FORM 60 (RULE 51) Anatol-Vesel Lukanov No.

1
March 16th 2001

No. S004040
VANCOUVER REGISTRY
IN THE SUPREME COURT OF BRITISH COLUMBIA

BETWEEN:

KAPOUSTIN, et al

PLAINTIFFS
AND:

THE REPUBLIC OF BULGARIA, et al

DEFENDANTS
AND:

MINISTRY OF JUSTICE
REPUBLIC OF BULGARIA

RESPONDENT

AFFIDAVIT

I, Anatol-Vesel Lukanov, a practicing attorney in the Republic of Bulgaria and advocate for
the Plaintiffs in the Republic of Bulgaria DO MAKE OATH AND SAY AS FOLLOWS:

1. That the following is based upon my personal knowledge of certain facts and
circumstances; where relevant I have made references to provisions of prevailing
national law and enactment together with any pertinent legislation and international
agreements and treaties to which the Defendant, Republic of Bulgaria (the
“Defendant”) is a contracting party; making referral only to common judicial practice
and relevant decisions of the Constitutional Court, the Supreme Cassation Court and
the Supreme Administrative Court, Republic of Bulgaria (“Bulgaria”).

2. That, as a civil and criminal attorney licensed to practice law in Bulgaria, No 103/2001
of the Advocates Register I have made reference only to those national laws, decisions
and treaties I believe to be meaningful to this, my Affidavit, as submitted by me for
consideration by this Honorable Court; doing so in support of claims made by the
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 Plaintiffs to this jurisdiction being the only one proper and right to ascertain if the
Plaintiffs, being citizens and residents of British Columbia, Canada, are or are not
entitled to the relief sought for the breeches of law and other acts of the Defendants as
alleged by Plaintiffs to be connected to them in the Province of British Columbia (the
“Province”).

3. That, upon my best information and belief, after having closely examined all the
materials available to me and relevant provisions of law, I do verily believe that the
jurisdiction of this Honorable Court is proper since the particulars of the above entitled
case and the facts to which I attest to, in this my Affidavit, lead me to believe that this
Defendant is directly or vicariously responsible for the personal injury, property loss
and breeches of contract or other the torts alleged in the Plaintiffs claim as having
occurred in or otherwise somehow being connected to the Province.

4. As to all other facts they are on my best information and belief based upon, inter alia,
the investigations made by me, including a review of various court records and filings
in various jurisdictions; my examination of official state documents of Canada as
provided to me and those of agencies or instrumentalities, including political
subdivisions of this Defendant; the personal records of the Plaintiffs; the corporate and
court records of the Bulgarian registered company LifeChoice International AD and
others; various published reports and news articles; my personal interviews with the
Plaintiff Michael Kapoustin and such other persons as did provide information under
oath, the nature of which I believe relevant; upon the foregoing I have prepared within
the extremely short period of time consisting of 48 hours this, my affidavit, which does
not include all issues brought up by the Plaintiffs and the documents available
evidencing their claims.

5. The responsibility of the Defendant may be sought on the territory of Bulgaria

according to State's Responsibility for Injuries Caused to Citizens Act - State Gazette
No 60 dated August 5, 1988. It concerns responsibility for the activities of state
administration and of the investigative, prosecution and judicial authorities. But in
view of the nature of the case and of the circumstance that the Plaintiffs reside in
British Columbia and have judicial registrations there, it is only logical to submit their
claims for injured commercial interests under the local legislation.

6. According to the Code on Civil Procedure in effect on the territory of Bulgaria, the
State is to be represented by the Minister of Finance - Article 18 § 3, which does not
lead to arguments that the Supreme Court of British Columbia might not have
jurisdiction over claims for injured rights and interests, by a foreign State, of citizens
and legal entities in Canada as the Plaintiffs appear to be.

7. That I have read the 23rd February 2001 Affidavit of Ms. Maya Dobreva (“Dobreva”)
and can attest that there exists no document or other material fact known or discovered
by me or known to the Plaintiffs as having been filed with this Honorable Court
proving or otherwise establishing the legal right or authority of Ms. Dobreva, as
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 Minister Plenipotentiary & Consul, Embassy Republic of Bulgaria, to retain an
attorney or enter an appearance or to otherwise act or to engage others to act or make
representation in any legal or other capacity in the Province for or on behalf of the
Defendant as to material facts or contracts or applicable national and international laws
which did bind this Defendant as a contracting party, making this Defendant subject to
the jurisdiction of this Honorable Court.

