A m e r i c a n C h a m b e r o f C o m m e r c e i n B u l g a r i a

h o m e p a g e : w w w . a m c h a m . b g e - m a i l : a m c h a m @a m c h a m . b gBus i n e s s Pa r k So f i a , M l ados t 4 A r e a , Bu i l d i n g 2 , F l o o r 6 , 1 7 6 6

So f i aT e l . : ( 3 5 9 2 ) 9 7 4 2 7 4 3 F a x : ( 3 5 9 2 ) 9 7 4 2 7 4 1

i s s u e 9 1j u l y - a u g u s t 2 0 0 8

4th of July in Sofia4th of July in Sofia

AmCham Bids Farewell to John Beyrle and James RigassioAmCham Bids Farewell to John Beyrle and James Rigassio

Analysis: Corruption Investigation Freezes EU Road Construction Funds; AmCham Events:Government , Businesses Discuss EU-U.S. Par tnership; Pain D'or Wins AmCham Tennis Trophy;General Assembly Welcomes Scott Pozil , Votes Bernard Moscheni to Board

Analysis: Corruption Investigation Freezes EU Road Construction Funds; AmCham Events:Government , Businesses Discuss EU-U.S. Par tnership; Pain D'or Wins AmCham Tennis Trophy;General Assembly Welcomes Scott Pozil , Votes Bernard Moscheni to Board

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Dear Members and Friends,

The last month was full of remarkable events for both ourcountry and the Chamber. The most touching moment to us,by far, was the farewell party that AmCham gave for thedeparting U.S. Ambassador John Beyrle and U.S.Commercial Counselor James Rigassio.

It is hard to express how thankful we are for what they havedone for AmCham to become such a successful organiza-tion as it is now. We have been privileged to know and workwith them. The greatest asset for us has become theirfriendship.

We wish them all the best in their new assignments.

John and Jim, You are always welcome to Bulgaria and AmCham!

AmCham Board of Directors

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Publisher

American Chamber of Commerce in Bulgaria

Business Park Sofia, Mladost 4 Area

Building 2, Floor 6, Sofia 1766, Bulgaria

Tel.: +359 (2) 9742 743

Fax: +359 (2) 9742 741

e-mail: amcham@amcham.bg

www.amcham.bg

Editor-in-Chief

Milen Marchev

Deputy Editor-in-Chief:

Christopher Karadjov

Senior Editor:

Irina Bacheva

ISSN 1312-935X

Writers:

Boyko Vassilev, Marina Tzvetkova,

Mina Georgieva, Panayot Angarev,

Yuliana Boncheva

Advertising

AmCham Bulgaria:

Nadejda Vakareeva, nadia@amcham.bg

AmCham Bulgaria Magazine:

Milen Marchev, milen@milenmarchev.com

The AmCham Bulgaria Magazine reaches a broad audience

of AmCham members, leading US, Bulgarian and internation-

al companies, US and Bulgarian decision-makers, all

AmChams around the world.

Subscription is free of charge. If you would like to subscribe

to AmCham Bulgaria publications, please contact the

AmCham Bulgaria office.

i s s u e 9 1j u l y - a u g u s t 2 0 0 8

AmCham Bulgaria Magazine is a primary forum for political and economic analyses, news, viewpoints as well as for the presentation of new business

opportunities. The articles in the AmCham Bulgaria Magazine express the opinions of the authors and do not necessarily reflect the position of the

American Chamber of Commerce in Bulgaria.

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a m c h a m b u l g a r i a

3M (East) AG . AA KRES EOOD . ABB Bulgaria EOOD . Abbott Laboratories S.A. . AbCRO - Bulgaria .Accor Services Bulgaria . ACO Building Elements Ltd. . ACSIOR Ltd. . ADIS Ltd. . Advance InternationalTransport (Balkan) EAD . AES Corporation . AFA OOD . AIG Bulgaria Insurance & Reinsurance CompanyEAD . AIG Life Bulgaria . AIMS Human Capital . Alcoa Packaging Bulgaria . Alexander Hughes BulgariaOOD . ALEXANDROV GROUP CORPORATION . Alfred C.Toepfer International . Alliance One TobaccoBulgaria . Allied Pickfords Bulgaria . Alter Ego Company OOD . American College of Sofia . AmericanEnglish Academy . American Resarch Center in Sofia . American University in Bulgaria (AUBG) . Anglo-American School of Sofia . Anton Preslavski, Liebert Hiross . APIS - BULGARIA Ltd. . APOLO Ltd. . AriesCommerce . Ashtrom International Ltd. . Association Integra-BDS . Astra Zeneca UK Ltd. . Astral HolidaysAD . AT Engineering 2000 Ltd. . Auditing Company Versi and Partners Ltd. . AVON Cosmetics Bulgaria Ltd.. BAE Systems International Ltd. . Balkan Accession Fund . Balkan News Corporation Plc. . Balkan StarAutomotive EOOD . Baxter AG . Bayer Bulgaria EOOD . BC Serdon . Berlitz Schools of Languages .BG Radio . BMG Ltd. . Bodyguard-Fire-K Ltd. . Borislav Boyanov & Co. . Braykov's Legal Office .British American Tobacco . Brown Forman Beverages Worldwide Sofia Branch LLC . Bulgaria Platinum GroupEAD . Bulgarian American Enterprise Fund . Bulgarian Charities Aid Foundation (BCAF) . Bulgarian InvestmentConsulting Agency (BICA) . Bulgarian Land Development EAD . Bulgarian Telecommunications Company AD. Business Media Group . Business Park Sofia EOOD . CallPoint New Europe AD . Candole PartnersEOOD . Car Rental Bulgaria Ltd. . Carlsberg Bulgaria AD . Cefin Bulgaria EOOD (IVECO dealer) . Centerfor the Study of Democracy . CENTURY 21 Bulgaria . Cheque Dejeuner Bulgaria OOD . Chelopech MiningEAD . Chris Thompson, Independent Consultant . Cisco Systems Bulgaria . Citibank N.A.- Sofia Branch .City University of Seattle . Cleves EOOD . CMS Cameron McKenna EOOD . Coca-Cola HBC Bulgaria AD. Coface Bulgaria Credit Management Services EOOD . Colgate-Palmolive Adria . COLLIERS International. ConsulTeam Recruitment and Selection Ltd. . Cook Communications . Corstjens Worlwide Movers Group. CPM Consultancy Sllc . Curtis / Balkan Ltd. . D&IC (Dun and Bradstreet Representative) . DeConiInternational . Deloitte Bulgaria OOD . DENIMAR Ltd. . Devin AD . DHL Express Bulgaria Ltd. . DiageoBulgaria Ltd . Diamed Ltd. . Dimitrov, Petrov & Co. . Djingov, Gouginski, Kyutchukov, & Velichkov . DLAPiper Weiss-Tessbach Branch Sofia . Dobrev, Kinkin & Lyutskanov Law Firm . Domaine Boyar International AD. Dr. Emil Benatov & Partners . Dr. I.S. Greenberg Medical Center, Ellen Ruth Greenberg, Ph.D. . DuPont deNemours International S.A. . DynCorp International LLC . Economedia AD . Effekten Und Finanz - Sofia AD. Ekotoi - Service Ltd. . Electron Progress EAD . Eli Lilly and Company . Elido (Lamel Ltd.) . ElmecSport Bulgaria EOOD . Elta consult AD associated partner of CB Richard Ellis for Bulgaria . Emerson ProcessManagement AG . Emporiki Bank Bulgaria EAD . Encouragement Bank AD . Enel Maritza East 3 AD .Enemona SA . Engineeringservice Sofia Ltd. . Environmental Quality Management, Inc. . Epsilon InteractiveInternational . Equest EAD . ERATO HOLDING Plc . Ernst & Young Bulgaria . European Bank forReconstruction and Development (EBRD) . Flying Cargo Bulgaria Ltd. - Licensee of FedEx . Force Delta Ltd.. Forem Consulting Bulgaria . Fortel Engineering LTD. . Forton International JSCo . Foster Wheeler EnergiaPolska, Branch Office Bulgaria . Foundation for Local Government Reform . G4S Security Services BulgariaJSC . General Electric International . General Security ltd. . Genmark Automation Bulgaria Plc. .GlaxoSmithKline . Global Benefits Group GBGI CEE LLC Representrative Office . Goodyear Dunlop TiresRomania . Grand Hotel Sofia . Grenville Bulgaria . Grey Worldwide Bulgaria EOOD . Hewlett-PackardBulgaria Ltd. . Hilton Sofia . Holiday Inn Sofia . Honeywell EOOD . Hotel Yastrebets Wellness & SPA .IBM Bulgaria . IBS Bulgaria Ltd. . Ideal Standard Bulgaria . Immo Industry Bulgaria . In Time Ltd. .Industrial Holding Bulgaria . ING Bank Sofia Branch . Interbrands Marketing & Distribution Inc. OOD . Interdean. International University College . Investbank Plc. . IP Consulting Ltd. . ISI Emerging Markets (InternetSecurities, Inc.) . Johnson & Johnson Doo. . Johnson Controls Electronics Bulgaria . Junior AchievementBulgaria . Kaliakra AD . Kamenitza AD . Kamor Auto EOOD . Katilin Popov Enforcement Officers .Kempinski Hotel Grand Arena Bansko . Kimimpex Trade and Leasing Ltd. (2be) . Kolbis International TransferCorporation . KPMG Bulgaria . Kraft Foods Bulgaria . LANDMARK Property Bulgaria . Lexim Sofia Ltd.. Lindner Immobilien Management EOOD . Lirex BG Ltd. . Lowe Swing Communications . M & M Air CargoService Bulgaria Ltd. . M3 Communications Group, Inc. A Hill & Knowlton Associate . Magnetic HeadTechnologies . Maria Vranovska, MD, MBA . Marsh EOOD . MARTERN EOOD . Mathnasium (RossimatLtd.) . MBL Ltd. . McDonald's Bulgaria Ltd. . Mellon Bulgaria EAD . Merck Sharp & Dohme Bulgaria .Mercurius-Sofia . Metropolitan Hotel Sofia . Microsoft Bulgaria . Miltech Ltd. . Mmd, Corporate, PublicAffairs & Public Relations Consultants . Mobiltel EAD . Monbat Plc. . Moody International Ltd. . MotenSport . Moto-Pfohe Ltd. . Motorola Bulgaria EAD . National DISTRIBUTORS . NATO Defense CollegeAnciens' Association . NDT Equipment Supplies Ltd. . Neochimiki Bulgaria S.A. . Neterra Communications. Neumann International AG . New Europe Corporate Advisory . New Europe Directories Bulgaria . NexcomBulgaria EAD . On Bulgaria Ltd. . Opet/Aygaz Bulgaria EAD . Oracle East Central Europe Limited - BranchBulgaria . Orbit Ltd. . Orkikem Ltd. . OSG Records Management . Outsource Partners International .Ozone Laboratories Bulgaria . PANDA - IP Ltd. . Pedersen & Partners . Penev & Partners Law Offices .Penkov, Markov & Partners OOD . Pfizer Luxembourg SARL, Representation Office Bulgaria . Philip MorrisBulgaria EOOD . Pioneer Semena Bulgaria EOOD . Piraeus Bank Bulgaria AD . Plesio Computers Jsc .Popov Legal Office . Postbank (Eurobank EFG Bulgaria AD) . PostPath . Praktiker EOOD . Pratt &Whitney . PricewaterhouseCoopers . Procter & Gamble Bulgaria . ProSoft . PSG Payroll Services Ltd.. Radisson SAS Grand Hotel . Reader's Digest EOOD . Regus Bulgaria Ltd. . Renault Nissan BulgariaSRL . Rising Force Co., Ltd. . Rockwell/Intelpack . RPI Consulting . S&T Bulgaria . Sanofi - AventisBulgaria EOOD . Scandinavia Motors Ltd. . Schenker EOOD . Schering - Plough Central East - Bulgaria. SEAF Management Bulgaria EOOD . Sheraton Sofia Hotel Balkan . Sherita M Ltd. . Siemens EOOD .Sienit Ltd. . SigmaBleyzer Investment Group LLC - Representative Office . SKE Bulgaria EOOD . SofstroyAD . Soravia Bulgaria Ltd. . Stanton Chase International Bulgaria . Steelcase . Stefan Dimitrov, NormanRealestate Co. Ltd. . Stroy-Consult EOOD . Symix Bulgaria OOD . TechnoLogica EOOD . TeleLink EAD. The Coca-Cola Company Bulgaria . Tishman Management Company Ltd. . Tissue Bank Osteocenter BulgariaEAD . TMF . Totema Engineering . Trans Company Ltd. . TravelStoreMaker.com . Tumbleweed ®Communications Corporation EOOD . UniCredit Bulbank . Unimasters Logistics Plc . Unique Estates .Unisys Bulgaria Branch . United Bulgarian Bank . United Consulting Ltd. . United Healthcare Bulgaria Groupof Companies . United Medical Communications . Vaptsarov Holding AD . Vector Management BulgariaEOOD . Videolux Holding / Technopolis . VIP Security Ltd. . VISA Europe . VM Finance Group . VSKKentavar Ltd. . Welcome to Bulgaria . Westinghouse Energy Systems Bulgaria Branch . World CourierBulgaria . World Transport Overseas Bulgaria Ltd . WorleyParsons Europe Energy Services Ltd. . WrigleyBulgaria EOOD . Xerox Bulgaria Ltd. . Yavlena EOOD . Zlati Dinev Studio in partnership with

Board of Directors of the American Chamber of Commerce in Bulgaria

President Mr. Borislav Boyanov Borislav Boyanov & Co.

