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News 05 May 16

Tycoon Accused of Plundering Bulgaria’s CCB Bank

A report on the bankruptcy of Bulgaria's Corporate Commercial Bank accused its former owner Tsvetan Vasilev of acquiring over 1.2 billion euros of the bank’s assets through firms connected to him.

Maria Cheresheva
Tsvetan Vasilev in Sofia. | Photo: CCB Archive

Tsvetan Vasilev, a Bulgarian banker now living in exile in Serbia, has drained 2.5 billion leva (around 1.25 billion euros) from his Corporate Commercial Bank, CCB, which went bankrupt in 2014, international business consultancy firm AlixPartners said in a report made public this week.

According to AlixPartners, which was hired by the bankruptcy trustees to track down the CCB’s assets, the bank acted as a Ponzi scheme, giving out unsecured loans to a network of companies connected to Vasilev.

“Our analysis of the commercial activity of CCB from 2009 on discloses the broad use of credits to clients as a channel for wrongfully or illegally extracting funds from the bank,” AlixPartners’ report said.

“It seems that in most of the cases, this money was used in benefit of the real majority owner of the bank, Mr. Vasilev, his associates and connected entities,” it added.

The confidential report, which runs to more than 500 pages, was made public on Tuesday, following legal amendments to Bulgaria’s banking insolvency law, pushed through by parliament in April.

The report tracks CCB’s banking operations from January 2009 to March 2015, revealing а credit portfolio of 472 unpaid loans to 243 corporate borrowers.

Over a half of the total credits were given to companies linked to the owner, claimed the report.

“There are strikingly high levels of connectivity between the clients-borrowers,” it said.

The auditors are pessimistic about the possibility of recovering the funds, estimating that only between 650 and 800 million leva (between 325 and 400 million euros) can be taken back from the borrowers.

“Because most of the beneficiaries own non-functioning enterprises, there are few, or invalid guarantees,” the report said.

The report highlights eight companies which took a total of over one billion leva (half a billion euros) in loans.

Among them are the Bulgarian telecoms firm Vivacom, the petrol retailer Petrol and the Serbian Glass Factory.

The CCB has given out a total of 221 million leva (around 110 million euros) to the Serbian Glass Factory through two connected firms – Glass Industry and Balkan Glass, registered in Serbia in consortium with a company named Rubin.

According to the report, Balkan Glass was obviously registered with the sole aim of funding the investment activities and budget deficits of the Serbian Glass Factory, which has continuously reported losses.

None of the loans provided to Glass Industry and Balkan Glass have been paid off.

AlixPartners also criticised the Bulgarian financial regulators - the Bulgarian National Bank and the CCB’s auditing firm, KPMG - for being negligent about the irregularities which led to the bank’s collapse.

Neither the Bulgarian National Bank nor KPMG have reacted to the report so far.

Vasilev has been living in Belgrade since 2014, arriving days after the CCB went bankrupt in by far the biggest banking collapse in the history of Bulgaria, with lost assets valued at over four billion leva (around two billion euro).

His extradition has been demanded by the Bulgarian authorities, but it is up to the Belgrade High Court to decide on whether to send him back.

Vasilev is resisting extradition on the grounds that he would not have a fair trial in Bulgaria and has reportedly sought political asylum in Serbia.

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