Prime Minister Stephen Harper and two of his most trusted ministers have for more than a year been quietly pressuring the Bulgarian government to transfer home to Canada a former millionaire Canadian businessman jailed overseas since 1996 on charges of fraud and embezzlement, CanWest News Service has learned.
Despite numerous diplomatic efforts - including a meeting in Sofia last year between Bulgaria's top prosecutor and Secretary of State Jason Kenney, at which Kenney pleaded for the return of 55-year-old Michael Kapoustin - Bulgaria refuses to transfer a man it once labelled an international swindler.
As a result, Canada is turning up the heat, invoking for the first time an international treaty that forces the unco-operative Bulgarian government into mediation talks.
On Thursday, a Canadian delegation will square off against Bulgarian officials in Strasbourg, France, headquarters of the Council of Europe - a European human rights body created in the wake of the Second World War to oversee, among other things, prisoner-transfer rules among the countries of Europe, Canada and the United States.
The mediation process follows months of failed intervention by Kenney and Harper - who has lobbied the Bulgarian president on the Kapoustin case - and by Public Safety Minister Stockwell Day, who is responsible for prisoner transfers to Canada and is also the MP for Kapoustin's British Columbia-based family.
Such efforts are a marked contrast to the Harper government's treatment of some other Canadians imprisoned abroad.
Since last year the Conservatives have denied the transfers of at least 17 Canadian citizens jailed in the U.S., even though their transfers to Canadian prisons were approved by U.S. authorities.
The government is also refusing to advocate against the death row sentence of Ronald Smith, an Albertan convicted of murder in Montana.
Kapoustin's repatriation, however, is "a priority for our government," said Kenney in a letter last December to Bulgaria's prosecutor general, adding, "Our government is determined to robustly defend the interests of Canadian citizens abroad."
Kapoustin was born in Yugoslavia but grew up in Toronto and Vancouver after his family immigrated to Canada in the 1950s. He became a high-profile entrepreneur in Bulgaria during the 1990s, as capitalism replaced communism following the breakup of the Soviet bloc.
"Michael was a very high flyer in Bulgaria in the post-Soviet period," says Gar Pardy, Canada's former director general of consular affairs, who has taken up Kapoustin's case in retirement. "He was running a bunch of companies and there was a lot of money on the go.
Bulgarian officials charged him with tax evasion, money laundering, fraud and embezzlement. Authorities shut down Kapoustin's companies and seized assets he claims were worth more than $11 million.
In 1996, he was arrested during an airport stopover in Germany and extradited to Bulgaria.
In 2002, after six years in detention, a Bulgarian court finally convicted Kapoustin on a new charge of embezzlement and sentenced him to 17 years in prison.
Pardy says that for years he and other Canadian diplomats worked hard to secure Kapoustin's transfer to a Canadian prison, where he would soon be eligible for parole - but never got anywhere with Bulgarian officials.
On Tuesday, Canadian law firm Amsterdam & Peroff announced that it has produced a website about its pro-bono client Michael Kapoustin, a citizen of Canada who has been languishing in a Bulgarian prison since he was convicted to 17 years in prison on what his defense team insists were false charges of embezzlement, fraud, tax evasion, and money laundering.
The website has been created to coincide with a new level of government talks about the prisoner transfer treaty between the two nations.
Article 23 of the Council of Europe's Convention on the Transfer of Sentenced Persons to initiate mediation has been invoked by Canadian Prime Minister Stephen Harper who, after over a year of constant contact, has not been able to secure Kapoustin's release and extradiction to Canada.
The website allegedly shows violations of Kapoustin's basic due process and fundamental rights in the trial, torture, solitary confinement, cruel and unusual treatment in prison, and the irresponsible conduct of a number of former government officials.
"For so many years, the family has been told to keep quiet about these injustices while numerous promises to bring Michael home were repeatedly broken. The time has come to speak up," said international lawyer Dean Peroff of Amsterdam & Peroff.