Vice President Mr. Anthony Hassiotis PostBank

Vice President Mr. Kenneth M. Lefkowitz New Europe Corporate Advisory

Treasurer Ms. Tanya Kosseva-Boshova Landmark Property Bulgaria

Members Mr. Bernard Moscheni BTC

Mr. George Georgiev Motorola Bulgaria

Mr. Thomas Higgins Balkan Accession Fund

Mr. Andon Ichev General Electric

Mr. Stefan Ivanov Citibank N.A.

Ms. Dana Leff AbCRO Bulgaria

Mr. Chris Thompson Consultant

Ms. Elitsa Tsaneva Ideal Standard Bulgaria

Ex-Officio Member Mr. Scott Pozil US Senior Commercial Attache

Executive Director Valentin Georgiev

Contentsc o v e r s t o r y

Bush, Stanishev and Secret of Broad Smiles . . . . . .4

By Boyko Vassilev

4 t h o f j u l y

AmCham community marks 14th Independence

Day in Sofia . . . . . . . . . . . . . . . . . . . . . . . . . .10

a m c h a m e v e n t s

AmCham Bids Farewell to True Friends . . . . . . . .16

e c o n o m y

Corruption Investigation Freezes EU Road

Construction Funds . . . . . . . . . . . . . . . . . . . . . .20

By Mina Georgieva

a n a l y s i s

Economic Growth Accelerates in Q1 amid Risks of

Dramatic Market Corrections . . . . . . . . . . . . . . . .28

a m c h a m e v e n t s

Government, Businesses Discuss EU-U.S.

Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . .30

General Assembly Welcomes Scott Pozil,

Votes Bernard Moscheni to Board . . . . . . . . . . . .34

n e w m e m b e r s . . . . . . . . . . . . . . . . . . . . .37

Cheque Dejeuner Bulgaria OOD

Pedersen & Partners

Stroy-Consult EOOD

a m c h a m e v e n t s

Pain D'or Wins AmCham Tennis Trophy . . . . . . . .38

m e m b e r n e w s

Anglo-American School of Sofia Marks 40th anniver-

sary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

Golden Pages Sends 2008 Edition to 350,000

Addresses . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

UniCredit Bulbank Cardholders Are Free-of-charge at

ATM Withdrawal Abroad . . . . . . . . . . . . . . . . . .43

Sopra Group Merges with Tumbleweed

Communications . . . . . . . . . . . . . . . . . . . . . . . .44

They are an odd couple, but neverthe-less they seem to like each other.

One of them is the son of a former CIAchief, later to become the U.S.President, who put a victorious end tothe Cold War, George Bush Senior.Bush Junior himself is a U.S. militaryleader and a conservative, whobelieves in God. The other is the sonof the former secretary of the CentralCommittee of the Bulgarian CommunistParty and former guerrilla Dimiter

Stanishev. Junior Stanishev graduatedfrom a university in Moscow and ledprotests against the war in Iraq.George Bush Junior and SergeiStanishev met each other for the sec-ond time in mid-June 2008 and thepleasure they experienced from theirmeeting at the White House impressedeverybody.

Was it because earlier, in Sofia, Bushcalled the Bulgarian Prime Minister"Mr. Clean?" Was it for that reason

that the two extended the meetingbeyond the time fixed by protocol andcrowned it with broad smiles?Bulgarian media were unanimous intheir euphoria - "Stanishev is Bush'sman," "America's man in Bulgaria. TheU.S. friend at the Balkans." Severaldays later Bulgaria's prime ministercontinued to hail Bulgarian-U.S. coop-eration as a major priority of thiscountry. Joy and emotions. However,what is the secret behind the emo-tions?

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Bush, Stanishev andSecret of Broad Smiles

By Boyko Vassilev

"Mr. Clean" Goes to Washington

U.S. President George W. Bush (R) shakes hands with Prime Minister of Bulgaria Sergei Stanishev in the Oval Office of the White House in Washington, DC. USA,

on 18 June 2008. The two leaders discussed issues of mutual importance.

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It may sound paradoxical, but if welook into the specific contents, thenthe U.S. visit of Bulgaria's prime min-ister would emerge as completely rou-tine. Bush and Stanishev exchanged

the standard niceties

hailed, out of courtesy, the role ofBulgaria in the Balkans and the recog-nition of Kosovo, demonstrated theallies' decisiveness in Iraq andAfghanistan, and talked a little aboutenergy. A day before that the twostates had signed "an intermediateagreement on the issues related to theprogram for visa-free travels to theUnited States" which is a loose docu-ment. Bulgaria and the United Stateshave no strategic differences, nor arethey forced to face strategic decisionsregarding their bilateral relations:Sofia joined NATO a long time ago, itreceived the U.S. backing for its EUmembership and for the liberation ofthe Bulgarian nurses held in Libya; itdoes not plan a pullout of any of thehot spots; there is no huge diaspora inthe United States. Nothing but routineinter-country business, at first glance.

But only at first glance. An American,who recently visited Sofia, said "owlsare not what they are."

Let us take the visits. In practicalterms, the agreement signed byBulgaria's Foreign Minister Ivailo Kalfinand U.S. Secretary of HomelandSecurity Michael Chertoff does notsolve the issue and does not set anydeadlines. Bulgaria, however, is thefirst of its group of countries, which

signs such an agreement, after itsomehow made the United States rec-ognize that visa restrictions are incom-patible with the Bulgarian victims inIraq. George Bush himself admittedthis fact in an interview for theBulgarian National TV last year. Andalthough the debate is beyond thepresident's administration (especiallybeyond the outgoing incumbent admin-istration), Bulgaria was granted a gen-uine horizon for the elimination ofvisas. World media highlighted thisfact, which came out of the Stanishev-Bush meeting, on the background ofthe ongoing U.S. visa disputes inEurope.

Or take energy. Bulgaria and Americaseem to be far apart, at first glance.And whenever they start talking onenergy issues, the only thing we hearis the silent American murmur afterthe next Bulgarian signature in anenergy agreement with Russia. Plusthe magic word "diversification" - whentranslated, it means "do not leave allyour eggs in the Russian energy bas-ket." This time, however, the accentwas different. Bulgaria demonstrated agenuine interest in Nabucco,America's favorite gas pipeline, fre-quently opposed to the "pro-Russian"South Stream. Besides, Bulgariademonstrated its concern of the slowprogress of Nabucco.

Nuclear energy emerged as the bighit. Bush and Stanishev talked aboutit, which was not a chance selectionof topic. Pressed by global warmingand skyrocketing oil prices, the UnitedStates will invest in nuclear power

facilities at home and abroad. Ministerof Economy and Power EngineeringPetar Dimitrov also

spoke about nuclear inter-

ests towards Bulgaria.

Dimitrov was among the three cabinetministers, who accompanied Stanishevon his trip to the United States(together with Foreign Minister Kalfin,the new Defence Minister NikolayTsonev and the head of the parlia-mentary committee on foreign affairs,Kalfins's predecessor Solomon Passi).

Minister Dimitrov refrained from goinginto details, but still an old idea man-aged to pop out - to build a seventh,and perhaps also an eighth nuclearreactor at the Kozlodui Nuclear PowerPlant, without halting the Belene pro-ject. The meeting with U.S. Secretaryof Energy Samuel Bodman fueledthese conjectures and confirmed theU.S. commitments also for the "non-nuclear" investments in the energysector, for instance the participation ofAES in Maritsa Iztok projects.

Otherwise, Bulgaria again turned toU.S. business. Prime MinisterStanishev emotionally urged the par-ticipants in the investments forum,held at the New York's Harvard Clubon Fifth Avenue, to act. "You arealready late," Stanishev stressed. Theforum was attended by representativesof more than 150 corporations, JPMorgan, Tishmann International,American Standard, Morgan-Stanley,Moody's, Deloitte and Touche amongthem. Bulgaria's competitive advan-

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tages were highlighted by people likeAllen Levy, President and owner ofTishmann. "American investments inBulgaria are already measured in bil-lions, and not in millions," said U.S.Ambassador John Beyrle, the diplo-mat, who helped boost bilateral rela-tions during his mandate.

Bulgarians in the United States are onemore component of this forum.According to the prime minister, thereare already some 200,000 Bulgarians inAmerica, and although this is a smallnumber compared to Italians, Irish andGreeks, the community has alreadymanifested its ability to self-organize.Prominent representatives of theBulgarian diaspora met with Stanishev inNew York, Washington and Philadelphia.Several days after Stanishev left, U.S.and Bulgarian national teams playedvolleyball in Chicago, where Bulgarianfans outnumbered and outshoutedAmericans in the arena.

Generally speaking, all Bulgarianactivities during the visit schedulewere unexpectedly well attended.Prime Minister Stanishev was happy tosay for the Bulgarian NationalTelevision that he had been surprisedby the sheer number and the profile ofguests, who attended the receptionorganized by Bulgaria at theNewseum. The presence of the CIA,FBI and DEA heads at the receptionwas symbolic, because

security is a major com-

ponent

of Bulgarian - U.S. relations andStanishev's personal agenda. Heboasted during the trip about the cre-ation of the State Agency on NationalSecurity (SANS), often called"Bulgaria's FBI." SANS was not morethan an idea during the visit ofPresident Bush in Sofia, while it isalready up and running and generatingresults.

Could these factors be taken as signalthat the United States supportsStanishev in his efforts to fight cor-ruption? No doubt about that. Didthese factors indicate that Washingtonsees "Mr. Clean" as the uncorruptedentity in Bulgaria's politics? It is prob-able. However, Bulgarian analystswere quick to ask the question: "When

are the United States telling the truth?When Bush hails Stanishev for fightingcorruption? Or when the U.S. ambas-sador to Bulgaria criticizes institutionsand businessmen for being suscepti-ble to corruption?" Both would be true.The United States work perfectly wellwith the incumbent government andespecially with its prime minister, butWashington cannot pretend it does notsee any violations. A difficult situation,no doubt about this, but this is not themain issue.

Which is the difficult situation of theprime minister. Immediately before heleft for Washington, Stanishev had tobear with the criticism of PresidentGeorgi Parvanov addressed towardhim, his advisors and some governmentactions. The criticism, albeit somewhatsoftened, continued while the youngpremier was abroad. Stanishev wasreluctant to comment on it inWashington and seemed to be underpressure. Perhaps this is the reasonwhy the support extended by PresidentBush relieved and delighted him."Unlike other states, George Bush hastwo people to talk to - Parvanov andme," said the prime minister. And thatwas perhaps his reply to questions whyhe was so happy after his meeting withBush.

It was at that instance that the geopo-litical imagination of Bulgarian analystsflew really high - "America's" manStanishev against "Russia's" manParvanov; Nabucco lobbyist against theSouth Stream lobbyist," etc. Well, thingsare never so simple, unidirectional andconspirative; domestic problems prevail,while external surprises are just forspicing. The surprise was elsewhere: inBulgaria, unlike Western Europe,

American political support

brings dividends.

Add the traditional easiness, withwhich the Republicans deal with EastEuropeans left in the framework ofrelations, where partners simply can-not be disappointed by each other.Given this background, Stanishevseemed unwilling to fly back fromWashington to Frankfurt and Brusselsto attend the European Council sum-mit. Instead of Washington smiles, hehad to endure the stern faces ofEuropean leaders, pressed by oil

prices, the Irish "no" to the LisbonTreaty and their willingness to admon-ish Bulgaria for its poor managementof European funds. Thus, Washingtonturned for Bulgarian politicians into abearer of good news, while Brusselsbrings only the bad ones. It is anentirely different questions howBulgarians treat these issues.

The current situation will be preservedwith the new U.S. President. JohnMcCain is an old friend of Bulgaria,and Barak Obama is competent onEuropean issues and recently urgedthe new U.S. Ambassador to Bulgariato support "aggressively" the combatagainst corruption in this country. Inother words - both the carrot and thestick are on a prominent display. Theproblem is whether Bulgarian politicianswill manage to use the good relationswith America to the benefit of theBulgarian citizens. An improved invest-ments climate, a more carefulapproach to the military bases issue,and more joint projects would undoubt-edly help.