8. That I am unaware of any material fact or circumstance which would lead me to

believe that Ms. Dobreva or Mr. Dimitar Tonchev, Deputy Minister, Ministry of Justice
of the Defendant, as Respondent, to having any direct or specific personal knowledge
of those events, acts, material contracts or other transactions as concluded by the
Plaintiffs with this Defendant or certain of the Defendant’s political subdivisions,
agencies or instrumentalities; each of the aforementioned being separate commercial
activities or transactions of this Defendant with the Plaintiffs and having been effected
among the parties, now litigants, between the period from August 1991 up to and
including the end of December 1995; the breeches of contract and torts claimed against
this Defendant are alleged to have occurred from 31 December 1994 up to and
including 30th November 1998; these are the periods as known to me to be relied upon
by the Plaintiffs in their claim which I, as their legal counsel in Bulgaria am familiar
with and have, in part, briefly enumerated below .

9. That I am further unaware of any material fact or circumstance which would lead me to
believe, Ms. Dobreva or Mr. Dimitar Tonchev, Deputy Minister, Ministry of Justice of
the Defendant, to having any direct or specific personal impressions or knowledge of
those breaches of contract, torts or other acts of the Defendant or certain of the
Defendant’s political subdivisions, agencies or instrumentalities that are alleged as
having caused damage or loss of property, physical injury and other material and non-
material harm claimed to have been suffered by the Plaintiffs in the Province; the
nature and cause of which the Plaintiffs rely upon as their grounds for the relief sought.

10. Setting aside the applicable legal questions of the right of Ms. Dobreva to participate or
give testimony in the above entitled proceedings on behalf of her employer, this
Defendant; or her and Mr. Tonchev’s questionable personal knowledge of relevant
material facts during the period from August 1991 up to December 1998, the following
can be said.

11. That representations made by Ms. Dobreva are unrelated to the subject matter of the
Plaintiffs law suit as set before this Honorable Court; neither are they pertinent to the
subject of this Honorable Court’s jurisdiction over the Defendants in civil or
commercial matters which are the substance of Plaintiffs claims. The issue before this
Honorable Court is one of commercial activities conducted by this Defendant in the
Province, as effected with residents of the Province, the Plaintiffs; this Honorable
Court asked to consider if this Defendant's alleged breeches of conduct; transfers of
title upon property without any guarantees for repayment of the funds invested by the
Plaintiffs; materially untrue or false commercial representations or other tortious
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 conducts in the province or outside the province but having a direct or vicarious affect
upon residents or others in the Province; or alternatively relating to commercial
activities to be completed in or connected to property in the Province to which the
Plaintiffs have or claim to have lawful title or rights.

12. Upon my best information and from the materials available to me it is apparent the
Plaintiffs have not claimed anywhere in their allegations that the judicial proceeding in
Bulgaria cited by Ms Dobreva is the causus for the claims made by them or the relief
sought; Plaintiffs' claims against this Defendant arise from acts organized by it of the
kind as carried on by private persons, de jure gestionis, in connection with commercial
activities and certain material contracts and transactions as entered into by this
Defendant, through different State authorities, institutes and ministries, in the Province
with the Plaintiffs who allege that breaches of contract and other torts of the Defendant
resulted in the injuries and damages being claimed.

13. That Ms. Dobreva’s assertion of Plaintiffs reliance upon official acts arising out of
government activities, de jure imperii, does not represent the truth and is not reflected
in either the originating process as served upon this Defendant. or any subsequent
pleadings or argument set before this Honorable Court.

14. I am unable to determine upon what representations of the Plaintiffs or other material
facts Ms. Dobreva is able to conclude, under oath as if fact or alluding to it as such,
that the law suit commenced by Plaintiffs in the Province is on account of or as a result
of a penal judicial proceeding initiated on the 4th of December 1998 against one of the
Plaintiffs presently in Bulgaria.

15. My client Plaintiff Michael Kapoustin was arrested at the request of the Defendant on
February 7, 1996 in the Federal Republic of Germany. The penal proceedings against
him started on October 26, 1995.

