How the almost bankrupted ViK – Shumen buys media comfort and pays for expensive PR

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The almost bankrupted state-owned company Water Supply and Sewerage Company (ViK) – Shumen, whose accounts were seized by a bailiff and which only a month ago needed urgent state aid in order not to remain without electricity supply has been buying media comfort for years and paying for expensive PR. This shows a financial audit of the Public Financial Inspection Agency (PFIA), carried out on a signal of the right-wing municipal councilor Dobromir Draev, who has long been dealing with the problems of the water sector in Shumen.

The financial audit covers the last 3 years of operation of ViK-Shumen – 2017, 2018 and nine months of 2019. In this period, the company has been managed by two directors – Krassimir Markov and Ilian Iliev, who since the beginning of 2020 is the Executive Director of the “Bulgarian ViK Holding” EAD.

It turns out that while ViK – Shumen has accumulated millions of unpaid debts, mainly for electricity, somehow managed to find money to pay under contracts for information services to most of the Shumen media and to hire an expensive PR expert in person of the spokesman of the regional organization of GERB. This is shown by the data from documents that “Pro Veritas” has.

At the end of 2019, the losses of ViK – Shumen exceeded BGN 3 million, announced at a briefing the then manager of the company Ilian Iliev. In addition to the loss from operating activities, the company also has unpaid debts of BGN 4.5 million under old contracts for rehabilitation of the water supply and sewerage network, for which the water operator was convicted and its accounts were seized by a bailiff. The company continued to accumulate debts to other suppliers, in huge amounts as well. In September 2020, it became known that the debts of ViK – Shumen only to the electricity distribution companies are BGN 7.5 million. The water operator took an emergency internal loan from the National Holding in order to pay for its electricity, otherwise it was threatened with a power outage.

In the same period, in which it didn’t find money for its suppliers, the water company paid regularly to ensure media comfort. It is not clear by what criteria the heads of ViK – Shumen have chosen their media partners, as the conclusion of contracts was done without public announcement of conditions or requirements. Now, the financial auditors indicate the concluded contracts of ViK – Shumen with media from the city and the results of their implementation:

In 2018, ViK – Shumen had a contract for information services with Television Shumen for the period of one year for the amount of BGN 300 per month, VAT excluded. For this amount, the television must broadcast 2 reportages, 4 messages, 1 interview and 1 participation in programs per month. A total of BGN 4,320, VAT included, for the year was paid by ViK – Shumen under the contract, and the costs were reported as external services. By letter dated January 22, 2020, the Financial Inspection has requested that evidence be provided certifying the work performed under the contract. “Such were not presented. In view of the above, the Financial Inspection cannot establish in an indisputable way whether the agreed volume of work, for which BGN 4,320 were paid, has actually been performed,” the auditors wrote in their final report.

On February 1, 2017, between ViK – Shumen and Darik Radio – Sofia a contract for information services has been concluded for one year, worth BGN 1,200, VAT included. According to the contract, the radio must broadcast 40 messages and 3 interviews. The money was paid as expenses for external services, but the auditors again stated that “it is not possible to establish in an indisputable manner whether the agreed amount of work for which BGN 1,200 was paid was actually performed.”

In 2017 and 2018, ViK – Shumen has paid expenses for broadcasted messages, interviews and reportages to Radio – Shumen, without a contract being concluded for them, the auditors established. The expenses are totally BGN 3,896.70, VAT included, and are proven by invoices. In 2017, ViK-Shumen has paid to the radio totally BGN 1,861.50 – one message, interview and report worth BGN 1,224 and another BGN 637 for an advertising banner. In 2018, BGN 2,035.20 were paid for one message, interview and reportage. “The total price entered on the invoices for one service – BGN 1,224 and BGN 2,035.20, does not provide information for each of the paid services – message, interview and reportage. Comparing the values ​​on the two invoices, it is evident that the value of the same service has increased after 9 months by over BGN 800, “reads the report of the Financial Inspection. The auditors again came to the conclusion that “it cannot be established in an indisputable manner whether the invoiced volume of work, for which a total of BGN 3,896.70 was paid, was actually performed.”