Yet the main focus is elsewhere:Bulgarian elites must do their own jobalone and forget about being con-stantly urged by the United States tofight corruption, organized crime anddeficient regulations. The Bulgariansmust feel that they are representednot by the U.S. Ambassador, but bytheir own government. Otherwise theywill start hating the Americans as well- as it usually happens with governors-general, even with those of them whohave genuinely good intentions.

They - the president and prime minis-ter, with different backgrounds andmutual sympathies - have alreadydone whatever they could the secondhas about a year until the end of hismandate, while the first has two timesless than that. The next governmentconfigurations in Sofia andWashington seem unclear. But readthe writing on the wall: even an oddcouple may get along well.

That is, if this couple really wants todo its job and not embark on conspir-acies, personal slander, pettiness andunimportant issues. Bush andStanishev managed to deal with eachother not because they have no histo-ry among themselves. On the contrary.

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Letter from Ambassador John Beyrle

On June 18, I had the honor of participating in the Oval Office

meeting between President Bush and Prime Minister Stanishev

- truly one of the high points of my three years here in

Bulgaria. President Bush praised Bulgaria for its constructive

role in the Balkans, for its support in Iraq and Afghanistan, and

for its efforts against crime and corruption. Prime Minister

Stanishev noted that Bulgaria and the United States have

reached the level of a real strategic partnership.

The visit of the Prime Minister had concrete benefits. We

signed an interim agreement to move closer to visa-free trav-

el to the United States. Our Federal Aviation Administration

announced that Bulgarian air travel standards have improved

to a level that will allow direct flights between the United States and Bulgaria. And we agreed to

strengthen our cooperation against the proliferation of weapons of mass destruction. The Prime

Minister also met with American business leaders and investors in New York, making a strong case

that Bulgaria, with its talented and educated work force, offered excellent opportunities for growth.

The Prime Minister's visit was a clear demonstration of what our two nations have achieved in the

last three years. We have become real strategic partners, working side by side in NATO, and fight-

ing together against extremism and terrorism in Afghanistan and Iraq.

We have become partners for greater stability in the Balkans. As President Bush said to Prime

Minister Stanishev, "you've been a constructive force for stability, a constructive force for hope" in

this region.

We are business partners - American investment has grown from the millions to the billions of dol-

lars. The two largest foreign investments in Bulgaria today are American-led.

And we are partners in the fight against organized crime and corruption, against human trafficking

and drug trafficking. Our FBI, Secret Service, and Drug Enforcement Agency work together with

their Bulgarian counterparts every day. Our training and technical assistance is giving Bulgarian

law enforcement the tools and expertise it needs to defeat organized crime.

I take great pride in the fact that my government played a leading role in helping Bulgarians mod-

ernize their judicial and administrative systems. USAID will close here this summer, but it leaves

an enduring, sustainable institutional legacy, including the National Institute of Justice, the American

University in Bulgaria, and a large cadre of officials in government, industry, and NGOs trained in

better public service.

And again this summer, thousands of Bulgarian university students will travel and work in the United

States. These are truly some of your best diplomats; they have introduced Bulgaria to countless

Americans, who have marveled at their intelligence, industriousness, good humor, and curiosity

about the world.

Obviously, great challenges remain, as you work to make Bulgaria more prosperous, diversify ener-

gy sources, fight crime and corruption, and strengthen the rule of law.

I know that Bulgaria can succeed, because I know that Bulgarians have overcome much greater

obstacles in their long history. And today, you no longer face problems on your own. You are now

truly re-integrated with Europe. You have a strong ally and partner in the United States. And we

have a stake in your success as you work to make Bulgaria a stronger, more prosperous country.

I thank you for considering me a friend, for honestly sharing your ambitions and frustrations with

me, and helping me do a better job of supporting your efforts during these pivotal three years in

y o u r

history.

Sincerely,

John Beyrle

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Members and friends of the AmCham family gathered yetagain for the 14th time to celebrate the U.S.Independence Day.

More than 2,000 people gathered at the LozenetsResidence on Milin Kamak Street for this already tradi-tional party. The residence has become a familiar spotfor the American community in Bulgaria - AmCham mem-bers, U.S. embassy employees and families, U.S. citizensin Bulgaria, and businesspersons invited for the occa-sion.

AmCham Fourth of July party usually is associated withlots of fun, good music, special moments, presents, ruf-fle prizes, delicious meals, beer and soft drinks. On thetwo stages the guests enjoyed the live performance ofKeystone (Pennsylvania) State Boychoir, Astor's MagicShow, Malchugan-Velikan clownes and of course thefamous Dirty Purchase band - Lyudmil Stoynev, NikolayTanev, Emil Minchev, Amalia Georgieva Nikolova, MihailYossifov, Vassil Enchev, Velislav Stoyanov, Ivan Lechev,and Hristoslav Galileev. In addition, we had the now tra-ditional Jack Daniel's barbecue party, which is a VIP con-test for the best chef. Special Jeep Corner for the kidsand BTC free Wi-Fi zone added to entertainment.

All guests were warmly welcomed by AlexanderKaragiannis, DCM, U.S. Embassy; Borislav Boyanov,AmCham President, Valentin Georgiev, ExecutiveDirector; and David Hampson, master of ceremony. Theyreiterated the idea of liberty and justice as a foundationof the U.S. nation, and a 200-year-old ideal that hasproved its appeal worldwide. A symbolic part of the cel-ebration became the performance of 60 boys, agedbetween 7 and 17, of the Keystone State Boychoir ofPennsylvania. These performers are on their Europeantour, which included Bulgaria and a stop at the AmChamparty. Since the choir came from historic Philadelphia,where the Declaration of Independence was signed,Associate Music Director Steven Fisher presentedAmCham with a symbolic Liberty Bell replica.

The choir's evening repertoire included classical chorals,world music, and the ever-popular American genres ofspirituals, gospel, jazz and Broadway songs. The U.S.choir mixed with Bulgaria's Bodra Smyana to perform thenational anthems, followed by National Colors ceremonyby representatives of the U.S. Marine Corps.

There is no Fourth of July party without spectacular fire-works, so guests at the AmCham party also expected afiery ending. They were not disappointed and right at9:30 p.m. the sky was lit up in red, white and blue. Thedaylong party ended near midnight with a huge cake anda happy audience. ■

AmCham community marks 14thPennsylvania's Boychoir, Bulgaria's

Astor, Dirty Purchase entertain

guests

T h e P a r t y S t a r t s

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4 t h o f j u l y

Independence Day in Sofia

F a m i l i e s a n d F r i e n d s

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The fundraising from raffles collected money for char-

ity purposes. A lot of companies - AmCham members

and their business partners - were willing to contribute

with attractive prizes. Among temptations for the

guests, which kept the AmCham raffle stand busy all

the time, were weekend stays at attractive hotels, free

tickets for international travel, vouchers for gourmet,

music entertainments and many others. Prizes were

contributed by the following companies:

2be

Allied Pickfords

Balkan Star Automotive

BCD Travel

Bulgarian Telecommunications Company

Bulgarian VIP Travel

Centralni Hali

Centransit.bg & Sol Nessebar Palace / Nessebar

Centransit.bg & ECO complex Old Bistrilishki Houses

Centransit.bg & Hotel Time Out / Sandanski

Hotel Perun / Bansko

Centransit.bg & Melia Grand Hermitage / Golden Sands

Centransit.bg & Parlapanova House / Bojenci

Classic

Grand Hotel Sofia

Hilton Sofia

Kempinski Hotel Grand Arena, Bansko

Metropolitan Hotel Sofia

Motorola

Plesio Computers

Radisson SAS Grand Hotel Sofia

Reader's Digest

Sheraton Sofia Hotel Balkan

Yastrebets Wellness & SPA Hotel, Borovets

R a f f l e s

T h e B a n d s a n d t h e F a n s

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4 t h o f j u l y

J a c k D a n i e l ’ s B a r b e q u e

Simultaneously with the various attraction corners of the party,a lively Jack Daniel’s barbeque contest was carried on under theprofessional guidance of Petar Bachvarov-Uti, the famousBulgarian chief, who was presiding the jury. Five teams from dif-ferent media participated in the contest. The overall award wasgranted to bTV's Ivan Tenchev. Other awards were given for aspecial meal cooked with a fish, for the best looking meal, andfor the most delicious meal.

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Children were the happiest guests, with

several attractions at their disposal, from a

UHB mini-golf corner to JEEP Kids' Corner

and Patilantzi playcastles. To add to that

was the performance of Malchugan-

Velikan, and the Astor Magic Show.

K i d s C o r n e r

F i r e w o r k s a n d C a k e p a r t y

The party was generously supported

by BAE Systems, Balkan Star

Automotive, bTC and Vivatel, Jack

Daniel's, MBL. Supporting sponsors

were: Dundee Precious Metals, Ernst

& Young, BZF - United Medical Group,

ADIS, DuPont, Motorola Bulgaria,

Penkov, Markov & Partners, Postbank

(Eurobank EFG). The delicious foods,

beverages and facilities were provided

by: Hilton, McDonalds, Coca Cola,,

Jack Daniel's, Pain D'or, Radisson

SAS, Kamenitza & Stella Artois,

Tuborg & Shumensko, Krea Design,

Red Devil Catering.

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"The most difficult task for me inMoscow will be the nostalgia forBulgaria," said U.S. Ambassador toBulgaria John Beyrle in an emotionaladdress to the participants during aparty organized by АmCham Bulgariaon June 9. Also leaving is U.S.Commercial Counsellor in Sofia JamesRigassio.

The two U.S. diplomats completed theirSofia mandates will be departing short-ly, albeit with regret. Beyrle has beenappointed U.S. Ambassador to Russia,and Rigassio will join the U.S.Commercial Service in Argentina. Theyleave Bulgaria with two paintings offamous Sofia landmarks, presented byAmCham President Borislav Boyanov.

Some 100 AmCham members attended

the farewell party, along with the diplo-mats' spouses, Jocelyn Greene andMimi Rigassio.

By all accounts, it was a partingbetween genuine friends rather than aformal farewell dinner. John and Jim,as AmCham's Executive DirectorValentin Georgiev addressed them,were moved by the warm and friendlyattitude of all guests. "We shall reallymiss you," said numerous AmChammembers who came to shake thedeparting diplomats' hands at the partyand have one last chat with them.

Ambassador Beyrle and CounsellorRigassio are leaving a trail of achieve-ments behind. The Ambassador, whospeaks perfect Bulgarian, has offeredon many occasions his decisive sup-

port. For the good of Bulgaria, he evenaddressed, delicately, some domesticissues, thus accelerating the solutionfor the duty-free shops, extended seri-ous help in combating organized crime,and spoke openly against the organizedcrime. He was brilliant in organizing thevisit of U.S. President George Bush toSofia in 2006, and barely two weeksago arranged for the warm reception ofPrime Minister Stanishev at the WhiteHouse. Now John Beyrle takes over asthe U.S. Ambassador to Russia, whichis by far the most important ambas-sadorial position in the world. It is per-haps his success in Bulgaria thatboosted his nomination for such animportant posting.

U.S. Commercial Counsellor in SofiaJames Rigassio will also be remem-

U.S. Ambassador John Beyrle and U.S. Commercial Counselor James Rigassio,

who leave for Moscow, Buenos Aires, honored with party

AmCham Bids Farewellto True Friends

From Left: Mrs Jocelyn Greene, US Ambassador John Beyrle, Mrs Mimi Rigassio, and James Rigassio, US Commercial Counselor at the highly emotional event.

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a m c h a m e v e n t s

bered by a string of successes. TheU.S.-Bulgarian agreement on the avoid-ance of double taxation was signedduring his mandate. He was personallyinstrumental in assisting AmCham'sefforts to that end. Some of the largestindividual U.S. investments in Bulgaria -such as AES-3C Maritza Iztok, and theprivatization of the Bulgarian Telecom-munication Company - happened duringhis tenure. 2006 emerged as a recordyear for U.S. investments in Bulgaria.As Ambassador Beyrle said, "Nothingmakes a country more successful thanhaving a strong economy, and nothingmakes economy stronger than havingstrong investors."

AmCham President Borislav Boyanovand AmCham Executive DirectorValentin Georgiev thanked John andJim for dealing professionally withsophisticated diplomatic and commer-cial issues. "It is of great importance tohave real and reliable partners and we,as a chamber, have had real partnersin all fields we worked in", Mr. Boyanovsaid. He further added that the mainreasons of the chamber's success sto-ries were also due to the efforts of bothdiplomats.