Michael Kapoustin's wife, Tracy, has been raising their 14-year-old son alone for most of the boy's life as a result of the imprisonment.
Kapoustin, now 55, was a millionaire entrepreneur. He became very influential in Bulgarian business circles in the early 1990s as Communism collapsed and Capitalism began to flourish in the Eastern European nations.
Bulgaria: A Hard But Lucrative Place for SMEs
03.08.2007 For the past seven years, Swiss entrepreneur André Felder has been working in Bulgaria. Despite some unpleasant experiences, he does not regret his decision to move there. At a forum during the latest Credit Suisse field trip to Bulgaria, he warned investors and business people against having unrealistic expectations.
What was Bulgaria like seven years ago?
Chaotic. The mafia were also rampant. The gray economy was bigger than the "regular" economy. But it was a time of optimism and a new direction, and perhaps a dose of "Wild West" capitalism is simply part and parcel of that sort of pioneer era.
What exactly do you mean by Wild West capitalism?
We lived by the laws of the jungle. My original partners very nearly forced me out of the business, for example - without providing any form of compensation. And institutional sloppiness and arbitrariness nearly drove me to bankruptcy.
Do you think that would still be possible today?
Organized crime remains active - but it's in retreat. And obviously corruption is still an issue. But recently in particular, a lot of things have changed for the better. The reform process is beginning to take effect, and there is broad agreement among people about the need for reforms in the administration and justice system.
The EU's Unpopular Expansion
In its latest progress report, issued in December, the European Parliament expressed shock at the "audacity of organized crime" in Bulgaria. According to Western observers, the economy is pretty much controlled by shady insider dealing. Recently, Susette Schuster, a judge from Cologne, was sent to Bulgaria on an EU mission and came back with "alarming" findings: The legal system is tangled, judicial reform is chaotic, the trust of the citizens in the state is weak, and corruption is widespread.
In addition, officials at Eurojust, the EU body that coordinates the member states' judicial systems, have also discreetly contacted parliamentarians in Brussels. They are afraid that their fight against terrorism and the trafficking of drugs, weapons and children would be made more difficult once Bulgaria's criminal gangs' informers in government gain access to all of the files. People who once dealt in drugs at the behest of the Communist state apparatus, now hold key positions in the police, the judiciary and politics. The same people will soon find themselves in control of €2.3 billion that the Bulgarians are due to receive in subsidies from Brussels over the next three years.
23.01.06
Кристиян Кирчев
The so called people's representatives - the politicians onf Bulgaria are just business men people in suits working in the parliament, geting payed by the national taxes collected off the people. Those Bulgarian businessmen - called Government Deputies (GD) - are trading with national goods. Whenever money come from the European Union (EU), the GD's are spreading them amongs themselves. They think and act as they think: "Those are money for our associates, their firms, and our companies. Let's split them, and screw the republic. This Is Capitalism!" Post-communistic looting of the the country. All closed factories, all farms forced to bancrupcy, all MAIN sectors of transport, comunication, and energy are privatised, and/or sold out to foreign investors in suspicious secret deals, are dooming a nation to be the employer of his own looter.
Luchezar Boyadjiev interviewed by Geert LovinkThe first interview was conducted during the opening of Hybrid Workspace in June 1997, the temporary media lab in the margins of the big art show Documenta X in Kassel (Germany).
> Could you explain us the current situation in Bulgaria from your point of view? For a long time, the Bulgarian communists have stayed in power, after having changed their faces. Recently, a lot has happened in South-East Europe... student demonstrations in Serbia, the first non-communist government in Romania, anarchy in Albania... What is the reason of the apparently unique position of Bulgaria?
