS, including one file belonging to the previous
Socialist Prime Minister Sergei Stanishev. Rivals inside the
Socialist Party, such as former Interior Minister Rumen
Petkov, have called for Stanishev to step down as leader of
the party. Politicians from other parties, including some
frequent critics of Borissov, such as Blue Coalition leader
Ivan Kostov, have praised Borissov and his government's
efforts and joined the media in condemning the previous
government's ineffectiveness and complicity with organized
crime.

BUT WILL THE CHARGES STICK?
-----------------------------

8. (C) All of the positive momentum generated by these
arrests will be lost in an instant should Petrov and his
associates not end up in jail. Many in the media, while
praising the police operation and the political will behind
it, worry that Petrov will be able to bribe or threaten his
way to freedom, or that a single procedural error will allow
him to walk. PM Borissov, DPM Tsvetanov and Prosecutor
General Velchev have all stated unequivocally that sufficient
evidence exists to prevent any of the seven highest-ranking
criminals from escaping justice. Tsvetanov said that in just
hours after Petrov's arrest, victims of blackmail and threats
of violence have offered to testify against him. Tsvetanov
believes additional witnesses will come forward as the police
continue their investigation and as the reality of Petrov's
arrest sinks in among the hundreds of people and businesses
harassed by his organization.

9. (C) Comment: The government's decision to move against
Petrov and his group is a courageous act and emblematic of
the GERB government's stated commitment to fighting organized
crime. News of Petrov's arrest was on the front page of
nearly every newspaper in the country and has set Sofia
buzzing. Most Bulgarians seem shocked that the government
has the power and political will to go after a figure of
Petrov's stature. If Petrov's case ultimately leads to
conviction it will go down as an arrest of historic
proportions. However, two dangers loom large. First, an
unsuccessful prosecution, whether due to bribery, extortion
or on a technicality, would be a major blow to the government
and intensely demoralizing to the public. Second, the
possibility of Petrov's group using or threatening violence
against Tsvetanov and his staff or the Prosecutor General and
his staff is very real. Tsvetanov told the Ambassador that
all possible measures are being taken to prevent either
scenario.
WARLICK

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