"I would like also to thank AmbassadorJohn Beyrle and Jim Rigassio for theirfriendship with the AmCham Bulgaria,and as a Bulgarian I would like to saythey were real friends of Bulgaria",Boyanov said. The Amcham Presidentreminded the US road show in 2007when both Embassy and the Chambermade 10-days trip across the US to pro-mote Bulgaria as an attractive countryfor US investments. "John and Jim didnot spare time and efforts to advertiseBulgaria as a place for investments.And I would like to thank them on behalfof Bulgaria", Boyanov further admitted.

In a quite moving manner Jim Rigassiothanked AmCham Bulgaria for the timeand work together. "As in family, whentwo people work together, can do muchmore than two people working sepa-rately - the same applies to two organi-zations working together", Jim said. Inhis words, the Chamber, the Embassy,and the U.S. Commercial Sectionachieved a lot more together, than theycould do on their own. He mentionedthe shared efforts of the three partiesto bring more US investors to Bulgaria,to facilitate the ratification of the treaty

Ambassador John Beyrle and Trainka Orfanidu, President, Force Delta Ltd.

Jim Rigassio receives greetings from Sasha Bezuhanova, General Manager, Hewlett-Packard Bulgaria Ltd.

Ambassador John Beyrle, Anthony Hassiostis, CEO and Chairman of MB, Postbank and Borislav Boyanov,

AmCham President

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for avoidance of double taxation, andreferred also to the success ofAmCham Bulgaria as being most activechamber in the last 2 years, accordingto the ECACC surveys.

In his address to the audience JohnBeyrle recalled the times when he gotin Bulgaria in 2005 and soon after thathe had to accompany PresidentParvanov during his meeting withPresident George Bush. Both presi-dents appreciated the achievements indefense and security relationship.Furthermore, President Bush askedwhy the economic relationship is not atthat high-quality level, and Parvanovagreed that there is a lot to be done.

"When I came back I met Jim Rigassioand first got to know Valentin and theAmCham Bulgaria. Both of them mademe feel what makes the relationshipsstronger", US Ambassador said. He fur-ther went on saying that nothing makesa country more successful than havinga strong economy, and nothing makeseconomy stronger than a good investor.

As to add further to this very touchingatmosphere, fireworks went off and the"Sofia Dixie Swing" band created theperfect party. It could not be differentwith the well known music profession-als as Bulgarian composer and pianistAngel Zaberski, Mihail Yosifov, trumpet,Emanuil Manolov, dubbed as theAlmond, saxophone; Vladimir Slavchev,trombone, Dimitar Shanov, contrabass,and Krum Kalachev, percussions. ■

Valentin Georgiev gifted two baskets of flowers to the spouses of both diplomats: Mrs Jocelyn Greene and

Mrs Mimi Rigassio.

As an expression of gratitude two paintings of famous Sofia landmarks were presented to both diplomats by AmCham President Borislav Boyanov.

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Corruption InvestigationFreezes EU RoadConstruction FundsBulgaria initiated the freeze of 88 million Euro due within the PHARE program

for road construction in the border regions following the discovery of viola-

tions in the Republican Road Infrastructure Fund. The embarrassing facts

emerged out of a KMPG audit

By Mina Georgieva

Vice-premier in charge of European Funds Meglena Plugchieva and Deputy Minister of finance Dimitar Ivanovski presented to the public the new government plan

for monitoring and improving the usage of funds.

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Bulgaria initiated the freezefinancing for 10 projects wortha total of 88.4 million Euro,

managed by the Republican RoadInfrastructure Fund with the Ministry ofRegional Development. Payments weresuspended by Dimitar Ivanovski, thenational manager who supervises thefinancial management of Europeanfunds, because of data indicating theabuse of funds use. The data wascontained in the audit of the road fundperformed by the KPMG consultancy,which was submitted to the Ministry ofFinance on June 16, but immediatelyplaced under secrecy.

Another KPMG audit analyzes theimplementation of measures within thePHARE and ISPA programs. Based onthis report, the implementation of pro-jects of the Republican RoadInfrastructure Fund under the PHAREprogram was suspended. The docu-ment states that some of the due rulesand procedures have been deviatingfrom PHARE regulations.

The National Accounts Office submit-ted about a month ago to the prose-cution its own audit report concerningthe road fund. "The auditor hasreached the conclusion that there isno clear evidence concerning themanner, in which the Republican RoadInfrastructure Fund is efficiently man-aging the projects in terms of tenderprocedures and payments," the gov-ernment press center announced.

All payments for the following mainprojects were suspended: the rehabili-tation and the reconstruction of roadII-19 from Razlog through Bansko andGotse Delchev to Sadovo; the con-struction of a second parallel tunneltube at the entrance of Dupnitsa onroad E-79; the access road to a newborder check point between Rudozemand Xanti; the rehabilitation of road II-34 in the section between Pleven andNikopol. Ivanovski has recommendedto the regional development ministry tofind alternative sources of financing inorder to avoid the total freeze of theprojects.

Vice-premier Meglena Plugchieva hasinsisted that the KPMG audit be sub-mitted to the prosecution. The auditcontains a number of serious findings,including some about violations that

may be subject to a criminal investi-gation - corruption, abuse and a com-plex set of administrative problems,Plugchieva said. She made it clearthat is has been decided to closedown the Republican RoadInfrastructure Fund and create a newstate agency before the end of themonth.

Transport and Regional

Development operational

programs

have been blocked by major problems,

while the Republican Road Infra-structure Fund was discredited in frontof the EU, Bulgarian authorities nowadmit. It was announced later that theEuropean Commissioner on RegionalDevelopment, Danuta Hubner, hadalso received the KPMG audit and anaction plan of the Bulgarian authoritiesregarding the frozen funds. If theEuropean Commission is satisfied withthe implementation of the action plan,then it may restore payments withinthe ISPA program for road construc-tion.

The EU closed one more tapThe European Commission froze the money for Bulgaria, which are allocated

within the framework of two more SAPARD measures. The motives behind this

move were again disclosures made by the European anti-fraud -office OLAF.

The imposed suspension affects 183 million Leva. Thus, the total amount of

funds due to Bulgarian farmers within the SAPARD program but suspended rose

to a total of 263 million Leva. This equals about one third of the whole SAPARD

budget for the seven years since it started operations in Bulgaria.

The SAPARD agency audit, which resulted in suspending the funds for Bulgaria,

was conducted by EU experts in late May. The results were never officially dis-

closed, but immediately after the audit was completed the Deputy Prime Minister

in charge of the European funds, Meglena Plugchieva, requested an additional

review by OLAF.

The two suspended measures are among the most attractive within the SAPARD

program - "Development and diversification of business activities" and

"Investments in farming." The first measure made headlines a couple of years

ago after it was established that the funds were used to build large hotels in

resort complexes and not small family houses with an authentic atmosphere

suitable for rural and environmental tourism. The Bulgarian National Association

of Alternative Tourism claims it has notified the agricultural ministry about vio-

lations with the hotels on several occasions. As late as late 2005 the measure

was amended, so that hotels built with SAPARD money may not have more than

10 rooms with a maximum of 25 beds.

The second measure applies to the modernization of farms for the production

of milk, meat and eggs, and the funds may be used for the acquisition of trac-

tors and combines. In this case, the applicants had to submit to the Agriculture

Fund the offers made from at least three sellers, and the applicant had also to

convince the assessment commission that he or she had selected the best offer.

Frequently, this required is complied with only formally while officials fail to

make any inspections. This deficiency resulted last March in the suspension of

funds, which were allocated to companies of the food production sector.

An OLAF investigation had established that seven Bulgarian companies have

acquired second-hand machines, which were reported as new. It was only after

the scandal that the Agriculture Fund started to ask the manufacturers whether

the invoices, as submitted, were really theirs. Although all seven businessmen

were charged with abuse of financial assets, none of them has been brought to

court so far. There is also another problem - related companies are engaged

in several projects within one and the same measure. This becomes obvious

also from the list of beneficiaries, but the Agriculture Fund claimed that Brussels

has not explicitly banned such practices.

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The former and the incumbent direc-tors of the Republican Road Infra-structure Fund were not mentioned inthe KPMG audit, said Finance MinisterPlamen Oresharski, who - togetherwith his colleagues Assen Gagauzovand Petar Mutafchiev - is in charge ofthe infamous government agency. Thesame audit report refers to 10 individ-ual cases, but only four of the peopleimplicated are still employed by theroad fund. The analysis, submitted tothe prosecution, contains the descrip-tion of cases, in which there is apotential for conflicts of interest in theRepublican Road Infrastructure Fund,the Finance minister explained. Headded that the audit is not an investi-gation report and is not based of prov-ing violations, as it simply highlightsdeficiencies in the management sys-tem.

The report actually does not describespecific cases, while the names of the

implicated persons are written in ini-tials only. Still, the report states thevalue of the described projects - atotal of 88.4 million Euro. The mostindicative case of conflict of interests,according to the auditors, relates tothe two contracts within the PHAREprogram, signed with the Greek com-pany Prodephtiki. The first one, for4.19 million Euro, is for the construc-tion of the Gotse-Delchev - Dramatunnel, and the second, for 10.3 mil-lion Euro is for the repair of theRazlog - Bansko - Gotse Delchev -Sadovo road. These contracts weresigned by a single person both as"assignor" and as "contractor." Thiswas the former head of the road fund,who remained at this post for a coupleof months only. He was employed bythe Greek company until May 2005,then served as the head of theRepublican Road Infrastructure Fundbetween September and December ofthe same year (when he attached his

signature); and in early 2006 returnedto Prodephtiki as a deputy manager.

The fate of one more contract imple-mented by the Greek company is alsointeresting - the construction of thesecond parallel tunnel tube at theentrance of the town of Dupnitsa atkilometre 327 on Е-79 (DupnitsaBypass Road). Construction started onJan. 11, 2005, and the project isalready 21 months behind schedule.Experts estimate the cost of some ofthe tunnel construction at 7.6 millionEuro, with appreciation estimated atabout EUR 1 million. More than 60percent of the financing is providedfor by the PHARE program, and thebalance comes from the state budget.

The second of the described casesdeals with a direct conflict of interestsand involves the supervising company ofthe Gotse Delchev - Drama tunnel pro-ject, Road Invest Engineering EOOD,

The government decided in May 2007 that the Republican

Road Infrastructure Fund will receive 90 million Euro from

the World Bank for repairs of 450 km of roads. The cred-

it agreement was signed in September 2007, and nation-

al co-financing was set at 54 million Euro.

The funds must be spent on repairs of first, second and

third-class roads along the Vidin - Lom, Lom -

Kovatchitsa, Lom - Gigen, Vratsa - Oryahovo, Pleven -

Troyan - Karnare, Rousse - Silistra, Sofia - Pirdop -

Karlovo - Kalofer, Plovdiv - Byala Cherkva - Kosovo,

Shoumen - Preslav, Preslav - Vrabnitsa, Bourgas -

Zvezdets - Malko Tirnovo - the border with Turkey sec-

tions of the national road network.

By having the money transferred, the road fund would be

able to draw and settle payments with contractors and will

serve the debt on behalf of the state.

Financing

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which de facto oversaw its own opera-tions, as the company had acquired,back in 2003, the firm Road Project fromthe Ministry of Transport.

Although the audit was

classified, media learned

that it deals with several cases of nepo-tism.

One of the cases refers to a formerdeputy executive director of the RoadsExecutive Agency, between June 19,2007 and April 23, 2008, who signed,barely after a week after he had beenemployed, a contract with a consortium,consisting of the companies Black SeaHighways and Entechnos, both managedby his own father.

The road fund practices include also amother-son collusion. The former headof PHARE projects in 2004 initialled thecontract with the Austrian companyStrabag for the rehabilitation of the Vidin- Montana road. The Austrian subcon-

tracted work to BG Asphalt, whichemployed the son of the PHARE projectshead.

The auditors define as conflicts of inter-est another three cases, referring to theappointment of three companies as con-sultants of the road fund - the BritishMott McDonald, Bulgarian Transconsultand "Trans-Consult-22." The Bulgarianfirms are owned by Yulian Tyufekchief,who is also a manager of the Britishcompany. Some of his employees hadrelatives in the road fund.

The rest of the cases, found by KPMG,refer to an established practice in mostof the state offices and state-ownedcompanies. For instance, an employeeof the Road Administration in VelikoTirnovo was appointed as an expert forthe 4.94-million-Euro project to build theroad between Malko Tirnovo and theTurkish border.

The conflict of interest cases have notbeen proved yet, KPMG warned. The

audit involved a research of operations,employees and documents of theRepublican Road Infrastructure Fund forthe period between Jan. 1, 1999, andMarch 31, 2008. Some of the informa-tion was in the public domain and notcorroborated by independent sources.The Cabinet ordered KPMG during thelast week of June to make another auditof the road fund and announced that theRepublican Road Infrastructure Fund willbe transformed into Road InfrastructureAgency with the Council of Ministers.Minister Assen Gagauzov was quick torefute the statement made by one of hisdeputies, Savin Kovachev (who alsoheads the PHARE executive unit of theministry) that Bulgaria will have to returnto the European Union the PHARE fundsreceived for the 10 projects that hadbeen suspended. The prosecution hasso far remained silent.

