October 17, 2016 / 11:01 AM / 9 months ago

Bulgarian prosecutors charge two former executives over nuclear project

3 Min Read

SOFIA, Oct 17 (Reuters) - Bulgaria's prosecutors have charged two former directors of state electricity firm NEK with causing financial damage by signing a nuclear deal that cost the business more than 77 million euros ($86 million).

Bulgaria cancelled its 10 billion euro Belene project with Russia's Atomstroyexport in 2012 after failing to find foreign investors and under pressure from Brussels and Washington to limit its energy dependence on Russia.

NEK now has to pay over 620 million euros ($695 million) in compensation to Atomstroyexport over the project, which analysts and politicians say reflects widespread corruption.

On Friday, Sofia City Prosecution accused Ludomir Velkov and Madrik Papazian of signing a 205 million euro deal to sell the ageing nuclear equipment to Atomstroyexport in 2007 and agreed to take all transport and tax expenses.

"The two defendants obliged NEK to take all costs for the contract's execution, and deduct them from the price the buyer Atomstroyexport will pay for the equipment of Belene," the prosecutors said in a statement on Monday.

As part of the deal with the Russian company to build two new 1,000 megawatt reactors at Belene, Bulgaria had agreed to sell it an aging nuclear reactor it had at the site.

NEK exported equipment worth 165 million euros to Atomstroyexport, but the total sum was reduced by 77 million euros to account for expenses under the contract.

Prosecutors say this reduction damaged NEK's finances and that the two former executives signed the unfavourable deal without the consent of the energy ministry, NEK's owner.

Velkov, who was chief executive director at the time of the deal, and Papazian, who was executive director, were not immediately available for comment.

They would have to sign daily at a police station until an indictment is filed in court, prosecutors said.

In 2012, when the public financial inspection agency announced similar findings, Velkov and Papazian both denied wrongdoing, saying that any price for the ageing reactor above the price of scrap metal was favourable. ($1 = 0.8928 euros) (Reporting by Tsvetelia Tsolova; Editing by Ruth Pitchford)

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