01/10/2013 10:59 am ET Updated Mar 12, 2013

Taming the Wild East

Even during the communist era, Bulgaria was a center for organized crime. As Misha Glenny reports in his book McMafia, Bulgaria's arms export firm Kintex started out in the late 1970s smuggling arms to insurgents in Africa, "but soon the channels were also being used for illegal people trafficking, for drugs, and even for the smuggling of works of art and antiquities."

The criminality only intensified after 1989. The media tycoon Robert Maxwell, who had close ties to communist dictator Todor Zhivkov, allegedly facilitated a money-laundering operation that spirited $2 billion out of Bulgaria and into Western tax havens. The privatization of national assets was a golden opportunity for the old capitalists of the West and the red capitalists of the East to engage in corruption and graft.

Iliya Pavlov emerged as one of Bulgaria's key red capitalists. On the surface, he was just a successful businessman, running a large corporation called Multigroup and employing thousands of people. Behind the scenes, however, Pavlov worked closely with Bulgaria's version of the KGB to make huge profits through price-fixing. In 2003, a sniper assassinated Pavlov in 2003 outside his Multigroup headquarters.

Before his fall, Pavlov was powerful enough to control Bulgarian politics. As Stefan Popov explains, "Pavlov said, 'If the Bulgarian prime minister wants something from me, let's talk at the table.' Can you imagine Al Capone saying something like that about the U.S. president? That's unthinkable, unless you're a movie director."

Stefan Popov is trying to change the image of Bulgaria as the Wild East frontier of the European Union. He heads up an organization called Risk Monitor, which shines a light on the more shadowy recesses of Bulgaria's illegal economy. As a result of Risk Monitor's work, the Bulgarian government has to face tough questions about sex trafficking and money-laundering.

Risk Monitor's work is complicated by the high-level involvement of powerful political and economic interests. It's not simply the intervention of a Mafia-like network from the outside.

"In a country like Bulgaria, it's a senseless distinction between organized crime and white-collar crime," Popov says. "Right from the beginning, the crime was white collar and had deep roots in the state and the politics of that time. It didn't come from the outside. That makes it very difficult to manage and oppose. These are crimes that imply a close interaction or synthesis between business, politics and criminal practices at a very high state level. That's something very difficult to investigate."

We talked about how someone with a philosophy degree got involved in monitoring organized crime, the choices that Bulgaria made in its early years of transition, and what can be done at this point to establish the rule of law in the country.

The Interview

What would you say are your biggest accomplishments in this work?

I think that we opened a whole new page of developing civic expertise on something traditionally considered exclusive state activities, even secret state activities like criminal intelligence and organized crime networks and big criminal markets. Also, we made policies on how the state should counter these issues into a broader issue and challenged the notion that the state should exclusively deal with these topics. This is not only unique for this country. It's very rare for an NGO generally to deal with the issue of organized crime.

We have three major areas of activity and expertise. One is criminal markets. The other is monitoring and assessment of institutional policies and institutional capacity. The third is transnational organized crime. In the first area, our major accomplishment is the description of the money-laundering process in Bulgaria and the organized forced-prostitution rings, which are proportionately larger than the Ukrainian and Russian ones.

Bigger than Moldova?

Yes. Bulgaria has taken the lead in prostitution in countries like Belgium, in the export of young girls and other nasty things. It's quite an accomplishment that we produced facts and data that couldn't be challenged by the officials in government. Our assessment shows 3-6 times higher data on everything that the government has admitted to. The different government branches -- the ministry of interior, the National Investigative Service, the prosecutors' office -- have data that has been "normalized," so to say, to be suitable for Bulgarian-EU negotiations. We revealed much higher figures for forced prostitution and trafficking in human beings, especially sex services. The government ultimately agreed with our figures. The very fact that government agencies agreed with these figures moved the discussion to a different stage.

As far as institutional expertise, we have, for instance, drafted the first-ever national strategy against money laundering. It was accepted first at the ministerial level, then in different branches of the judiciary, and finally it became an official state document of the council of ministers. We connected 12-15 different governmental branches dealing with money laundering. They didn't talk to each other before. Just by negotiating the need for such document, we helped created a common basis for future action.

Another example: we are now in the process of producing the first-ever textbook in Bulgaria on money laundering and policies against money laundering. We're about to help start a pioneering initiative on criminology at a Bulgarian university. We don't have the capacity to run a whole MA program, but we are providing the expertise for this program.

To read the rest of the interview, click here.