Economy Minister Alerts Prosecutor General about Actions of Kremikovtzi Management

Economy Minister Alerts Prosecutor General about Actions of Kremikovtzi Management

Bulgarian Economy and Energy Minister Peter Dimitrov has alerted Prosecutor General Boris Velchev about criminal offenses that may have been committed by members of the management of Kremikovtzi AD between May 2006 and March 2008, Dimitrov's Ministry said in a press release Thursday.

The alert follows a report of a working group formed to establish the company's financial position between January 1, 2006 and December 31, 2007, BTA reported.

The commission found that factory and office workers were not paid their wages for two months, that the company now is not in a position to settle its outstanding obligations to suppliers, and that it lacks inputs for operation, according to the press release.

Dimitrov argues that, "in breach of their obligations under the Commercial Code, the persons managing and representing Kremikovtzi AD have failed to petition the competent court for adjudication in bankruptcy, thereby admitting a continued disposition of assets, increasing further the company's obligations, and eroding the future bankruptcy estate."

In May 2006, Kremikovzti AD became a guarantor of a 325 million euro bond loan of Dutch company Bulgarian Steel Finance B.V. and pledged all manufacturing facilities of the iron and steel works under the Registered Pledges Act. Just a fraction of the proceeds from the bond loan served directly the needs of Kremikovtzi. The amount of 99.92 million euro was inexplicably paid to Pramod Mittal, the owner of Global Steel Holding Ltd., which owns the majority shareholder in Kremikovtzi, Finmetals Holding AD. Dimitrov sees these findings as reason to suspect that Kremikovtzi AD management members have committed criminal offenses under Articles 219, 220 and 227b of the Penal Code and requests Velchev to order an inquiry.

Article 219 criminalizes the failure to devote sufficient care to the guidance, control, management, keeping or preservation of the property entrusted to an office holder, resulting in substantial damage, destruction or dissipation of property for the enterprise or the economy. The offense is punishable by a maximum prison term of three years and a fine of up to 5,000 leva. Article 220 provides for up to five years' imprisonment for an office holder who intentionally concludes a disadvantageous transaction inflicting considerable damage on the economy or on the institution, enterprise or organization which the office holder represents. Under Article 227b, a merchant who becomes insolvent and within 30 days after suspension of payments fails to declare this to the court, is liable to deprivation of liberty for up to three years or to a maximum fine of 5,000 leva.

Earlier in the day, the Confederation of Independent Trade Unions in Bulgaria (CITUB) said that Dimitrov and the Kremikovtzi management signed an agreement late on Wednesday.

Under the agreement, services and supplies by the Bulgarian State Railways, the National Electric Company and Bulgargaz are to be normalized and the plant is to make regular payments to the three companies.

Half of the plant's employees were paid their wages by Wednesday. Since the management has promised to pay the rest by the end of the week, a national protest rally of metal workers scheduled for Friday has been called off, CITUB said.

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