On January 1, 2018, between ViK – Shumen and News.M EOOD a contract for information services has been concluded through the electronic site shmoko.bg for publication of announcements, competitions, advertisements, interviews. The contract is for 1 year and is worth BGN 1,200, VAT included. On February 1, 2019 between ViK – Shumen and News.M EOOD a new contract has been concluded, identical to the previous one, again for one year, worth BGN 1,200, payable BGN 100 per month. In this contract as well, the Financial Inspection “cannot establish in an indisputable way whether the agreed volume of work, for which a total of BGN 1,900 was paid, was actually performed,” the audit report reads.

And while some explanation can be found for the contracts with the public media, despite the lack of criteria, the contract with the website Strela.bg, published by a GERB lady-activist, is more than scandalous. This not always working site receives twice as much from the state operator as Darik Radio and Shmoko.bg, it receives more money even compared to Radio Shumen, and its only “merit” compared to other media is the party affiliation of its only “item“. It is difficult to determine what kind of media the site in question is, as it does not provide daily publications, its publisher does not go to briefings and press conferences, and “once in a blue moon” it makes a copy-paste of the messages from the police bulletin. For months, the site was even shut down and disappeared from the Internet altogether, but has now been restored. Strela.bg mainly plays the role of a media “indian club” against the critics of the ruling party and especially of the Shumen mayor Lyubomir Hristov, who is also the regional coordinator of GERB. In a style reminiscent of the “Rabotnichesko delo” newspaper as of its most retrograde years, the site in question “smashes” right-wing and left-wing opposition politicians. One of his favorite targets is right-wing municipal councilor Dobromir Draev, but now the financial audit also shows the real reason for the attacks on Draev. The site Strela.bg has a contract for 2019 with ViK – Shumen for the amount of BGN 2,400 per year – twice as much as the working Darik Radio and Shmoko.bg have received. The agreed amount is paid quarterly as costs for external services. The auditors have not received evidence certifying whether the payment corresponds to the work performed under the contract, the PFIA report reads.

The expensive PR of ViK – Shumen

In addition to certain media, ViK – Shumen pays generously to its own PR expert. It is by no coincidence at all, that this is the PR of the regional organization of GERB Kamen Andonov, a historian, lecturer at the University of Shumen and since 2019 a municipal councilor from the ruling party. At a press conference with the new manager of ViK Shumen Janeta Panayotova, she was asked how the GERB activist was selected to the position of PR in the state company and what professional criteria he met. Panayotova dismissed the issue, explaining that the contract had been signed by the previous managers.

The joint activity between ViK – Shumen and Andonov started on July 3, 2017, when a contract was signed between the state company, then represented by the manager Krassimir Markov, and the company “KA Social Network” EOOD, represented by Kamen Andonov, to “prepare and to implement a communication strategy of ViK-Shumen”. The contract was valid until January 3, 2018 and it stipulated a remuneration of BGN 3,000 for Andonov. The Financial Inspection has requested the submission of evidence certifying the work performed and handed over to the contracting authority. “Such were not presented. So it is not possible to establish in an indisputable way that the agreed volume of work, for which BGN 3,000 were paid, has been performed,” the financial auditors claim.

The contract with GERB’s PR continues the next year as well. In force as from January 4, 2018, a new contract was concluded between ViK Shumen and “KA Social Network”, again for the implementation of the communication strategy of the water company, for a period of one year. Twice as much remuneration has been agreed for the service in the amount of BGN 6,000 payable every month – BGN 500 upon presentation of an invoice. The obligations of the parties are identical as those of the previous contract, but it can be seen that for the same agreed activities under the two contracts the value of the service has doubled – from BGN 3,000 to BGN 6,000, the financial auditors write. Again, the Financial Inspection cannot establish in an indisputable manner whether the agreed volume of work, for which BGN 6,000 were paid, was actually performed.

In 2019 as well, ViK-Shumen concludes a contract with the GERB activist under the same conditions – BGN 6,000 for the year, which are paid BGN 500 each month. The payments under all three contracts with Andonov are reported as external costs for the company.

