State Maritsa East 2 has become the bone of contention for a very serious conflict of interests between a leading French corporation and almost unknown Chinese company. In the dispute are involved and Bulgarian Commission for Protection of Competition (CPC) and the Supreme Administrative Court (SAC), which for five years now have been churning out conflicting decisions. This has been a behavior that causes a lot of questions because the unequivocal position of the s (OLAF) is that it can smell a rat in the whole saga.
The case will certainly cause serious repercussions in Brussels after this week representatives of the French company Alstom bluntly stated that the Bulgarian Justice refuses to protect their intellectual property. „We are determined to continue to fight for our rights. Maritsa East 2 is a case that is being investigated at the European level,“ commercial director of the French conglomerate, Guillaume Geoffroy, told the BANKER.
Everything started back in 2008. Then, the Bulgarian plant announced a competition for the selection of a company to build a desulphurization plant for its 5th and 6th block. The winner was a consortium between Italian company Idreco and Chinese Insigma who offered to build the facility at a cost of 85.6 million euros. Alstom participated in the procedure, too, and gave a higher price bid – of 103.9 million euros. An important detail is that 36.165 million euros of the funding for the project is provided by the pre-accession programme ISPA, another 34 million euros is a loan from the European Bank for Reconstruction and Development (EBRD) and the remaining amount the state company must obtain from its own funds.
It turns out that instead of using the preliminary declared technology of the Italian technology Idreco, the Chinese Insigma copy-pasted the one of Alstom. They had access to it in 2004 against a promise to pay the relevant licensing rights, but only for the territory of China. A year later, the Chinese company stopped its transfers to the French company, the contract is terminated. However the Chinese continued to use the know-how of Alstom, for which in 2010 it was condemned by the Court of Arbitration in Singapore to pay damages of USD35 million.
In all the havoc comes the contract for Bulgarian TPP Maritza East 2. Alstom first approached the local CPC informing it that Insigma provided false information about their previous projects for the construction of desulphurization facilities and by doing so they deceived the committee that they meet the mandatory requirements for practical experience. The French further claimed that the winning consortium could afford to offer a lower price because the unlawfully used a technology applied by Alstom, without having paid the applicable license fee for it.
The case was referred to the European Commission and upon its initiative OLAF initiated proceedings against the Italian-Chinese consortium. The European anti-fraud body quickly concluded that there was a violation. As a result, in 2010 EU stopped the grants under ISPA and the lending by the EBRD. For the implementation of the project there were only the own funds of Maritsa East 2. The Commission entered Insigma in the blacklist of companies that are not permitted to tender for projects funded by it, the EBRD and the European Investment Bank. And it turns out that the Chinese use the stolen know-how only in their own country, Chile, and in Bulgaria.
In Bulgaria, however, to prove that there is something wrong with the whole situation, it appears to be an impossible mission. In 2011 the CPC imposes a modest fine of 150,000 levs to the consortium Idreco-Insigma on the ground that they forged documents to cover the qualification criteria for participation in the procedure for awarding the contract. But it dismissed the Alstom’s claim of intellectual property theft.
For the French it was essential to prove the violation against their know-how and therefore appealed to the Supreme Administrative Court. The same did the fined consortium. For some reason in 2012 the Bulgarian judiciary decided in favour of the Chinese and the fine imposed by the CPC was canceled by a three-judge panel of the administrative court, and in 2013 this was reaffirmed by a five-member panel. Meanwhile, at the end of 2012 Maritsa East 2 terminated its contract with Idreco-Insigma due to the delayed construction of the plant and poor performance, although the desulphurization facility was completed.
Alstom decided to present new evidence to the court clearly proving that the French technology was stolen. Some of them were shown this week for the first time to Bulgarian journalists and then to members of the European Parliament and the Commission in Brussels.
By decision of 18 December 2013 the Supreme Administrative Court considered that the documents did not constitute new documentary evidence under the provisions of Article 239, item 1 of the Code of Administrative Procedures because they were unilateral statements of a stakeholder in a legal dispute and their materialization in a tangible form was in essence a new creation of Alstom. Now the interested parties will have to wait and see what the last action of the play will be on January 21.
More importantly, the problem of the whole argument remains for the Bulgarian plant. It currently has a facility that is not licensed. It can work, but in 2016 a new a new directive on large combustion plants is expected to enter into force, which will further limit emissions emitted into the atmosphere. Then a modernization of the plant will be needed, but no one will actually be in position to make it because it is still pirated.
„So far we are not thinking of starting lawsuits against Maritsa East 2 itself because it uses our technology illegally. They were also deceived. We do not even claim for payment of damages for our stolen know-how, because as you know, fines imposed by CPC are in favour of the state, not in ours. We have notified them that the amount of license fees due is about USD4 million,“ Mr. Geoffroy explained. He was adamant that his company was not seeking to profit from the case, but is fighting for the termination of such intellectual property thefts as Alstom invests more than 700 million euros a year for research and development.
