A DEPARTMENT called "Management of the President's Affairs" within the Russian president's office sent letters to potential buyers of Bulgartabac Holding, informing them of Russia's claims to obtaining shares in the holding, it was alleged by the head of the department, Vladimir Kozhin.
He made the allegation in an interview with Russian magazine Itogi, published in its March 16 edition.
Kozhin said that a special unit had been set up within the department, responsible for collecting back assets abroad of the former Soviet Union. The unit had been operating extremely effectively and proof of this was the case of Bulgartabac, Kozhin was quoted as saying.
"We have documents showing that Russia, as the legal successor to the Soviet Union, has rights regarding a significant stake of the holding. When the Bulgarian Government decided to privatise Bulgartabac, we presented our claims but received no response," Kozhin said. After the department sent the documents to the potential buyers of the holding, the latter "assessed them correctly" and so attempts at a Bulgartabac deal had failed for a second consecutive year, Kozhin said.
No top official in Bulgaria agreed to comment on the allegations in the interview. The topic has been extremely sensitive lately after British American Tobacco (BAT) withdrew from the most recent attempt to privatise Bulgartabac. BAT withdrew from the negotiations with the Government in early February, citing political reasons.
Bulgartabac responded that the Russian claims to Bulgartabac were not the reason for the investors' withdrawal. This was said by the holding in a statement on March 17, quoted by  Bulgarian news agency BTA.
Bulgartabac said that there was nothing new about the Russian claims. Russia made no claims at the time of the first privatisation attempt in 2000. The first claims dated from the time of the second privatisation attempt in 2001 and 2002. In December 2002, the Bulgarian Government sent Russia an official reply saying that thorough analysis showed indisputably the claims were unwarranted, Bulgartabac said.
In the attempt to privatise Sofia BT, Blagoevgrad BT, Plovdiv BT and Sluntse Stara Zagora BT in 2004, all potential buyers were duly informed about the issue, with an exhaustive account of its history included in the information memorandum. It set out the Bulgarian position that even if the Russian claims were granted, they would be settled on the basis of intergovernmental agreements, without any detriment to the assets of Bulgartabac Holding or its subsidiaries.
All potential investors were aware of the problem and of the possibility that Russia might renew its claims, Bulgartabac said. The Russian claims were never a problem in the course of negotiations with British American Tobacco, the holding said.
In 2002, Russia declared its claims to shares in 12 of the holding's enterprises, including 49 per cent in the cigarette factory in Sofia, which is one of the two most profitable subsidiaries of Bulgartabac, together with the one in Blagoevgrad.
Russia's claims also include the holding's central offices in Sofia, Plovdiv, Haskovo and Kurdzhali, real estate in several cities, as well as bank accounts, letters of credits and others. According to Russian sources, under a 1953 intergovernmental agreement, the former Soviet Union granted Bulgartabac estate on indefinite lease to Bulgaria. The agreement provides for unilateral abrogation at one month's notice and Russia has already taken steps towards the cancellation of the agreement.
According to Russian lawyers, the German property in Bulgaria involved in the tobacco industry was not donated by Russia to Bulgaria, but only leased in perpetuity. The Russian side has documents, which do not invite the conclusion that the German property (from the stage of World War 2 when Bulgaria was an ally of Germany) involved in the tobacco industry has been donated to Bulgaria, the lawyers said.