Representatives of the New DemocracyParty (NDP) announced, days before theJuly monitoring report of the EuropeanCommission, that the demonstrated will

Stopping some of the EU funded projects for the Republican Road Infrastructure will affect the deadlines for finishing some of the main highways in Bulgaria such as

Maritza-Novo Selo on the way to Istambul, Turkey and Simitli - Razlog on the way to Drama, Greece.

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of the government to fight with corruptionis a positive development.

The opposition party howeverexpressed its reservations that

the measures initiated by

the Stanishev cabinet con-

tain a large amount of

ostentation.

Both the party, and perhaps hundreds ofthousands of Bulgaria's citizens, areconcerned that the construction of roadsof a strategic importance for the trans-port infrastructure of the country will befrozen.

The main problem stems from the factthat most of the preparatory works alongthese roads have been completed, andfor that reason these roads are current-ly with a reduced traffic capacity andcreate dangers for traffic safety. Interms of jobs, freezing these projectswould mean a reduction of both existingand potential employment, which is ofan exceptional importance for theaffected regions.

NDP insisted that the Cabinet mustreport to the Parliament about the imme-diate measures initiated in order to elim-inate the deficiencies. Road constructionmust continue with fair and transparentprocedures in strict compliance with thelaw, the regulations and the goodEuropean practices, while stating

who and how will assume

the political responsibility

for the frozen European money, opposi-tion representatives said.

Despite the suspension of Europeanfinancing, the project may continue withgovernment funds, as these projectsinvolve some contractual commitments.The new person in charge of the PHAREprojects at the regional developmentministry, Savin Kovachev, said that hehad still to become acquainted with theprojects, but financing would continuefor strategic construction. Data obtainedfrom the internet site of the road fundindicate that, in principle, national co-financing amounts to 40-50 percent.

If these projects are suspended aswell, Bulgaria will have, for all practicalpurposes, proceed to build roads onlywith budget funds. Brussels froze earli-er this year the funds for road projectsfinanced by the ISPA program, whichpays, for instance, for the constructionof the Lyulin Highway. Later, theEuropean Commission ordered Bulgariato stop temporarily the financing ofroad projects out of the TransportOperative Program due to severe viola-tions by the road fund. Initially themove was motivated by the conflict ofinterests scandal, in which the formerhead of the Republican RoadInfrastructure Fund, Vesselin Georgiev,and his brother, whose company Binderhad won public procurement contractsfor 120 million Euro. Several seniorofficials of the fund were also appre-hended with bribes.

Prime Minister Stanishev

assumed personal commit-

ments to manage the road

projects

The Cabinet decided to submit a pro-

1. The Maritsa Highway - Novo Selo

The value of the project is set at 11,648,576 Euro, with 67

percent financed by the PHARE program. The contractor is

the Bulgarian Road Construction and Moststroy consortium.

2. Sokolovtsi - Smolyan - Srednogortsi

The rehabilitation of 29 km of this second-class road will

cost the state an additional 4,800,400 Euro. The contrac-

tor is the Entechnos-Leader group. The Greek companies

are assisted by the Shoumen-based Black Sea Highways.

3. Simitly - Razlog

The rehabilitation of the 36 km section has already been

completed. The value of the whole projects is set at 15.167

million Euro, with 6.92 million Euro provided by European

funds. The contractor is the Mesta-Bulgaria consortium,

which includes two companies of the Glavbolgarstroy

group.

4. Bansko - Sadovo

The repair of the 58 km sections has been suspended. The

contract with the Greek contractor Prodephtiki was termi-

nated, as the company has completed only 60 percent of

the works. The value of the projects is estimated at

10,301,405 Euro, with 71.8 percent, or close to 7.4 million

Euro, financed by the PHARE program.

5. The Lom Port -Montana

Value - 5.7 million, with 4.3 million Euro to be provided by

European funds. The contractor is Patstroy-92 AD.

6. The tunnel at Dupnitsa

The contractor for the construction of the second tunnel

tube at the town of Dupnitsa is the Turkish TINSA-ERKO

consortium. Construction started as early as the 1970s, but

was suspended because of landslides. The project is esti-

mated at 5.53 million Euro, with close to 3.5 million Euro

provided by the PHARE program.

7. Rudozem - Eledje border cross point

The project requires the construction of 9.5 km of new

road. The total value of the project is estimated at 7.72 mil-

lion Euro, with 4.92 million Euro provided by the PHARE

program.

8. Malko Tirnovo - Turkey

The Czech Raimo company is constructing new road to the

border with Turkey. The whole section is 3.531 km long.

The value of the project is set at 4.94 million Euro, with

EUR 2.3 million Euro provided by the PHARE program.

9. Pleven - Nikopol

The rehabilitation of the 42.5 km section was contracted to

the PSI OOD company, which is a part of the Trace Group.

The project is estimated at 12.51 million Euro, with 4.73

million Euro provided by the PHARE program.

The Suspended Projects

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posal for radical amendments to theeffective Roads Act. The ministersproposed that the management of thenew Road Infrastructure NationalAgency must be handed to experts.The new agency will be a departmentwithin the Council of Ministers and willbe supervised personally by the primeminister Stanishev, which means thatthe line ministers, their deputies andtheir advisors will have no say in thefuture. It is true that three out of thefive members of the supervisory boardwill be nominated by the ministers oftransport, finance and regional devel-opment, but they would be approvedonly with the consent of the primeminister. The premier will also appointthe executive director of the restruc-tured unit as well as his two deputies.They will be restricted from holdingany managerial or control position in apolitical party and shall be obliged tosubmit every six months that they arenot "related persons," as stipulated bythe effective Commercial Code, with atrader, partner or shareholder in acompany, which participate in procure-ment or concession tenders held bythe Agency.

The amendments to the effective law"clearly define and differentiate the pre-rogatives of the government and of theministers of transport and of regionaldevelopment as authorities in charge ofdefining and implementing the policies inthe sector and of the new administrativestructure," according to a governmentstatement. In the future, the Minister ofTransport will be in charge only of thepolicies and strategies in the develop-ment of the road network and for thecategorization of the roads. The region-al development ministry will deal withroad infrastructure but tenders will behandled by the new agency.

Meanwhile, the cabinet announced it willtry to save the projects for the Maritsaand Struma highways and the linkbetween the Hemus Highway and theSofia Ring Road. The total budget ofthese projects is estimated at 840 mil-lion Euro, with 672 million Euro expect-ed from the EU Cohesion Fund withinthe Transport Operative Program. Earlyin July, the cabinet had to discuss areport with specific deadlines and per-sons in charge of the projects for theconstruction of the three highways.

Updated environmental impact analyseshave already been drafted for the con-struction of the three highways. TheMaritsa Highway project is at the mostadvanced stage, and the procedures forexpropriation of the relevant land lotsare close to completion. The expropria-tion of land lots for the link between theHemus Highway and the Sofia RingRoad is already in progress. The updat-ed pre-investment study for the MaritsaHighway must be completed in August,and for the Hemus Highway - by midJuly. The Maritsa project includes theconstruction of 67 km of highway at anindicative price of 208 million Euro. Ofthe total, 166 million Euro will have to beprovided by the Cohesion Fund, and theamount of national co-financing is set at42 million Euro.

The cost of the linkage between HemusHighway and Sofia Ring Road is esti-mated at 32 million Euro, spilt into 25.6million Euro from the Cohesion Fundand 6.4 billion Euro of national co-financing. The indicative budget for theStruma Highway, which is a part of theTrans-European Corridor No. 4, is set atabout 600 million Euro - 480 million

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The economic growth accelerated to real 7% y/y in Q1 andunemployment continued falling by the end of May but theoverall economic framework remained quite vulnerable to anumber of adverse market developments. Most of the risksare related to external shocks such as high oil prices, inter-national lending restraints, global property price correctionslimiting inflows to local real estates, and economic slowdownon some export markets. Local market deficiencies linked toinefficient utilisation of EU funds, pro-inflationary policies thatare partly offset by large budget surpluses but still main-tained by excess fiscal intermediation and discretionaryspending, as well as expected social boosts before the gen-eral elections in Q3 next year bring significant risks of dra-matic corrections in the macroeconomic framework.

The first signals of unsustainable economic developmentsare coming from the radical fall in the net FDI inflows andtheir relative value vis-a-vis the large and widening CA gapamid continuous inflation movements and worrying indicatorsin the regular business sentiments surveys. Nevertheless,lagged effects from the large FDI inflows last year and baseeffects in the agricultural sector are likely to keep the eco-nomic growth quite high this year. Most of the risks are like-ly to materialise next year when the economic growth ratemay slow down well below 5% and the country's externalposition may further deteriorate if the high oil prices and theglobal investment concerns are maintained. Soft landing stilllooks like the most likely scenario but it will require adequatepolicy reactions that are always at deficit in periods of pre-election battles.

Gross Domestic Product (GDP)

The GDP growth accelerated to 7% y/y in Q1 from 6.2% lastyear and 6.9% y/y in Q4 last year, preliminary data of thestatistical institute shows. Exports played a key role for theimprovement surging by 9.2% y/y as compared to 6% y/y inQ4 last year. Imports rose at a weaker pace of 5.8% y/y. Thefigures thus show that the foreign balance improved signifi-cantly in real terms but it was insufficient to reverse the nom-inal deterioration in the CA fuelled by unfavourable changesin the import prices of energy inputs. Aggregate domesticdemand and investments retained strong expansion rates aswell although both indicators marked some slowdown fromlast year. Private consumption is not affected by the priceshocks yet and advanced by 6.5% y/y in Q1 as compared to

5.3% last year and 2.8% in Q4.

On the supply side, industrial output and services continuedgrowing at high rates while the agricultural sector fell by 1.6%despite the low base from last year. The growth rate in theindustry slowed to 7.7% y/y in Q1 from 14% last year but thefigures are adversely affected by the catholic Easter holidaysin March that have contained exports.

Despite the bright figures for Q1, the risks of economic slow-down are growing as well and are likely to materialise nextyear. Most of the risks are linked to external shocks stem-ming from the high oil prices and global credit restraints thatwill cut external inflows to local property development pro-jects. The growth rate this year is likely to remain quite stronghowever in view of lagged effects from the large FDI inflowslast year and the very low agricultural base in Apr-Dec lastyear. This could pose significant risks to the economic bal-ance, as policy makers may not be able to interpret correct-ly the growth factors this year and will keep pro-inflationarypolicies in combination with political drives for boosting socialexpenditures before the general elections in Q3 next year.

Inflation Risks

The consumer price inflation accelerated to 15% y/y in Mayfrom 14.6% y/y in April, according to data of the statisticalinstitute. The period-average index for Jan-Apr reached13.9% y/y and is nearly two times above the correspondingfull-year rate projected in the budget law for this year. Theindex based on the EU-harmonised consumer basket HICPaccelerated to 14% y/y in May from 13.4% y/y in April and

Economic Growth Acceleratesin Q1 amid Risks of DramaticMarket Corrections

This article is based on extracts from ISI Emerging MarketsIntelliNews publications: Bulgaria This Week and BulgariaCountry Report. For more detailed information please contactISI Emerging Markets office in Sofia at +359 2 8160404 or info_bg@securities.com

GDP breakdowns in constant prices (%, y/y)

2002 2003 2004 2005 2006 2007 Q1/08

Agriculture 4.7 -2.3 2.3 -9.4 -1.0 -29.7 -1.6

Industry 4.6 5.7 4.1 4.8 7.8 14.0 7.7

Services 5.9 4.8 5.7 8.2 7.1 7.5 8.3

GDP 4.5 5.0 6.6 6.2 6.3 6.2 7.0

Consumption 4.2 5.9 5.4 5.3 7.3 4.9 4.7

Investment 8.5 13.9 13.5 23.3 14.7 21.7 15.5

Exports 8.1 10.7 12.7 8.5 8.7 5.2 9.2

Imports 5.1 16.4 14.6 13.1 14.0 9.9 5.8

Source: Statistical Institute, preliminary data for 2007 and 2008

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completely undermines the central bank's ambitions for quickadoption of the euro. The price hike in May comes in con-tradiction with statements of the economy ministry that infla-tion is already slowing down. Indeed, some moderation isobserved in the group of food prices but car fuels and relat-ed items are growing at a quick pace. Moreover, the plannedincrease in prices administered by state or municipal author-ities will have a significant impact on the consumer basket bythe end of July, as double-digit adjustments are expected inthe prices of public transport, electricity, heat and water sup-

plies. Given the high inflation since the beginning of the year,the full-year average index is very likely to remain in the dou-ble-digit zone despite certain disinflation moves that will takeplace in the second half of the year.