The more time passes after 1989, the more differences there are between each country in Eastern Europe. In the past, Bulgaria had a privileged position, in terms of being one of the closest allies of the Soviet Union. The country enjoyed an almost free supply of raw materials, crude oil, electricity. A utopian situation, having no worry about how to produce and make a living for its citizens. Now, it looks as if time has stopped after 1989. We realized this only recently. On the surface, a democratic reform took place. A free-market economy was introduced, of which I am not a fan, but which seemed to be the only way out of the deadlock. As it turned out, there is no capitalism, so consequently, there is no opposition to capitalism. This applies also to the social situation. A redistribution of the old money of the regime is now taking place among its loyal followers who are now top bankers or mafia leaders. This is not capitalism, it is Monte-Carlo money. Easy come, easy go, no re-investments.
Violina Hristova of Sofia, senior reporter for Standart News specializing in reporting on organized crime: What distinguishes my country are the extortion rings controlled by groups of ex-athletes, especially wrestlers. They also control narcotics traffic, smuggling, counterfeiting and prostitution. They call it the "Wrestlers mafia. " The wrestlers' weapons are always baseball bats, and they use "security organizations" (protection agencies) as their cover.
Although many people talk about connections between the Bulgarian and Italian mafia, there's no proof. Some experts estimate 4,000 people are involved in this kind of organized crime. These groups launder money and bribe public officials and police. The businessman who does not go along may be beaten severely or even murdered. Sometimes the wrestlers make mistakes. For example, last summer in Sofia they kidnapped a businessman's mother-in-law instead of his wife. Many of these wrestlers are former members of government security forces.
Some people estimate the wrestlers control 50% of the nightclubs, 70% of the gambling and 80% of the cigarette and alcohol trade in Bulgaria, and are partners or owners of six casinos. The Wrestlers mafia originated after the change of the political system, as big groups of shady operators began employing the ex-weightlifters, ex-wrestlers, ex-boxers. Also employed were former police officers and the security services. Many believe these profits from illegal activities are being invested in the privatization process and legitimate businesses will emerge from them.
In Bulgaria, I found a society that was regarded as a democratic success abroad, but was really under siege from criminal clans. Organized crime is, of course, a common feature of former Soviet bloc societies.
 | | Romanians seem to be adapting to global capitalism in the same aggressive manner they once adapted to communism. | |
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By the 1980s, communist parties had evolved largely into large-scale mafias which, when the system collapsed, simply divided into smaller mafias that purchased politicians in all those new and weak democracies. Common, too, are allegations of a new Russian imperialism by way of European-wide crime connections and energy monopolies like Gazprom.
Quasi-legitimate enterprises
Nowhere, however, were such phenomena so transparent as in Bulgaria when I visited in 1998. Is is a poor, small country in which democratic institutions have been fighting valiantly against Russian attempts at "re-satellitization" by criminal stealth. Bulgaria illustrates how the potential evils of the new century are ominous precisely because of their ambiguity. It is no accident that here the word "groupings" is used instead of mafias.
These networks include legitimate enterprises — audited by Western accountants and, increasingly, linked to Western multinationals — as well as legitimate entities. They engage in activities such as compact-disk pirating, illicit-drug activity, money laundering and extortion. One foreign diplomat told me, "These groupings engage in violent intimidation and corrupt politicians. Yet, their genius is to cover their tracks to an extent that they are quasi-legitimate."
Transition economy crime stories
| | | The breakdown of Bulgaria's Communist state provided numerous opportunities for people close to power to cash in. | |
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Bulgarian crime has no centuries-old tradition like Italy's, or even one of heroic thieves and warrior clans as in Russia, Serbia, or Albania. Nor is there the colorful ethnic ingredient here that distinguishes criminal circles in the Caucasus, particularly in Georgia and Chechnya, with their family mafias and highwaymen. The Bulgarian groupings essentially are the result of the transition from communist totalitarianism to parliamentary democracy.
Cashing in
The breakdown of the Communist state provided numerous opportunities for people close to power to cash in. Some Olympic wrestlers, for example, gained control of motels along Bulgaria's international highways and at border checkpoints.
These motels provided revenues from prostitution and currency dealing and helped give them access to the car-theft business. This involved the theft of both local vehicles and those stolen in Western Europe, which passed through Bulgaria to the former Soviet Union by ship across the Black Sea.