16. I am unable to determine upon what material representations of the Plaintiffs in their
Statement of Claim or other material facts Ms. Dobreva is able to conclude that the
Plaintiffs have at any time claimed or otherwise alluded to challenge a sovereign right
to governmental activities and jurisdiction of any state to commence the referenced by
Ms. Dobreva penal judicial proceeding; or the right of its judiciary to effect, on behalf
of a sovereign state, any acts which conform to the principles of natural law,
international conventions and the national law of a sovereign state; as long as those acts
are lawful and conform to the laws of the jurisdiction in which they were performed.

17. Furthermore that it is apparent to me that the Plaintiffs law suit does not rely upon or
relate to any lawful conduct of this Defendant from 4th December 1998 to the present in
the court case in Bulgaria as referenced in the written declarations of Ms. Dobreva.

18. Up to date there is no effective conviction in force in Bulgaria for a crime of general
character against Plaintiff Michael Kapoustin.
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19. Plaintiffs' claims are for activities of this Defendant from June 1991 up to and
including November 1998.

20. That upon my best information and belief and as is apparent to me from the material
facts set before me, the Plaintiffs are seeking to exercise the sovereign right and
jurisdiction of courts of the Province and Canada and seek only their lawful right to
have adjudicated for them, as lawful resource users and citizens of the Province, their
claims for relief; and to do so before a Canadian court with competent jurisdiction in
commercial matters and property or personal injury claims that are in someway
connected to the Province and its residents; Plaintiffs asking this Honorable Court to
assess upon the merit of their facts the claims made by them; this Honorable Court
applying those provisions of Canadian law, enactment or international law as
applicable in the instance case and giving it sovereign right and jurisdiction over the
subject matter of the Plaintiffs claims.

21. By incoming reference No M-94-000082 from February 17, 1994 my client Plaintiff
Michael Kapoustin has registered with the Ministry of Finance of Bulgaria foreign
investment made by him in the form of 7,500 shares with par value 100 BGL each
amounting to the total sum of 750,000 BGL (seven hundred and fifty thousand BGL).

22. It can be seen from a decision under companies registration case No 15249/93 of the
Sofia City Court, Corporations Department that the corporate registered capital of
LifeChoice International - AD ("LCIAD") amounts to 2,000,000,000 (two billion) old
BGL which represents the equivalent at the time of about $ 74,000,000 USD (seventy
four million USD). Up to date the corporation has not been declared bankrupt nor
insolvent, neither wound-up.

23. On April 28, 1994 a special trust account was open with the Canadian law firm
McCandless, Morrison and Verdicchio for the purposes of financing of all initial
expenses to be made in Canada and the USA connected with transferring the securities
of the Bulgarian investors in compliance with local legislation. We have available a
bank document for the amount of $ 65,000 USD (sixty five thousand USD).

24. I have examined 19,630 documents attached to Applications for Submitting of

Depositary Receipts and Withdrawal of Deposited Securities belonging to 6,217
Bulgarian investors. These documents were addressed to the above mentioned
Canadian law firm McCandless, Morrison and Verdicchio at 1603-1106 Alberni Street,
Vancouver B.C., V6E 3Z3 and together with the envelopes with LifeChoice
International - AD ("LCIAD") stamp, as a sender, were seized by the National
Investigative Service from the offices of LCIAD in Sofia. Up to date neither
prosecution nor the court have released documents to the company, thus making it
impossible for them to complete realization of this project in the Province. All these
envelopes with documents are at the disposal of the Sofia City Court to date.

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25. On June 30, 1993 LifeChoice Pharmaceuticals Joint Venture, Plovdiv, Bulgaria [a joint
venture with Electronic and Magnetic Products owned by the State of Bulgaria, fully
financed and principally owned by LifeChoice Pharmaceuticals Inc., Canada, a British
Columbia corporation] bought active substance Respivax from the National Center for
Infectious and Parasitic Diseases, Bulgaria ("NCIPD") for the amount of $ 20,000 USD
(twenty thousand USD). I have available bank documents from the transaction.