External Balance Risks

The CA deficit widened by 14.4% y/y to EUR 2.43bn in Jan-Apr and 23.2% y/y to EUR 679.9mn in April, according to pre-liminary data of the central bank. The year-to-date deficitaccounted for 7.4% of the projected full-year GDP and stoodroughly unchanged as compared to one year earlier. The 12-month CA gap for the period ending in April worsened mar-ginally to 21.9% of our GDP estimates from revised 21.6% amonth earlier. The overall balance of payments was positiveat EUR 1bn in Jan-Apr but due mainly to debt inflows. Foreigndirect investments continued to decline for the same period,especially in net terms that are vital for sustainable financingof the CA gap. The most worrying signals of unsustainableexternal flows are coming from the ratio of net FDI inflows toCA deficit. As net FDI inflows plunged 41.5% to EUR 821mnin Jan-Apr they covered only 50.7% of the CA gap for theperiod compared to nearly 100% last year. The annualisedcoverage of the CA deficit deteriorated to 81.6% as of end-April from revised 85.7% a month earlier. In addition to thelarge CA gap and falling FDI inflows, there are several otherfactors posing significant risks to the country's external liq-uidity - high oil prices, economic slowdown on major exportmarkets, and global liquidity crisis. ■

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On June 16, the day that Bulgarian Prime Minister SergeiStanishev opened at New York's Harvard Club an investmentforum on the business opportunities in Bulgaria, AmericanChamber of Commerce and German-Bulgarian IndustrialChamber jointly organized in Sofia a conference on the EU-US transatlantic partnership.

The prospects of a fair and transparent business environmentin Bulgaria were the main focus of the discussion at the event,which was attended by 140 participants from the businessesand diplomatic missions in Sofia, as well as 35 media repre-sentatives. The conference was supported by Balkan StarAutomotive ЕOOD, ABB Bulgaria, Penkov, Markov & Partner,Rousse Shipyard, SAP Labs Bulgaria, VSK Kentavar, Ernst &Young Bulgaria, and Microsoft.

The conference was held in a time when Bulgaria is criticizedand monitored by the European Commission for misappropri-ates of EU pre-accession and cohesion funds, as well as forthe Road Fund financial discrepancies. Therefore, the partic-ipants were keen to hear the keynote speaker, Deputy Prime

Government , Businesses Discuss EU-U.S. Par tnership

About 140 participants from the businesses and diplomatic missions in Sofia, as well as 35 media stations attended the forum.

The Deputy Prime Minister Meglena Plougchieva met with diplomats and min-

isters: at the photo Alexander Karagiannis, Deputy Chief of Mission, U.S.

Embassy to Bulgaria (right), minister of transport Peter Mutafchiev, and Michael

Geier, Ambassador of the Federal Republic of Germany to Bulgaria (on the left).

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Minister Meglena Plugchieva, who started her presentationwith the statement that she has been considering a meetingwith the foreign business community since she was appoint-ed one and a half month ago to monitor and control theBulgarian ministries for the EU funding. "The business com-munity is to correct us because it knows best where the stateadministration needs to change," Plugchieva told the audi-ence.

In her address, the Deputy Prime Minister went on saying thatthe EU membership is a tremendous change for Bulgaria,which represents the biggest challenge for the Bulgarianeconomy, politics, and society. With this kind of transforma-tion it is hard to avoid mistakes and inaccuracies, the minis-ter said. However, for the businesses that started operationsin Bulgaria there are a lot of opportunities to expand in theBalkan region, and specifically in Western Balkans - Kosovo,Macedonia, and Serbia, said Plugchieva.

"Bulgaria has contracted resources of 7 billion Euro for theperiod 2007-2013 to be allocated in seven operational pro-grams to cover key sectors of economy," she added. The gov-ernment is anticipating that big European companies will entercountry to execute infrastructure projects. The Deputy PrimeMinister mentioned the importance of projects in the energyfield, in agriculture and environment sectors.

Plugchieva assured that the Council of Ministers and theprime minister himself will take measures to fix the problems.An overall package of measures has been prepared to beapproved by the parliament before its summer vacation, whichenvisage an early warning system and work on the so calledblack list of companies that exploited the EU funding. Thegovernmental measures aim at diminishing the gray sector ofeconomy. Changes are envisaged also in the PublicProcurement Law.

Plugchieva pointed out that Bulgaria has a very stable macro-economic framework with a reduced external debt, low unem-ployment rate of 6.4 percent, an impressive budget surplus,and the lowest corporate tax rate in the EU, which makes thecountry one of the desirable investment destinations.

During the Q&A session, members of both chambers raisedthe issue with the assignment of public contracts and pointedto the lack of governmental will to develop clear-cut criteria.This encouraged corruption practices and the diverting offunds with incorrect distribution of 3 billion Euro. The lack ofsufficient data in the public procurement register also con-tributes to the problems.

"We trust Bulgaria and its future," said Alexander Karagiannis,

Deputy Chief of Mission, U.S. Embassy to Bulgaria. He reit-

erated that American and Bulgarian businesses want a trans-

parent and predictable environment in order to make more

investments and provide more working places.

Labor and social policy minister Emiliya Maslarova and Bulgaria's environment

and waters minister Djevdet Chakarov.

Michael Geier, Ambassador of the Federal Republic of

Germany to Bulgaria (in the middle), said that trans-

parency is a global subject and Sisyphean labor of every

government in the world. He stressed the need for trans-

parency in the public procurement process in Bulgaria.

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Transport Minister Petar Mutafchiev presented the updatedtransport infrastructure agenda of the government. He pointedthat a number of highways that traversed Bulgaria were eitherin need of upgrade, or extension. The minister underscoredthey could be built with international support. Foreign compa-nies were a welcome bidder at forthcoming concession pro-cedures for a number of ports and airports, he said. Accordingto the minister, there is a potential in striking private-publicpartnerships to this end and he gave a score of ports inSomovit, Sozopol, and Silistra as well as the airports in GornaOriahovitsa and Rousse. Mutafchiev clarified that the efforts

will concentrate mainly in building of the infrastructure alongthe European transportation corridors. In total, 4.712 billionEuro will be put in the transport infrastructure until 2015,together with the EU finds.

Bulgaria's Environment and Waters Minister Djevdet Chakarovsaid that Bulgaria would benefit if foreign partners took inter-est in the forthcoming and mandatory construction of purifi-cation installations along the Black Sea coastline. The help ofbusinesses is very much desired in arrangements of the pro-ject documentation. So far only 22 municipalities have filed

At the opening the conference, Jochen Bremme, vice

president of the German-Bulgarian Chamber of Industry

and Commerce, said it is very important to counter the

bureaucracy and to pay attention to the fact that Bulgaria

has harmonized legislation with the EU, but it is not

applied in practice. "We are here to help the positive

developments in the Bulgarian economy, and the German

and the other foreign companies that have the ungrateful

task to prove the standards that provide a normally oper-

ating business environment," Bremme said.

Levon Hampartzoumian, chairman of the MB and CEO of UniCredit Bulbank

(right) moderated the discussion with the Deputy Prime Minister Meglena

Plougchieva and minister of transport Peter Mutafchiev.

Alexander Karagiannis, Deputy Chief of Mission, U.S. Embassy to Bulgaria

(right) and AmCham vice president and CEO of Postbank Anthony Hassiotis.

The journalists inquired the Deputy Prime Minister Meglena Plougchieva for

misappropriates of EU pre-accession and cohesion funds, as well as for the Road

Fund financial discrepancies.

In his address, AmCham Vice President and CEO of

Postbank Anthony Hassiotis said that as an inseparable

part of the world, Bulgaria has become an inseparable

part of the world's largest economic relationship between

EU and the United States, which has $4 billion in total

commercial sales daily, and Europe is the top destination

for U.S. foreign direct investment. Up until present $128

billion have been invested in EU countries, Hassiotis said.

"As part of the EU we have to help Bulgaria to have a

greater part of these relations," he added. The AmCham

members want to operate in a transparent and predictable

environment, and to strengthen the EU-U.S. ties.

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applications, whereas all coastal municipalities with more than10,000 inhabitants are expected to have the waste watertreatment facilities built and operational by 2010 if Bulgariawants to comply with the EU directive on water cleanliness ontime.

Waste water treatment and water supply projects entitled to atotal pool of 1.6 billion Leva, and Chakarov said that theirimplementation could only occur with the help of businesses.

Labor and Social Policy Minister Emilia Maslarova elaboratedon the fact that Bulgaria is reaching very fast the Lisbon cri-teria for employment with an unemployment ratio of 6 percentat present, dropping from 12 percent. The major problem inthe country is that more than 60 percent of the unemployedBulgarians have poor education, or no education at all. Shespoke about progress in absorbing funds under the HumanRecourses operational program, all of them aimed at bridgingthe chasm between theoretical knowledge passed on atschools and universities and applied knowledge.

The funds under this program at the amount of 1.2 billion Euromust be used within five years. The program has three mainareas: the labor market, the education, and the social involve-

ment of people in their 50s. The Employment Agency startedan ambitious task to do further trainings of employed peopleand to provide qualifications services. Under this schememore than 52,000 people will be trained. Additionally, theAgency will finance with 50 million Leva the active social

Ognian Kiriakov, general manager of

Microsoft Bulgaria elaborated on the

importance of the investments in the

field of IT, which are an engine of the

knowledge economy. He said that ICT

has transformed work, the economy

and knowledge access in the past two

decades, and it contributed to the

wider process of globalization. Yet ICT

transformation is not universal and

there is a digital divide to overcome. In

the 21st century, acting as a respon-

sible business includes helping

economies grow. It is also the com-

mitment of Bulgarian government to

expand the country's potential as a

human economy.

Kiriakov talked about how Microsoft

created opportunities for everyone

willing to join the knowledge economy.

He shared with the audience the ongo-

ing investments to support the drives

of economic growth and social inclu-

sion: in the fields of innovation, edu-

cation, and job creation.

Microsoft has built a long standing

commitment to education, employabil-

ity and entrepreneurship. According to

Kiriakov, through a combination of

advanced technologies and strong

partnerships with governments, busi-

ness partners, NGOs and academia,

the company aims to enable a more

sustainable social and economic

growth for people everywhere.

In Central and Eastern Europe, the

speed of growth is calling to engage

with all players of national competi-

tiveness and bring together what it

takes to create long term sustainable

and economic development.

Microsoft Unlimited Potential is an ini-

tiative deploying both business model

and the company's Social

Responsibility programs to enable this

social and economic empowerment.

The communities need to get the

basic skills to be competitive, because

the partners of Microsoft need the

ability to create and to develop new

ideas and solutions, and because

young talents need a framework to

convert their knowledge and creativity

into sustainable business models.

European Union Grants Advisor

(EUGA) is a Microsoft program that

united 13 partners in Bulgaria in a

consortium, and made more than 130

consultations since October 2007 to

present. Some 30 projects have been

submitted for European financing, and

six of them at the amount of 400,000

Euro were approved.

Microsoft Bulgaria Supports Knowledge Economy

From Left: Yavor Kuiumdjiev, Deputy Minister of Economy and Energy, Dr.

Dimitar Vassilev, general manager of the German-Bulgarian Industrial

Chamber of Commerce, Stamen Tassev, executive director of the Bulgarian

Business Leaders Forum, and Borislav Boyanov, AmCham President.

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With several topics on its agenda, theAmCham General Assembly started itsJune 24 session with a welcome to ScottPozil, the newly appointed senior com-mercial officer at the U.S. Embassy toBulgaria. He succeeded James Rigassio,who spent four years in Bulgaria.Previously, Scott served as the DeputySCO in Singapore. In his first publicappearance in Bulgaria, Pozil said he isvery pleased to be in Bulgaria and tocontinue the work in the field of bilateralU.S.-Bulgaria commercial relations. Heworked closely with the AmChamSingapore and expressed his will toshare this valuable experience with theAmCham Bulgaria. Pozil had been work-ing with commercial service for 12 yearsand had three overseas postings.

A very special part at the GeneralAssembly was the report of theCompany Social ResponsibilityCommittee on the results fromAmCham/BCAF Volunteer Day on May17th when 30 companies and organiza-tions with more than 500 participantstook part in nine different CSR projects.

The assembly voted to elect a boardmember for the one vacant seat at theboard, since Olga Borissova, directorEuropean Programs, AUBG, has beenappointed as team leader for the EUCapacity Building Project in Croatia. TheGeneral Assembly expressed sincerethanks to Borissova, who has been lead-ing AmCham EU Affairs Committee sinceits creation in 2005 and has had a criti-cal contribution to the successfulaccomplishments of the AmCham EUagenda.