In addition to the costs of the contract, in 2019 ViK – Shumen has paid to Andonov BGN 400 for social costs for sounding of the competition “Forest Day”. However, according to the auditors, this cost is unacceptable.” According to the contract, the contractor /Andonov, note of the editor/ should “organize and promote public events, for which he is paid a monthly fee of BGN 500 under the contract. Therefore, it represents

double payment by ViK Shumen for one and the same activity –

once on the invoice, the second time according to the remuneration paid under the contract for March 2019″, the auditors ascertain and point out that responsible for these unreasonably high costs of the company are the then manager Krassimir Markov and the head of the financial unit Janeta Panayotova who is now the Manager of the water company. The auditors point out as well, that the contract unreasonably stipulates the right of Andonov to receive money for business trips, as he is not an employee of ViK – Shumen.

The Financial Inspection has found several violations in the protocol with which Andonov reported the work done in 2019. The PR expert has reported as paid (activity for payment) two publications on the site Shumenonline.bg for the vacant job positions and for repairs on “Rishki Prohod” Blvd. According to the auditors, however, there is no evidence that they were published on the dates indicated by Andonov. In May, a publication was paid for the ongoing repair of a water supply system on a street in Shumen, but the name of the media was not specified, which makes the inspection impossible, the auditors write. In June, a payment was reported to TV Shumen for information on the elimination of accidents, but the sites of the specific accidents were not indicated, due to which the inspection is impossible, the inspectors found. “In this part, the protocol is formally drawn up by the contractor and does not contain information about the actual work done. Therefore, it cannot be established in an indisputable way whether the agreed volume of work, for which BGN 4,500.00 have been paid, has actually been performed”, is the conclusion of the financial auditors.

The Inspection points out that the decisions and assessments regarding the need to outsource the services for PR activities and advertising to external companies were taken by the managers of the company – first by Krassimir Markov and afterwards by Ilian Iliev. During the inspection no specific evidence was presented for the performance of the services – submitted documentation, explanations, instructions, respectively received documentation from the contractor in the form of reports, inquiries and analyzes, the auditors wrote and stated: It is not enough just to have invoices issued by the contractor, and there should be other accompanying documents – protocols, requests, references, publications, interviews, etc.

The Financial Inspection concludes with the statement that “no reasonable conclusion can be made for actual activities performed and the implementation of agreed and paid services at a total value of BGN 26,616.70 cannot be established in an indisputable manner.” The auditors point out that the manager Krassimir Markov is responsible for approved payments in the amount of BGN 23,116.70, and after May 2019 Ilian Iliev has approved expenses of BGN 3,500 “without available documentation, which shows that the services described in the invoices have actually been performed”.

On June 1, 2020, Kamen Andonov, PR of ViK-Shumen, was fired, but not because of the omissions described by the auditors, but because of false information to the media, as was announced at a special briefing by the new manager of the company Janeta Panayotova.

During all this time – 2017, 2018 and 2019, the citizens of Shumen have been paying for the most expensive water in the country – BGN 3.40 per cubic meter.

Moreover, the water has been of poor quality for years and is often unfit for consumption, as the town does not have a treatment plant, and Ticha Dam, which is the main source for Shumen, does not have a sanitary protection zone. On top of it, the people of Shumen are often left without water due to the constant accidents on the network. However, the huge social tension finds a vent mainly in social networks. In most media, instead of analyzing the problems, heroic and as it turns out, paid reports for the elimination of accidents prevail, as if the routine activity of maintaining the water supply network is a feat in peacetime.

All this is against the background of the ongoing deterioration of the financial condition of ViK – Shumen. In 2019, for the first 9 months compared to the same period of 2018, the company’s revenues decreased by BGN 101,000.00 (-0.8%) and the expenses were increased by BGN 1,105,000.00 or by 8.9%, the financial audit shows. This is a proof of low revenue collection and inflated and/or excessive costs incurred by the company, which cannot be covered, despite the increased prices of services, commented the PFIA auditors.

ViK – Shumen is not the only state company in the region that pays in this non-transparent way to certain media, but rather it is a common practice, said the municipal councilor Dobromir Draev. The creation of media comfort for the government and the cultivation of obedient media through the allocation of state and European funds has already become a topic of the EP, and MEPs are preparing a resolution to regulate the media freedom at European level in order to protect independent journalism in Bulgaria.

 

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