A Russian satellite for crime?
| | | In Bulgaria, Russians as a people are very much liked, even if Russian communism is not. | |
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Not surprisingly,a strong bond exists between Bulgaria's groupings and Russia. Political party connections evolved into economic connections when Bulgaria was still a subservient satellite state. Strong links between the KGB and Bulgaria's communist-era security service became crime connections. And the countries' similar Slavic languages helped nourish social connections among criminals.
But what makes Bulgaria particularly vulnerable to Russian organized crime is that unlike other formerly communist states such as Hungary and Romania, here — for linguistic and historical reasons — Russians as a people are very much liked, even if Russian communism was not.
Not all that glitters is gold
Thus, even with a stable democracy, Bulgaria may not become a civil society if it continues to be undermined by this new and subtle Russian imperialism. As former president Zhelyu Zhelev told me, "The political parties could easily evolve into masks for mafia structures, with crime groups financing election campaigns."
The West could then leave Bulgaria to its fate by declaring it a "democratic success story." Since the Washington establishment typically prefers to simplify its problems by accepting official truths this seems a possibility. Bulgarians are right: They are in danger of being forgotten.
What the man on the street fears
Many Bulgarians and Romanians fear, however, that prices will rise after 2007 and that they will no longer be able to afford the basics, such as a heated apartment, a kilo of pork and a cinema ticket. Nothing sets of older people, farmers, and other ordinary citizens like the concept of EU accession. They worry that the EU will interfere too much in agriculture and that home-brewed schnapps will be made illegal.
Less than two years before they are due to join the EU, the feared rise in the cost of living is already beginning. At the end of September, a new tourism law was passed in Sofia: from now on the prices for Bulgarians and for foreign visitors should be comparable. Up until now, as in many other Eastern European countries, foreign tourists in Bulgaria paid many times more than domestic tourists for taxis, hotels, or museums. Thus the average Bulgarian fears that EU accession spells the end of annual holidays to the Black Sea. With an average income of €140 a month, Bulgarians cannot compete with tourists from the rest of the EU.
Faith in the EU-friendly political classes also suffers on account of corruption and crony-capitalism, both alive and well in Bulgaria and Romania. The biggest Bulgarian weekly paper, 168 chasa (168 hours) broke the news at the end of September that the young and ambitious Minister of State, Nikolai Vassilev, has, it is alleged, virtually exclusive control over the distribution of the money from EU Structural Funds. Meanwhile, according to the Romanian English-language daily paper Nine O’Clock, the Romanian President, Traian Basescu, has suggested a year long “abstinence from corruption” to his people at the end of September. This is theoretically supposed to wipe out corruption…
The Mafia is delighted
In the midst of this, Bulgarian and Romanian politicians are breaking into a sweat in order to fulfil their election promises: primarily, the longed-for EU accession in the year 2007. Bulgaria is behind in law reform, with 22 draft bills still waiting to be passed. Similarly, according to the Associated Press, the Romanian Prime Minister, Calin Tariceanu, pointed out at the end of September that his parliament had “still around 100 bills” that needed to be passed before EU accession.
The Mafia is delighted at the delays. The volume of human trafficking in the region is alarming, reports Richard Danziger from the International Organisation for Migration (IOM) in this year’s report on South Eastern Europe. General Boyko Borissov was, until recently, the General Secretary of the Bulgarian Ministry of the Interior and “Enemy No.1” of organised crime. In an interview with the Bulgarian magazine Egoist, he says that the fight against trafficking in drugs and people, money laundering and credit card fraud, as well as extortion, has had more success over the past few years. But unfortunately, he often finds that his hands are tied by the contradictory legal environment. Bulgarians and Romanians alike hope that these things will change with EU accession
Two Types of Post State-Socialist Capitalism
Following the disintegration of state socialism, a market system based on private ownership and production for profit has been constructed in all but three of the former state socialist societies.