Bernard Moscheni, CEO of BTC Group,got the majority of the votes in a faircompetition with the other candidateIravan Hira, Hewlett-Packard BulgariaSales Manager. Addressing the audience

prior to the vote, Moscheni said that hisprofessional background and experiencein different countries around the worldwould help to contribute to the AmChamactivities and initiatives. He addressedthe issues of better education and thechallenge to keep young Bulgarian tal-ents stay and work in Bulgaria as well asthe importance of the company socialresponsibility concept to be developed

and promoted among the business com-munity.

Moscheni took the position of BTCGroup CEO on Jan. 1, 2008. Prior tojoining BTC, he was CEO of Mobistar,France Telecom affiliate and a listedBelgian telecoms operator. Moschenihas taken leading positions in thetelecommunications industry for more

General Assembly Welcomes Scott Pozil ,Votes Bernard Moschenito Board

Scott Pozil joined the Foreign Commercial Service in February 2001, and will

assume his role as the Senior Commercial Officer (SCO) at the U.S. Embassy

in Sofia beginning in June 2008. He will be responsible for assisting U.S. com-

panies in pursuing business and trade opportunities in Bulgaria. Previously, Scott

served as the Deputy SCO in Singapore, and as the Commercial Liaison Officer

to the African Development Bank and acting SCO in Abidjan, Cote d'Ivoire. Scott

jointed the U.S. Department of Commerce in 1996 as a Presidential

Management Intern (PMI). He worked as an international trade specialist in the

Trade Information Center (TIC) from 1996-1997, and then in the Middletown, CT

Export Assistance Center from 1997-2001. Pozil received an MPA (Masters in

Public Administration) from the American University in 1996, and a bachelor's

from Lake Forest College in 1993. During 1994, Scott served as Fulbright

Scholar in Zimbabwe, where he worked for an economist and wrote a paper on

"The Commercial Banking Sector in Zimbabwe."

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than 18 years in Mexico, Italy andRomania.

Borislav Boyanov, AmCham President,addressed the audience with a report onthe current state of the chamber. Heelaborated on the main events that keptthe chamber busy during first half of theyear. The President mentioned the factthat it was acknowledged by ECACCamong the best chambers in Europe - for2007 AmCham Bulgaria was ranked sec-ond best AmCham after the one inGreece. Boyanov put an accent on thebusiness meetings with the minister ofeconomy and energy Petar Dimitrov, the

Co-chairs of the AmCham CSR com-

mittee Elitza Barakova, executive direc-

tor of Bulgarian Charities Aid

Foundation (BCAF), and Dana Leff,

CEO of AbCRO and board member of

AmCham, presented certificates of

recognition to all 30 companies that

participated in the AmCham/BCAF

Volunteer Day, held on May 17, 2008.

The initiative of BCAF and AmCham

Bulgaria was the first effort at staging

such a large event. On May 17 the

community volunteering day united 30

companies and organizations with more

than 500 participants. The activities

were divided in 9 projects: on Vitosha

Mountain, in the South Park and in

Borissova Gradina in Sofia, in Ochusha

Village (near Kostenetz), in Kailaka

Park near Pleven, and in Stara Zagora.

The initiative was implemented with the

assistance of Sofia Municipality,

Vitosha National Park Directorate, and

Ecopack.

At the assembly special picture boards

from the volunteering day were hanging

up on the walls of Mousalla Hall, so

everybody from the members could

vote for the best picture. Total of 500

Leva will be given by the BCAF

Matching Fund to winners, who will

then decide on the charitable project

they like to support.

Meeting the

country manag-

ing partners of

Ernst&Young

Bulgaria -

Panos

Papazoglou

(right) and John

Mystakidis.

Roumen Mihailov, office supervisor of 3M, was among managers of the 30 companies who got certificates

from Elitsa Barakova, chair of CSR committee and Dana Leff, co-chair of the CSR committee. The certificates

recognize the commitment and achievements of the companies at the Volunteering Day on May 17.

At the assembly special picture boards from the vol-

unteering day were hanging up on the walls of

Mousalla hall, so everybody from the members

could vote for the best picture on the respective vol-

unteer project. The results of the vote are: first place

- N18 of Citibank, second place - N42 of Mellon

Bulgaria, and third place - N 75 of WorleyParsons

Europe Energy Services.

CSR Award Ceremony for 30 Companies

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one with the minister of Justice MiglenaTacheva and on the meeting with theMayor of Sofia Boyko Borisov, and thenreferred to the joint AmCham-GermanChamber conference. The event wasmarked with the theme of Bulgaria's EUmembership and the role of the countryin the U.S.-EU transatlantic relationship.

AmCham has enjoyed quite a mediainterest in the first half of the year. Theevents, activities and initiatives of theChamber received regular and wide-scale coverage in the Bulgarian printedand electronic media during the first halfof 2008. The AmCham monitoring ofpress clipping for the first half showed80 coverage stories in the print andInternet media. In addition, there werenumerous quotations in the TV media.Personal interviews of Borislav Boyanov,Valentin Georgiev, Stefan Ivanov,Kenneth Lefkowitz, and Chris Thompsonwere given to Ikonomika TV, BBT TV,Darik Radio, Dnevnik Daily, WeekMagazine, Capital Weekly, Re:TV, CashWeekly.

In addition, the chamber showed a soundfinancial stability with a 15-percent annu-al growth in membership. TanyaKosseva-Boshova, AmCham treasurer,presented the financial statements of theauditor for 2007 which were reviewedand approved by the members.

The General Assembly approved alsonew amendmentsof the statutes ofthe Chamber,which are aimedto strengthen theperformance ofthe Board ofDirectors monthlysessions. ■

Bernard Moscheni took the position of BTC Group CEO as of Jan. 1, 2008.

Prior to joining BTC, he was CEO of Mobistar, France Telecom affiliate and a

listed Belgian telecoms operator. From 1997 to 2000, Moscheni was CFO of

Orange Romania, and consequently until 2004, its CEO, during which time he

rebranded and developed the company. With 2,800 employees, more than 10

million active subscribers and 1.3 million Euro in revenue, Orange Romania is

the undisputed leader in mobile telephony in Romania. Bernard Moscheni has

taken leading positions in the telecommunications industry for more than 18

years in Mexico (CFO, Telmex), Italy (CEO, CDS, France Telecom affiliate),

and Romania (Orange Romania). Before that Bernard has worked 10 years in

Renault Group and three years in Suez Bank. Bernard Moscheni is a Graduate

in Economics and Finance (Lyon, France).

Valentin Georgiev

shows the U.S.

Department of

Commerce

Certificate of appreci-

ation for achieve-

ment in trade pre-

sented to the

American Chamber

of Commerce in

Bulgaria for creating

international trade

opportunities

between the United

States and Bulgaria

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n e w m e m b e r s

Cheque Dejeuner Bulgaria OOD is one

of the leaders on the Bulgarian food

vouchers' market. Being a part of Cheque

Dejeuner Group in France, our company

is a specialist on all kind of vouchers with

social destination. Established in October

2003, Cheque Dejeuner Bulgaria OOD is

currently specialized in the printing, distribution and reim-

bursement of Cheque Dejeuner Ordinance 7 (food checks),

Cheque Dejeuner Ordinance 11 (food checks created espe-

cially for the employers, whose employees work in difficult or

specific conditions) as well as CADHOC (the gift voucher). No

matter if we consider the voucher for food under ordinance 7,

11 or the gift voucher Cadhoc, the process is extremely sim-

ple. Companies order vouchers according to their needs

(employees and/or partners i.e. for Cadhoc), Cheque

Dejeuner produces and delivers in a few days, employers dis-

tribute the vouchers which are spent in stores and restaurants.

At the end of the process, those stores and restaurants send

back the used vouchers to Cheque Dejeuner for reimburse-

ment.

Cheque Dejeuner Bulgaria is happy to offer its clients and

daily users of vouchers a wide network of affiliated partners.

Contacts:

Marc Buisson

Manager

Tel: +359 2 811 7747, 0800 11700

E-mail: bsotirova@chequedejeuner.bg

Address: 11, Knyaz Alexander Dondukov Blvd., Fl. 8

1000 Sofia

Pedersen &

Partners is the

largest executive

search firm in Central and Eastern Europe operating 32 whol-

ly owned offices in Almaty, Athens, Baku, Belgrade,

Bratislava, Bucharest, Budapest, Chisinau, Helsinki, Istanbul,

Kiev, Ljubljana, Minsk, Moscow, Munich, Nicosia, Prague,

Riga, Sarajevo, Skopje, Sofia, St. Petersburg, Tallinn,

Tashkent, Tbilisi, Tel-Aviv, Tirana, Toronto, Vienna, Vilnius,

Warsaw and Zagreb. Our values Trust - Relationship -

Professionalism apply to our interaction with clients as well as

executives. More information about Pedersen & Partners is

available at www.pedersenandpartners.com.

Contacts:

Marco Bosman

Business Development Manager

Tel: +359 2 9860550

E-mail: marco.bosman@pedersenandpartners.com

Ms. Anastasia Alpaticova

Communications Manager

E-mail: anastasia.alpaticova@pedersenandpartners.com

Address: 12B, Stefan Karadja Str.

1000 Sofia

Stroy-Consult EOOD is specialized

in the construction of industrial, com-

mercial buildings, trade and service

centres. The company is specialized

in the fulfillment of industrial pro-

jects, assembly of the metal and

reinforced concrete structures, con-

struction of special industrial con-

crete floorings, equipment installa-

tions. Stroy-Consult guarantees pro-

fessional and responsible approach to our customer base,

qualified and experienced team of professionals and experts.

Our customers are a lot of local and foreign investors like

Miroglio - Italy, Tyras S.A., General Frozen Foods S.A, KAU-

FLAND BULGARIA EOOD & Co KD, Technopolis Bulgaria

EAD, "Billa Bulgaria" Ltd., "Sofia France Auto" etc. In order to

achieve high quality performance, the company has made

great investments in new technologies and modern construc-

tion equipment. "Stroy-Consult" EOOD always proved that the

partnership at all levels of the construction business is a work-

ing mechanism, which brings mutual satisfaction and success.

Contacts:

Mr. Zhelyo Dobrev

ManagerTel: +359 44 61 60 21

E-mail: marketing@stroy-consult.com

Web: www.stroy-consult.com

Address: 16, Hadji Dimitar Str.

8800 Sliven

a m c h a m e v e n t s

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The Seventh AmCham Tennis Tournament was hosted by GloriaPalace Club in Gorna Banya on June 21-22. Pain D'or andGloria Palace Club players became the team finalists, with PainD'or team coming on top in a head-to-head battle. Gloria Palaceteam of Vesselin Madjarov, Ognian Naidenov, Eliezer Levi, andNikolai Dimitrov placed second.

At the semi-finals, the Gloria Palace team played with the otherproven tennis players of Motorola, represented by VladimirNedialkov, Yavor Yordanov, Lyuben Alexandrov, and PetarZarev. Motorola placed third.

Pain D'or team - Kiril Nikolov and Tsvetelin Traikov showed highlevel of performance again at the semi-finals, playing with CMSCameron McKenna team, represented by Kaloyan Yordanov andPavlin Stoyanov. CMS Cameron McKenna took the fourth placeat the contest.

Valentin Georgiev, executive director AmCham Bulgaria,together with Moni Monov, chief referee at the tournament,awarded the finalists. Active and persistent tennis playersfrom Capital Weekly and Siemens were also awarded for

doing their best at the courts.

AmCham is grateful to all sponsors and supporters who madethe contest possible: Ericsson Telecommunications, GloriaPalace Club, Devin, Pain D'or, Sport Shops Chain SLS andDunlop Sport. Awards were provided by: Allied PickfordsBulgaria, Ericsson Telecommunications, Grand Hotel Sofia,Metropolitan Hotel Sofia, Radisson SAS Grand Hotel, SportShops Chain SLS. ■

Pain D'or Wins AmCham

Siemens Team: Miroslav Dolapchiev and Nikodim Nikodimov.

Cocktail party and prizes for the winners

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Tennis Trophy

Players of CMS Cameron McKenna Kaloyan

Yordanov and Pavlin Stoyanov.

Veselin Madjarov of Gloria Palace Club team.

Eleonora Guncheva of Capital and Vladimir Nedialkov of Motorola Bulgaria

playing doubles during the preliminary qualification.

Kiril Nikolov from Pain d'or team.

The first and the second place winners: the teams of Pain d'or and Gloria Palace

Club.

The third place was taken by Motorola team, represented by Vladimir

Nedialkov, Yavor Yordanov, Luyben Alexandrov, and Petar Zarev.

Magdalena Dimitrova from the team of Capital.

m e m b e r n e w s

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The Anglo-American School of Sofia celebrated its 40thanniversary on May 31. For almost half a century, AAS hasprovided education for children from more than 60 nation-alities. As a leader in international education, AAS dedicat-ed its birthday to a noble cause. The official ceremonystarted with the students' performance of the AAS schoolsong.