26. I have available a contract approved by Ministry of Health, Bulgaria to effect clinical
tests of Bulgarian citizens, HIV/AIDS patients. The total value of the medicines,
consumables supplied to the Hospital for Infectious Diseases in Sofia, Bulgaria and
other amounts paid by LCIAD is $ 300,000 USD (three hundred thousand USD). No
results and reports from the research carried out, being property of LCIAD, have ever
been delivered to their legal representatives.

27. I have available a contract from September 29, 1994 for carrying out of scientific
experiments for the period of time from November 10, 1994 until December 10, 1995
under a program for scientific research about the effect of Factor - R upon 60 patients
subject to certain risks as a result of exercising of certain professions and of persons
who have undergone chemotherapy and surgical removal of metastases. To the
National Center for Radiobiology and Protection from Radiation were paid sums under
the said contract. I have available bank documents for the amount of $ 20,000 USD
(twenty thousand USD). Although the amount was paid, the results were not submitted
to LCIAD up to date.

28. I have available documentation for the import of AZT tablets. There is an approval
from the Ministry of Health, Bulgaria, permitting a shipment from Canada to be
delivered to the agencies of the Ministry of Health. The total value of the quantities
agreed upon amounts to about $ 130,000 USD (one hundred thirty thousand USD).

29. There is no illegal embezzlement of substantial sums of money from over 4,700
Bulgarian citizens, as Ms. Dobreva alleges in her affidavit. I have available decisions
of the Sofia Regional Court, Sofia City Court, Sofia Appeal Court, Supreme Cassation
Court and Supreme Administrative Court and all these decisions recognize the
relationships which existed between LCIAD and the separate Bulgarian investors as
contractual ones. There are perfect contracts, which the State in the face of the Ministry
of Finance has even taxed. The number pointed out by Ms. Dobreva is not supported
by written documents, there is no list of these persons and I state that she is not in a
position to submit one.

30. The allegation that my client Plaintiff Michael Kapoustin absconded abroad is not true
either. According to a letter from the Direction of People's Police, Passports
Department, my client had permission to stay in Bulgaria up to September 29, 1995.
The penal proceedings against him were initiated, as cited before, on October 27, 1995
at the time when he was not in Bulgaria.

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31. My client, Plaintiff Michael Kapoustin, was never subpoenaed at the official addresses
of his offices in Sofia, at addresses in Greece known such as Kavala, 14-V, "Plio" Str.
And Kavala, 16, "Yadras" Str. Neither at his address in Canada, Vancouver, Alberni Str.
1166 and phone numbers 662-37-71 and 669-98-28. Although addresses and telephone
numbers in Austin, Texas and St. John, Antigua were known, my client was never
subpoenaed there either. There is a Treaty for Legal Assistance on Civil and Penal
Matters between Bulgaria and Greece promulgated in State Gazette No 49/1980. There
is no duly formed and served subpoena to my client in compliance with this treaty.

32. The allegation that Plaintiff Michael Kapoustin started a pyramid scheme in Bulgaria is
not true, because I have available bank documents and statements from bank accounts
certifying unequivocally that the sums invested by different Bulgarian citizens do not
cover the expenses of the company for consumables, electricity, water, rents, etc. for
the period of time June 1993 - April 1994 in the bank account of LCIAD for BGL, not
taking into consideration the funds in foreign currency, were 16,900,566.85 BGL
(sixteen million nine hundred thousand five hundred sixty six BGL 85 stotinki),
approximate equivalent of $ 422,514 USD (taking into consideration the considerable
deviations in the exchange rate during this period of time), before the initiation of
collecting investments from Bulgarian citizens through distribution of Redeemable
Depositary Receipts (RDR).

33. I have available a written statement dated October 29, 1997 from which it can be seen
that property of LCIAD, seized by the National Investigative Service, Bulgaria, was
missing. Between the missing assets enumerated were two jeeps, a briefcase containing
programs for a simulator that costs $ 60,000 USD (sixty thousand). There is no
evaluation for the jeeps missing.

34. According to seizure order No 7171 from March 20, 1996 property was seized,
consisting of installation for processing of waste oils belonging to LCIAD. It can be
seen from a letter with ref. No 6600328 of MDB - Tzarimir dated August 26, 1997 the
funds for security of the site were withheld and the assets were depleted.

