From its establishment, Corporate Commercial Bank – formerly Bulgaria’s fourth-largest and now bankrupt – had functioned as a financial pyramid, with its majority owner Tsvetan Vassilev at the pinnacle of the scheme, according to a special parliamentary committee.
The report, tabled in Parliament on the night of July 7 and whose disclosures were made possible by legislation amending provisions on bank secrecy, sketched a complex scheme of unsound lending and linked companies that led to the alleged draining of four billion leva.
MP Snezhana Dukova of GERB, the centre-right party that has the largest share of seats in Parliament and is the majority partner in the coalition government that took office in November 2014, said that it should have been apparent “to the naked eye” to the State Agency for National Security and central Bulgarian National Bank supervisors what was happening with the bank.
But, she said, SANS and BNB had “slept through it”. She said that in her personal view, the three auditing firms that had checked the bank also were guilty, but said that it was up to prosecutors to establish whether they had concealed anything or just had not seen what was happening.
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.
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 CCB.
Sofia Appellate Court ruled on July 3 to declare Corporate Commercial Bank (CCB) insolvent as of June 20 2014, the day that it asked to be put under the special supervision of BNB.
The parliamentary committee said that draining of the bank had taken place through lending to linked companies as money was granted without any collateral.
Newly-created companies were given loans, which were passed down the line, all in one way or another returning to the majority shareholder. Dukova added that that interest rates on deposits of some important people were negotiated with very high interest.
The report claims that Vassilev – who currently is in Serbia, opposing attempts to extradite him to Bulgaria to face serious criminal charges, and who denies wrongdoing – mainly financed himself, with the vast majority of loans offered against little or no collateral to companies connected to him.
Proposals in the report include empowering SANS regarding the handling of primary information to prevent cases such as the CCB one.
The document says that BNB, SANS and the Financial Supervision Commission had not complied effectively with their functions and had not noticed the systematic violations by which loans without collateral were granted to companies associated with Vassilev.
“It’s not a question of lack of professionalism, but of complete irresponsibility and inaction,” the report said. Furthermore, SANS had filed several reports, but the prosecution had not taken any action.
After debate and voting on the report by a plenary session of the National Assembly, the parliamentary committee’s report will be forwarded to prosecutors.
Meanwhile, on July 8, Ivan Kostov – who was Bulgaria’s prime minister from 1997 to 2001 – was questioned at Sofia City Prosecutor’s Office for about an hour in connection with his dealings with Corporate Commercial Bank. In February, Kostov was reported to have said in a media interview that he had had a 155 000 leva deposit at CCB.
He was questioned in connection with this and regarding claims that his Risk Management Laboratory had received money from the bank. Kostov, who denies any wrongdoing, emerged from the questioning to say that it was part of politically-motivated persecution by prosecutors against him that had been persisting for the past 25 years.
(Photo: Corpbank’s logo and slogan, ‘our clients are dear to us’)