Following the students' musical introduction, the director ofthe school, Eric Larson, and the board chairman, AlexKaragiannis, awarded six academically talented Bulgarianstudents with full three- and four-year scholarships valuedat 72,000 Euro each. Along with the scholarship awards, theschool dedicated the funds raised at the event to theParent-Teacher Organization and the school's CommunityService fund. More than 14,000 Leva were raised from thedifferent activities and games at the fair.

Official guests of the event included the Minister of EUAffairs Gergana Grancharova; mayor of Pancharevo,Stanimir Peev; director of Sofia Educational Inspectorate,Vanya Kastreva; executive director of the AmericanChamber of Commerce, Valentin Georgiev; the chairwomanof the Bulgarian Business Leaders Forum, Maria Shishkova;executive director of BBLF, Stamen Tassev; and the chair-man of the Bulgarian Professional Forum of Education, JuriAnjekarski.

Minister Grancharova, highlighted the role of AAS in sup-porting the goodwill of the European Union and the UnitedStates in Bulgaria. Karagiannis noted that in 1968 AAS

started with only 24 students from seven countries and con-gratulated every member of the school for its achievements.

Vanya Kastreva thanked AAS for being an emblematicschool in Sofia and expressed a desire that the school willcelebrate another 100 years of successful development.The director of the school awarded the longest serving AASemployees with flowers and thanked them for their dedicat-ed service to the school.

The birthday celebration proceeded with jazz live music,international cuisine and a lot of good mood and entertain-ment.

Who won a scholarship?

In Grade 10

Boyana B., 14 , First German Secondary School in Sofia;Languages: English, German, Vietnamese; Achievements:Interior Design Awards, Personal exhibitions in the area ofpaintings in Bulgaria and Abroad ; Interests and Hobbies:Fine Arts, basketball

Julieta M., 15 , Sofia English Language School, Languages:English, Spanish, Africans

Achievements: student with the best English languagegrades in her class ; Interests and Hobbies: All social andecological outside school projects

Anglo-American School of Sofia Marks40th anniversary

Alumni, 1969 Minister of European Affairs Gergana Grancharova

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In Grade 9:

Magdalina Zh., 14, American College Sofia,

Languages: English, German, Spanish

Achievements: the highest grade in English language everachieved at the college; Interests and Hobbies: tennis,karate, swimming

Alexander K., 15, First English Language School, Sofia

Languages: English, German

Achievements: Awarded an European Language Portfolioand Passport from the Council of Europe, issued inStrasbourg; "Bulgarian Christmas" Fundraising Campaign -school coordinator, School newsletter editor; Interests andHobbies: charity and patriotic campaigns

Elena E., 14, Zlatarski IB School, Achievements: the beststudent in her class

Interests and Hobbies: ecology projects, and practicingmany sports: tae kwon do, volleyball, swimming, badminton,ice-skating

Evgeni D., 13, Sofia Mathematics School; Languages:English; Achievements: math competition, very talented inMath, helps teachers in organizing school events; Interestsand Hobbies: tennis, football

The scholarships will be in effect until the students com-plete their high school education. AAS will also supportthem financially with two international tournament trips year-ly in Europe, provide them with school books and all nec-essary educational materials. Over the course of the high

school scholarship program, AAS will invest up to 1 millionLeva in the education of these talented Bulgarian children.The only obligation these students will have is to continuewith their excellent performance and to strive to develop associally responsible citizens. ■

Alexander Karagiannis, Deputy Chief of US Mission to Bulgaria Julieta M, one of the students who won a scholarship.

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June 17 was the official start of the distribution of the sec-ond edition of the Golden Pages(tm) business directory inSofia and the region. Some 350,000 copies will reachabout two-thirds of the households and businesses.

Golden Pages(tm) is published and updated every year.More than 50 percent of the data in Golden Pages-Sofia2008 have been changed or are completely new. The newedition includes double the amount of advertising, andboasts the impressive 384 pages.

During the past year, Golden Pages(tm) has successfullyestablished itself as the main directory for the residents ofSofia. Independent research conducted in April 2008shows that for 60 percent of the population* of Sofia thinkof Golden Pages(tm) first when asked about the directoriesthat they know.

The second edition of the Golden Pages(tm) directory forSofia and the region will be distributed free of charge.Some of the success of the book is due to its uniquemethod of distribution - door-to-door delivery to house-holds and businesses by dedicated couriers. About 88 per-

cent of Sofia residents who received Golden Pages(tm)last year claimed that they have used it**. Some 37 per-cent of them said that they have used it at least once amonth. This year the distribution will be handled by М&МMilitzer&Munch BG.

"People in Sofia clearly want to find suppliers of productsand services, and Golden Pages provides the ideal way todo this. Distribution this year will be much easier, becausepeople expect to receive their free copy," said NickSaunders, executive director of Golden Pages.

Golden Pages aims to be the most comprehensible, reli-able, accessible and valuable source of business informa-tion in Bulgaria. The printed editions of Golden Pages arebased on a regional principle and are distributed free ofcharge in an annual circulation of more than 1.1 millionbusiness directories.

Golden Pages - Sofia 2008 in numbers:

● 27,353 free listings of companies with names, address-es, and telephones

● 743 classifications in which the listings and adverts areorganized

● 384 pages ● 4,267 businesses have been excluded as they didn't

answer the phone ● 6,000 new businesses added ● 50 percent of the content of the directory is different

from the content of Golden Pages - Sofia 2007 ● More than 2,000 adverts provide additional information

about businesses - unique selling points, advantages,and reasons why you should choose their products orservices

● 2,549 companies have published a mobile number asthe main contact telephone

● The Real Estate classification contains the highest num-ber of listed companies - 655!

Distribution data:

● 176,050 kg of directories, delivered to Bulgaria in 261packs by nine trucks

● More than 100 couriers, under the coordination of М&МMilitzer&Munch

● 350,000 households and businesses in Sofia and theregion will receive a copy

● 503 grams is the weight of each directory ● 30 kg is the weight of the directories carried by a couri-

er, entering a typical block of 60 flats ● Samokov and Radomir are the towns in which directo-

ries can be collected for free in the local BTC offices

Sources:

* Synovate, Omnibus Research, April 2008 ** BTC Contact, Telephone Research in the city of Sofia,

February 2008 ■

Golden Pages Sends 2008 Edition to350,000 Addresses

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UniCredit Bulbank grants a unique privilege to all its card-holders as the bank removes fees for ATM withdrawal inBulgaria as well as abroad. It means that clients of the bankhave free of charge permanent access to their money in 16European countries as long as they use one of the 15,000ATMs of UniCredit Group.

How to withdraw from foreign ATM For

free?

All the present and future clients of UniCredit Bulbank, card-holders of the bank debit cards (Maestro, Visa, Visa Electronand MasterCard) will take advantage of the free of chargeATM withdraw that is valid from July 1st.

"Our calculations have shown that the average number ofclients withdrawals per quarter is 13 000 at foreign ATMsand the whole amount of the drawn money for the respec-tive period is around BGN 5.5 mill. Upon standard fee of 2.5euro+1% of the drawn amount, it means that for each 100euro drawn abroad there are 3 euro fee", explains SlavkaValkova, Chairman of the Executive Committee of the bank-members of Visa Bulgaria Forum and Director "Cards" atUniCredit Bulbank. "As a member of the largest bank groupin CEE, UniCredit Bulbank removes withdrawal fees in 16countries".

The countries where the cardholders of UniCredit Bulbank canwithdraw for free are (except Bulgaria): Czech Republic,Hungary, Poland, Romania, Russia, Slovakia, Ukraine, Bosnia,Croatia, Serbia, Slovenia, Turkey, Austria, Germany and Italy.The UniCredit Group operates with over 15,000 ATMs and thebank continues to invest in the cash machines network. Up tonow UniCredit Bulbank has 525 cash machines in Bulgaria."We plan till the end of the year to install about 30 newATMs", says Mrs.Valkova.

How to go to Rome For free?

Along with the ATM fees removing, which vastly improves con-ditions for debit cards, UniCredit Bulbank makes an attractiveoffer for its credit cards Visa Classic/ Gold and Platinum.

All UniCredit Bulbank clients who make payments for theamount of at least 500 BGN with their Visa within the periodfrom 21st of June till 21st of August will take part in a lotteryfor five double tourist packages for Rome including airlinetickets and accommodation. The special conditions, whichare valid for the already existing credit cards as well as forthe new issued Visa, provide 2% bonus (cash back) for allpurchases made with Visa Classic и Visa Gold till 21st ofAugust.

The names of the winners will be announced on 29th ofAugust at www.unicreditbulbank.bg and on the following num-

ber: 0 700 1 84 84.

Some advices how to protect our credit card

In conclusion, the experts of UniCredit Bulbank give a fewsimple advices to guarantee the security of our cards.

How to use and keep the card?

The card is only for personal usage and could not be grant-ed even to the family members;Abroad take only these cards that you intend to use; Don't leave your cards without control (in the hotel rooms, onthe beach, in the changing rooms, etc.);You could be asked for your identity card in the shops. Beprepared to show it;Activate SMS notification for every card transaction.

For what transactions to be careful when

we plan vacation?

UniCredit Bulbank cards provide insurance "Travellingabroad", which becomes active after the first payment with thecard abroad;Copy your conformation for the hotel reservation or anothertourist service and keep it till the end of the journey; When you make reservation in the hotel/conference, check inadvance till when you are allowed to cancel your booking.Otherwise your credit card could be charged;In case you have to cancel or to change reservation ask fora written conformation;If you paid for your journey with a voucher, keep it till thereceiving of the monthly card statement.

For what transactions to be careful when

we are on vacation?

In resorts, prefer ATMs in bank branches during their workingtime, hotels or administrative premises; Take in immediately the withdrawn amount. In case of delay,the ATM will take back the cash. Take in as well your cardimmediately after transaction; Insert your PIN. In case you don't get the money from the ATMwait for a written notice to be displayed;If the ATM swallows you card, contact your bank immediate-ly to block it.

How to use and to keep your PIN?

Memorize your PIN. Do not keep it in your wallet, mobile, etc.Never write your PIN on the card; Keep in mind that for transaction with chip-card the PIN isrequired; When insert the numbers of your PIN protect with a free handthe ATM keyboard;

UniCredit Bulbank Cardholders Are Free-of-charge at ATM Withdrawal AbroadThe bank offers as gift to its clients five double tourist packages to Rome

m e m b e r n e w s

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Sopra Group and Tumbleweed Communications announced a

plan of merger in which Sopra Group, via its subsidiary Axway,

would acquire all the outstanding Tumbleweed stock in cash at

$2.70 per share. The proposed transaction is subject to cus-

tomary closing conditions including regulatory and Tumbleweed

stockholder approvals, and is expected to close in the third cal-

endar quarter of 2008. Tumbleweed's operations will then be

combined with those of Axway. Together, Axway and

Tumbleweed will offer integrated collaborative business solutions

to more than 11,000 customers globally. Tumbleweed provides

Secure Content Delivery Solutions to more than 3,300 customers

in various industries including financial services, healthcare and

government. Tumbleweed reported revenue of $57 million

(approximately 38 million Euro) in fiscal 2007. Sopra Group

intends to merge the businesses of Tumbleweed with those of

its subsidiary, Axway, a leading global provider of collaborative

business solutions which reported fiscal 2007 revenue of 145

million Euro ($218 million) and a 10-percent EBIT margin.

Sopra Group expects this transaction to be accretive. In 2009,

the combined entity of Axway and Tumbleweed expects to gen-

erate revenue of around 230 million Euro with an operating mar-

gin between 12-15 percent. The CEO of Axway, Christophe

Fabre, and the CEO of Tumbleweed, Jim Scullion, share a com-

mon vision about the market and the solutions required to drive

it. Scullion said : "Tumbleweed is a natural fit with Axway. We

are confident that the combined product offering will benefit cus-

tomers from both companies and increase long-term growth

prospects."

Fabre added: "The combined entity is expected to more than

double Axway's North American revenue. In addition, our respec-

tive customers will have access to a highly attractive set of prod-

ucts, solutions and services."

The proposed transaction has been approved by Sopra Group's

Board of Directors. Tumbleweed's Board of Directors also

approved the transaction and will recommend that its share-

holders accept the offer. The transaction is subject to regulato-

ry approvals and other customary closing conditions and is

expected to close in the third quarter of 2008. All current

Tumbleweed open positions are remaining open for filling.

Axway plans to continue the Tumbleweed momentum as

employees will now be part of a larger business with more

extensive resources enabling the merged company to grow

faster. Axway intends Tumbleweed to be managed in much the

same manner as it has in the past and will focus on typical inte-

gration plans (IT infrastructure practices and the like) for the bal-

Sopra Group Merges with TumbleweedCommunications