There is no chance of a return to state socialism. The measures of reform have secured a high level of irreversibility: the planning mechanism has been destroyed, and the lynchpin of the political system, the Communist Party apparatus, dissolved. Whether these countries have moved to a modern capitalist system is open to question. The consequences of transformation have led to three blocks of post state socialist countries: two of which are market orientated and have large private sectors and one small cluster of countries which preserve statist economies (Uzbekistan, Belarus and Turkmenistan, which are ignored in the following discussion). Despite the significant policies of destatisation, the post-communist societies all share in common a higher level of state control than market capitalist countries and most have stock market capitalization at the levels of very low income countries. In terms of social development, the post-communist states have fallen in the world rankings of human development.
Weber’s claim that modern capitalism is distinguished by ‘the pursuit of profit and forever renewed profit, by means of continuous, rational, capitalistic enterprise’ applies more to the first group than to the second. The first includes the central European countries – Slovenia, Czech Republic, Poland, Hungary, Slovakia and Estonia – all new members of, and having borders with, the European Union. These countries are approaching the levels of OECD countries with respect to marketisation and privatisation, they also have a very positive participation in the global economy. This group is closest to the continental type of market capitalism, though it is more state led. They all have a low level of stock market capitalization and more developed welfare states, making them distinct from the Anglo-American countries. What is particularly important, from the point of view of the transition to a self-sustaining capitalist system, is that a high level of accumulation of capital is sustained. The figures cited above (Fig 3-2 and Table 3- 3) is the exceedingly low levels in all the former state socialist societies. Some, but not all, have very high exposure to the global market which acts as an exogenous source of economic change.
They resemble, and are likely to identify with, the continental European system as they all have embedded welfare states derived from the state socialist period. Economic coordination here is not through stock exchange capitalism, but is dependent on the state and also on companies with an international presence. Tutored by the conditionality requirements of the EU and the IMF, they have developed not only the economic preconditions of capitalism, but also the political and societal: an appropriate type of government, a civil society and an emerging bourgeois class structure.
A second model is that of a hybrid state/market uncoordinated capitalism. This is a relatively economically poor group which has had an unsuccessful period of transition: Russia, Ukraine, Kazakhstan, Georgia, and Moldova. These countries have exceedingly high income differentials, and high levels of poverty and unemployment. They have the characteristics of low income, primary sector exporting countries, with a very low integration into the global economy. They have particularly low levels of domestically sourced investment, though those with a large energy sector (such as Russia) have significant and disproportionate foreign direct investments.
The form privatisation has taken may lead to relatively few owners in extractive industries, such as oil, giving rise to great wealth on the one hand and, because of relatively low employment rates and ineffective redistribution policies, to poverty on the other. Economic policy should be concerned not only with efficiency, but also with equity. The move to the market and private ownership has significantly diminished equity in the post-communist states – though less so for those bordering on the European Union.
Country Reports on Human Rights Practices - 2005
Released by the Bureau of Democracy, Human Rights, and Labor
March 8, 2006
Bulgaria is a parliamentary democracy of approximately 7.7 million persons, and is ruled by a coalition government headed by Prime Minister Sergei Stanishev. Multiparty parliamentary elections in June were deemed generally free and fair despite some reported irregularities. While civilian authorities generally maintained effective control of law enforcement officers, there were some instances in which law enforcement officers acted independently of government authority.
The government generally respected the human rights of its citizens; however, there were problems in several areas. The following human rights problems were reported:
- police abuses, including beatings and mistreatment, of criminal suspects, prison inmates, and members of minorities
- harsh conditions in prisons and detention facilities
- arbitrary arrest and detention
- impunity
- limitations on freedom of the press
- some restrictions on freedom of religion
- discrimination against certain religious minorities
- widespread corruption in executive and judicial branches
- violence and discrimination against women, children, and minority groups, particularly the Roma
- trafficking in persons
- discrimination against persons with disabilities
- child labor
