Bulgarian elections 2014: Politicians bank on Corpbank controversy

The question of the future of troubled Corporate Commercial Bank is defining debate ahead of Bulgaria’s October 5 early parliamentary elections – and will continue to do so in the country’s political life long after the elections are over.

Some might argue that Corporate Commercial Bank had a role in Bulgaria’s political life years before the current crises: the political crisis, the crisis of confidence in the country’s institutions and politicians, and of course the crisis around the bank itself.

Corporate Commercial Bank was Bulgaria’s fourth-largest lender before central Bulgarian National Bank (BNB) put it under special supervision on June 20 2014 at Corpbank’s request because of stated liquidity problems. The bank will remain under conservatorship until at least November 20, while its majority shareholder, Tsvetan Vassilev, is in Serbia, expected to face an extradition hearing as Bulgarian prosecutors want him to answer charges related to embezzling hundreds of millions of leva, allegations that Vassilev denies.

The CCB affair has been a constant talking point for politicians from various parties, some more than others, while some state institutions have had their say too. President Rossen Plevneliev convened a special meeting of top politicians and state officials in mid-July to discuss the problems in Bulgaria’s banking sector, while Prosecutor-General Sotir Tsatsarov regularly has had plenty to say about Corpbank and the goings-on around it.

Long before the dramatic events of late June 2014, Corporate Commercial Bank was seen by critics of elements of Bulgaria’s political establishment at being at the centre of political manoeuvrings and also as part of a nexus of well-funded and large-scale media ownerships. The bank consistently denied these allegations.

The anti-government Protest Network, that arose from the June 2013-July 2014 protests demanding the resignation of the cabinet after the controversial abortive appointment of Delyan Peevski as head of the State Agency for National Security, lodged a dossier with prosecutors (copied to other institutions) containing allegations against Vassilev, Peevski and populist politician Nikolai Barekov that the Protest Network said amounted to the three being an “organised crime group” – an allegation that all three rejected.

Against this background, Prosecutor-General Tsatsarov said on September 19 that there were politicians involved in the Corporate Commercial Bank case, and their names would come out in court.

Tsatsarov said that Corpbank was “not a normal bank” and said that the state had nurtured and tolerated the bank.

“The practices created there were used by certain political forces and when sooner or later we enter the courtroom, everything will become clear,” Tsatsarov said.

In the case of Corporate Commercial Bank, if it is true that the tail is wagging the dog, it remains to be seen who is the tail and who is the dog. Is this is case of a political set of interests using the bank as a vehicle, or a set of commercial interests who were using politicians as a vehicle?

Vassilev himself, interviewed by Bulgarian media in Belgrade after surrendering himself to Serbian authorities, spoke of an “uncontrollably strong political pressure” that was exerted on him.

“I am not sure about anything. I have been betrayed by everybody,” Vassilev said. Asked who was the source of the political pressure, Vassilev mentioned the names of BNB governor Ivan Iskrov and of Plamen Oresharski – the latter the nominal prime minister in the May 2013/August 2014 cabinet that was put in place with the mandate of the Bulgarian Socialist Party and the support of the Movement for Rights and Freedoms – but said that these two were just “marionettes”.

Iskrov, a 47-year-old former MP who became head of BNB in 2003 while the Saxe-Coburg cabinet was in government and retained the job when Boiko Borissov’s centre-right GERB government came to power in 2009, has been involved in tangles with politicians in recent weeks, including Borissov and GERB former minister Veshdi Rashidov. From various political quarters, there have been calls for Iskrov to resign over the Corpbank affair.

In recent days, at a meeting with CCB shareholders – an event promoted avidly by GERB’s publicity machine – Borissov and the shareholders were said by GERB to have agreed that there should be four specific steps taken to solve the Corpbank case.

These were the resignation of Iskov as soon as the 43rd National Assembly to be elected on October 5 is constituted (according to GERB, the shareholders and the party agreed that Iskrov should resign because there was still no roadmap for the recovery of the bank), immediate adoption by the new Parliament of legislative measures that will help strengthen Corpbank, a guarantee by all of Bulgaria’s state institutions that no misuse of the bank’s assets will be allowed until the adoption of a conclusive decision on the case, and prosecution of those liable over their involvement in the case.

In essence, a key element of the debate over the future of Corpbank is whether to save it or let it sink. On this, Bulgaria’s political house is divided. No doubt, several politicians are unlikely to want to embrace the idea of closing the bank, aware that apart from the major depositors – state and corporate – there are any number of small depositors having a miserable time pending clarity on the bank’s fate.

Iskrov, in an interview with public broadcaster Bulgarian National Television broadcast on September 21, said that Corporate Commercial Bank should be rehabilitated in the fastest way, but could not be opened solely through the efforts of BNB.

