Bulgarian “Bad Apples” Banks Now on TV Mind the horns!

On Friday, November 28, in its political talk show “This Morning”, bTV aired a report by journalist Stoyan Georgiev on the drain of failed private lender Corporate Commercial Bank (KTB or CCB), extensively quoting a classified diplomatic cable of former US Ambassador in Sofia, John Beyrle, on Bulgarian “bad apples” banks “funneling money for known criminals in money laundering schemes and involved in connected lending”. Their names were spared, except for KTB.

The report was first published by Bivol – Bulgarian partner of Wikileaks – in June 2011, with deleted names of informants of the Ambassador. Such were the publishing guidelines and our commitment under a contract with Julian Assange – not to endanger persons who are not in power and shield them from political and economic attacks over their contacts with the US embassy.

Two days later the report was quoted on second page in the French Le Monde. In Bulgarian media, however, there was total taboo to mention such a document and it lasted for a long time. Moreover, a slanderous attack was launched against the editor of the website Atanas Tchobanov, personally orchestrated by the head of the PR of First Investment Bank (FIB).

Several months later, all US cables leaked without deletions of names and those who were interested learned that the informant of Ambassador Beyrle was the then-director of financial intelligence Dr. Vasil Kirov, now working in OLAF.

Bivol then published the full text of the cable and was threatened by the Bulgarian central bank (Bulgarian National Bank –BNB) with a huge fine under the Lending Institutions Act over a complaint of four of the “bad apples” – FIB, Investbank, KTB and Central Cooperative Bank (CCB). After strong international support – reaction of Reporters Without Borders and a publication in the US Forbes – the central bank abandoned its intentions and resorted to silence. However, BNB refused to give to Bivol the letter with the complaint of the four “bad apples” banks.

Meanwhile, the “bad apples” were announced in a prestigious media study as “taboo topic” in Bulgarian media.

All these facts are particularly known to the readers of the site and to the journalists’ guild. And it is not at all ethical and collegial on the part of bTV to skip them and to display the cable as some last minute discovery.

After death the doctor or keeping the upcoming outbreak in mind?

The good news is that three years later, the taboos finally began to be lifted and led to displaying Ambassador Beyrle’s cable on TV. Paragraphs on lending to connected parties were cited; Dr. Vassil Kirov’s battle with political factors and even with BNB which, according to him, was not sufficiently vigilant against harmful practices was mentioned as well. We all know what this institutional policy eventually led to – a major banking crisis.

Some will say that this is hindsight, but we argue that it is better than continuing silence because the informed choice is an important one. Anyone can read the original cable on the site of Wikileaks or translated by Bivol and see that not only KTB is a “bad apple”.

The inquisitive reader will learn the names of the other “bad apples” that still have the same owners – CCB owned by the “criminal group TIM” (according to a cable of another former US Ambassador – James Pardew), Investbank and International Asset Bank.

And of course FIB, which now survives with State aid. Ambassador Beyrle dedicated the most extensive report on it – “it is known as one of the most aggressive and “polished” banks as well as one in the murkier criminal realm.”

The collapse of the CCB was preceded by numerous alarming publications about its huge exposures to connected parties and to fictitious companies, which led to its drain without the banking supervision noticing anything. The depositors and the taxpayers are the victims in this case and this is a situation very accurately described in the “bad apples” cable.

“Connected lending continues to be a problem among some banks as their owners funnel money to related – less competitive – companies, with no intention of repaying. This leaves legitimate investors and account-holders holding the bag when bad loans go uncollected.”

The behavior of BNB regarding FIB is identical – “everything is fine until the sh.. hits the fan”. Yesterday BNB refuted its own statement that it will check Bivol’s evidence of such a drain in FIB by connected companies. This outmost brazen drain is happening right now, under the nose of all institutions. However, with few exceptions, it is again a taboo subject.

Yet, as we just saw, barriers that are artificially imposed on media do fall sooner or later, unfortunately not before, but after the next “bad apple” falls. And while it is falling institutions stare into nothingness with “Eyes Wide Shut”. This is perfectly demonstrated in the report of our colleagues from bTV.

You will be able to read soon in Bivol about the dummy companies and the technology of the draining of FIB. And now, please read the “bad apples” cable.

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