35. I have available an Act for State Property No 001047 dated July 27, 1998 by which the
ground floor of a building consisting of 580 square meters together with offices of 57
square meters and a separate premise of 35 square meters, second level at 3, "Krakra"
Str., Sofia from the Ministry of Health title was transferred to the State. The new owner
in the person of the new District Manager of Sofia did not guarantee the existing
contract for rent, which LCIAD had concluded for this site. In this site considerable
funds were invested for its improvement but they were never reimbursed to LCIAD.
By an Order No 011003 from April 15th, 1999 issued by the District Manager of Sofia
the Regional Union of the Social-Democratic Party was lodged in the same premises.

36. I have information at my disposal which was received unofficially in Bulgaria from
separate Interpol officers but this information submitted by persons like John Imof,
Derek A. Doornbos has no official character and in most of the instances represents fax
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 messages without any certifications or official legalization. The documentation
necessary for the extradition was not duly formed in compliance with the Interpol
Constitution.

37. On December 13, 1995 a meeting was held between Derek A. Doornbos, Anatoli
Kossev, an employee in Department International Relations of the Ministry of Home
Affairs who participated in thirteen interrogations of my client Plaintiff Michael
Kapoustin as a translator, Roumen Andreev, deputy chief of the National Investigative
Service, Miroslav Genov, Central Service for Fight against Organized Crime and
investigator Stefcho Georgiev. Mr. Doornbos submitted his business card to these
persons and a fax number for them to pose questions to the Canadian economic police
in Vancouver and the Canadian economic police, through the Central Service for Fight
against Organized Crime and the National Investigative Service to give responses. This
meeting was documented in a memo available to me. I have at my disposal the phone
number given by Mr. Doornbos - 531-38-3555 and an address in Vienna. At the said
meeting it was specified that it was of mutual interest to establish the criminal activities
of the Plaintiff Michael Kapoustin in his large scale financial frauds and the transfers
to Canadian and Caribbean banks of millions of USD from East and West Europe.
There is no evidence whatsoever supporting the allegations made. On the contrary,
evidence exists which fully rebuts them.

38. The assertion in paragraph 4 of Ms. Dobreva's affidavit that Plaintiff Michael
Kapoustin became the reason for delaying of the case in Bulgaria is not true. Changes
of defence counsels were due to the voluminous evidential material. Only the last
session under the case continued from January 15, 2001 until March 7, 2001. Although
originally the session was set down for the period of time from January 15, 2001 until
February 28, 2001 the defence attended in the court-room in order to complete the
process and did not seek new adjournment of the case. In fact three defense counsels
have really worked under the case. The circumstance that the fourth one fell ill and at
present is not in a position to exercise her profession as a lawyer yet cannot be charged
with the Plaintiff to his disadvantage. The evidence under the case was collected in
more than 90,000 pages which means that the new lawyer, when entering the case,
would need time to get familiar with the materials. Furthermore, when examining the
case, it can be established that after the fourth attorney fell ill, the third one, who had
previously withdrawn since the court obstructed him to exercise his functions as
defence counsel and had advised about this the Ministry of Justice and the Sofia Bar,
continued his work. This shows that at no times the Plaintiff aimed at deliberately
delaying the proceedings but he only exercised his procedural rights for defence. The
fact that the court rejected more than 120 requests of the defence for collecting of
evidence, which prove the Plaintiff innocent, does not show delay of the process due to
his fault.

39. The complaint filed with the European Court of Human Rights refers to the Plaintiff's
rights for defence violated by investigator Stefcho Georgiev. Concerning this violation
there is an official opinion from the Supreme Cassation Prosecutor's Office of Bulgaria
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 that investigator Stefcho Georgiev cannot be held criminally liable because the
statutory period has expired.

40. This Affidavit is not notarized since according to the Bulgarian Advocacy Law a
lawyer, within the scope of his/her job, may himself/herself certify transcripts of
documents submitted to him/her in connection with and for the proceedings under the
case and under this case they have the force of officially certified documents.
Therefore, in case notarization is necessary according to Canadian legislation I will do
this after the direction of the Honorable Court.

_______________________
Anatol-Vesel Lukanov
Attorney at Law

For the veracity of translation:

Marianna Radoulova
Sworn translator

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