Iskrov told BNT, repeating a stance he has held for some time, that opening CCB required a political solution. (He added that, in his view, Corpbank was an isolated case and the tension in Bulgaria’s banking sector in June had been created artifically.)

Asked to respond to the view that it was banking supervision at BNB that had to take care of the good or bad condition of a private bank, Iskrov responded, “this is not a supervisory matter anymore. Without a political decision on the CCB, there cannot be opening of the bank”.

In the same interview, Iskrov denied having had deposits in Corpbank or its subsidiary Victoria Bank and also denied allegations of “dependency” made by Vassilev in recent days.

“I’ve never been anyone’s puppet. Better for Mr Vassilev to say what he did with the money of the depositors and how it will be returned eventually. And as far as the other detractor, the former minister of culture (Rashidov), my lawyers cannot find him to hand him some documents. Maybe I should send him (the lawyer) to some of the election rallies.”

The same day, September 21, reports said that the head of Bulgaria’s Financial Supervision Commission (FSC) Stoyan Mavrodiev was to hold a meeting of the Financial Stability Advisory Council because of the crisis in Corporate Commercial Bank.

Mavrodiev was quoted by daily Sega as saying that communication with conservators who are inspecting the bank and BNB is inadequate. He said that he would demand that Iskrov should present BNB’s plan for restructuring of the bank to the council.

Elsewhere on the campaign trail ahead of the October 5 parliamentary elections, the centre-right Reformist Bloc, an alliance of five parties generally seen as having a good chance of winning a minority share of seats in the 43rd National Assembly, has been vocal on the topic of Corpbank.

Radan Kanev, leader of one of the constituent parties of the bloc, said that BNB and the prosecutors were “doing nothing” about Corpbank because the circles around former MRF leader Ahmed Dogan, Peevski and Vassilev were benefitting from the period while the bank was closed.

According to Kanev, 97 per cent of the loans by Corpbank were concentrated in a small number of entities, some of which were hollow. A third of them did not have more than one employee, he said.

Kanev said that all of the money could be traced, but this was not being done, because a large number of the loans and deposits were politically connected.

“If you dig deeper, it may be that it leads to the BSP and GERB,” Kanev said, saying that he was basing this on data that the Reformist Bloc had from a financial assessment that it had ordered.

A notable perspective came from Tatyana Doncheva, whose Movement 21 is a breakaway from the BSP and is not seen as likely to win any seats in the next National Assembly.

Doncheva, a 54-year-old lawyer who sat in four successive parliaments as a BSP MP (but not in the most recent one after breaking with the BSP leadership) said that Oresharski would not have been prime minister without Vassilev’s consent.

According to Doncheva, the reason that Vassilev referred to Oresharski and Iskrov as “marionettes” and to speak about “traitors” was that the two had begun to do things other than those that Vassilev expected and wanted.

Doncheva said that no work was being done on the CCB affair because the State Agency for National Security, the special services, banking supervision and other political forces were closely related to the bank.

“They are in the bank. Those in power, the opposition, those formerly in power from GERB, those who were in power last year – the BSP and MRF, the opposition associated with the Reformist Bloc, also received funding through consultancy contracts for certain people their money is kept there, the special services and the Interior Ministry are also there. They are physically there. With a ladling spoon.

“They got consulting contracts, assignments, to advise, to lobby.

“When Corpbank is opened up and when information comes out who heads the Interior Ministry, the special services, the prosecution, the courts, the mayors, leaders of political parties, heads of major state and municipal enterprises have credit cards with no limits, it’ll become clear. You will see the connection between pocketing money of state and municipal firms and deposits of families with the relevant heads, with inexplicable interest rates on deposits, which are not only high, they are higher than those given by the bank,” Doncheva said.

Amid all of this, the major party that arguably has had the least to say – while not being silent – on the CCB affair during the election campaign is the BSP.

On September 17, twelve days after the start of the campaign, BSP leader Mihail Mikov made a public call to President Plevneliev to publish the minutes of the discussions convened by the head of state among political parties in June and July on how to deal with the banking crisis in the country.

In an interview, separately, with bTV, Mikov said that he did not want to guess who might have a political interest in the delay in the recovery of Corpbank. “I’ll keep my suspicions to myself,” Mikov said.

Mikov then went on to say that he was not convinced that there were links between the “Oresharski” government and the failure of Corpbank.

“The discussion in summer this year of the idea of a bank holiday after CCB was put under supervision was aimed at creating an apocalyptic picture, blocking the banking economy, blocking the banking sector and creating the situation before the elections, which is to the advantage of GERB,” Mikov said.

Mikov said that were Plevneliev to make public the transcripts of the meetings, it would become clear that it was GERB and the MRF that had been in favour of the “radical measure”

“In this situation, the BSP had a responsible position – against a bank holiday, observance of the law and no granting of funds from the Budget to cover the unclear liabilities of the bank,” Mikov said.

