Bulgaria’s Parliament voted on March 5 2015 to set up an ad hoc committee of inquiry into the conduct of state bodies and institutions meant by law to exercise control and that should have counteracted the draining of Corporate Commercial Bank (CCB).
Central Bulgarian National Bank (BNB) placed Corporate Commercial Bank under special supervision in June 2014. In November, BNB said that it was revoking CCB’s licence and initiating proceedings to declare the bank insolvent.
CCB majority shareholder Tsvetan Vassilev is reportedly in Serbia, and is expected to face an extradition hearing seeking his return to Bulgaria to face serious criminal charges. Vassilev denies wrongdoing.
The proposal to set up a parliamentary committee of inquiry was tabled by the head of the parliamentary group of GERB, Tsvetan Tsvetanov, and was signed by the leaders of all other parliamentary groups.
The committee will be made up of representatives of all parliamentary groups on a proportional basis.
The committee is to examine how the state bodies and institutions “slept through” the crisis at the bank.
An explanatory memorandum submitted with the proposal for the committee said that the draining of CCB, leading to its bankruptcy, was the largest financial fraud in the recent history of Bulgaria.
The result of this was the spending of four billion leva (about two billion euro) by the Deposit Insurance Fund, together with further funds from the state budget to cover payments of guaranteed deposits.
It was critical to examine to the timeliness and adequacy of the actions of government institutions that should take preventative action to prevent similar robbery of taxpayers in the future.
The commission will examine the actions of BNB’s banking supervision arm, the Financial Supervision Commission and the State Agency for National Security’s financial intelligence department.
The memorandum said that BNB’s banking supervision department should, through regular checks and on-site inspections, closely monitor compliance with good financial practices and take immediation action at the first sign of weakness.
CCB was a public company and therefore should be strictly monitored by the Financial Supervision Commission, but so far it was not clear whether the commission had taken any action.
The period of time to be covered by the inquiry is 2009 to 2014.
The memorandum suggests that after the committee has completed its task, it will recommend legislative changes to tighten controls.
Those backing the formation of the committee said that those guilty should be indicted by SANS and financial intelligence. If SANS did not have the capacity to intervene decisively in major financial fraud, national security was at risk, the memorandum said.
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