At the same time, he denied that the CCB affair had played a role in relations between the BSP and MRF becoming estranged, which had in turn led to the fall of the government.

Of all the players in this drama, the interaction between two has been of some fascination: Vassilev and Barekov (to leave aside the interactions, somewhat hostile in recent months including with mutual allegations of death threats, between Vassilev and Peevski).

Barekov was seen as close to Vassilev, a perspective held especially among those opposed to the ruling axis of May 2013-August 2014. Vassilev earlier repeatedly denied that having anything to do with the media with which Barekov, a former talk show host, was associated.

In 2013, Barekov made the transition from television figure to politician via his Bulgaria Without Censorship show, which picked up dynamics from the February 2013 anti-GERB protests that led to the resignation of Borissov’s government. From well-funded roadshow mode, BWC became a political party, reportedly the biggest spender in the May 2014 European Parliament elections.

The efforts ahead of the EP elections resulted in BWC getting two out of Bulgaria’s 17 seats in the European Parliament, with Barekov continually referring to himself as the decisive factor in Bulgarian politics and a future prime minister.

At the same time, as a result of the Protest Network allegations, Barekov found himself under scrutiny by the National Revenue Agency and other insitutions, along with Peevski and Vassilev. Media reports about the alleged findings of the NRA about Barekov’s finances have not been confirmed and have been denied by Barekov.

In a statement posted on his personal website on July 30, Vassilev said: “I would like to emphasize that recommending Mr. Barekov for the executive director position at TV7 a while ago was a mistake of mine. He had to be ‘rewarded’ in order for him to leave his position. However, the questions regarding his financial uprightness remained.”

“Barekov’s declarations in the last month make it evident whose servant he is,” Vassilev said.
A few days before the elections campaign officially started, Barekov – whose BWC now has wealthy businessman Hristo Kovachki’s LIDER party as a coalition ally – said that, “I have no master, that’s why I am attacked from everywhere”.

Neither Peevski nor Vassilev had anything to do with him and BWC, according to Barekov.

“I’m neither a man of Borisov, nor of MRF and therefore I suffer constant attacks,” said Barekov, adding that if he were the man of either, he would have comfortable treatment from the media.

Earlier, around the time of the Vassilev June 30 statement, Barekov said in an interview with local media that Vassilev had “gained momentum” during the time of the BSP-MRF-NMSII tripartite coalition and the influence of Vassilev and Peevski had grown significantly during the government of Borissov, who, Barekov said, had put the state’s money in CCB.

Barekov went on to say that if it turned out that Vassilev owned TV7, “the television station owes me a sum of a couple of millions, which meant a lot of difficulties for the management of the company which I still have shares in.

“I think that this answers your question as to whether I have financial dependencies. If someone owes you a huge amount of money – you cannot be dependent on them,” Barekov said.

Whatever one makes of what individual politicians in Bulgaria have to say about the Corpbank affair, about Vassilev and what they say has happened and should happen, Bulgaria’s people seem to have already come to their own conclusions.

According to the results of a survey conducted by Alpha Research – arguably the most reliable polling agency in Bulgaria – every third Bulgarian believes that the blame for the Corporate Commercial Bank crisis lies with the country’s politicians while 29 per cent blame BNB and a lack of sufficient control over the bank.

The survey, done between August 31 and September 5 and the results of which were released on September 9, people wanted transparency in the solution and for it to be made clear what had happened at the bank, which they saw as the “bank of power”.

Two-thirds wanted the Corpbank’s files opened particularly to find out if there were public figures who had benefited.

Close to three months after the bank was placed under special supervision, concern about its fate remained strong. About 54 per cent feared possible new problems in banks. Thirty-four per cent saw the case as an isolated one.

Thirteen per cent blamed Vassilev for the crisis at the bank while nine per cent blamed Peevski, who had “made unsubstantiated allegations against Vassilev and wanted to collapse the bank”.

The poll also found declining public confidence not only in BNB but also in Prosecutor-General Tsatsarov because of the CCB affair.

For now, the political balance sheet is not finalised; on October 5, it may become clear for which politicians the Corpbank affair proved an asset and for which a liability. More likely, however, just as the fate of the bank remains unclear, it may take much longer than that.

(For full coverage of the CCB situation from The Sofia Globe, click here.)

(Main photo: Tsvetan Vassilev, from his personal website vassilev.bg)



Clive Leviev-Sawyer

Clive Leviev-Sawyer is the Publisher and Editor-in-Chief of The Sofia Globe. He is the author of the book Bulgaria: Politics and Protests in the 21st Century (Riva Publishers, 2015), and co-author of the book Bulgarian Jews: Living History (The Organization of the Jews in Bulgaria 'Shalom', 2018). He is also the author of Power: A Political Novel, available via amazon.com, and, on the lighter side, Whiskers And Other Short Tales of Cats (2021), also available via Amazon. He has translated books and numerous texts from Bulgarian into English.