Greek National Pocketed State Budget Aid Granted to Private Lender FIB

Dummy companies receive hundreds of millions from the supervised First Investment Bank (FIB). There are large exposures to companies associated with Grisha Ganchev, Hristo Kovachki and Darina Pavlova
Екип на Биволъ

After some serious revelations about huge loans granted by FIB to entities of connected parties (see here, here and here), Bivol undertook the tough task to review the loan portfolio of the Bank that was rescued with State money.

The investigation was not easy. We analyzed the granting of corporate loans totaling 3.25 billion levs from a total of 4.9 billion levs given by FIB. We traced the ownership of more than 280 Bulgarian companies and nearly 50 offshore ones. We reviewed over 400 documents from Bulgarian and foreign commercial registries. At present, this is the largest investigation by processed databases conducted by the journalists of Bivol. It was done through adherence to all rules of working with information and validating its authenticity. We state in the most responsible manner that all facts reflect the current situation at the time of the investigation, according to official national and international public registries*.

We present the results in a table (in Bulgarian) with links to folders with documents for each company. Thus, everyone can review them and make sure that the published data is completely real. For us, personally, it seems too daunting.

Georgiou – the Golden Business Partner

The “globally-unknown” Cypriot citizen Georgios Georgiou was born in 1971. The man’s home address is registered in a modest suburb of Nicosia. However, according to documents discovered so far, the Cypriot owns large assets in Bulgaria such as the remnants of the steel mill Kremikovtsi and of the Lead and Zinc Complex (OCK) Kardzhali, emblematic companies such as Vitosha Ski and Yulen, construction, transport and tourism business.

These acquisitions are, however, related to obligations to FIB of over 800 million levs. This exceeds FIB’s own equity, which is 719.5 million levs. The loans, which the Greek Cypriot has received, are close in their amount to the 900 million levs of the bailout to rescue FIB in the summer of 2014, which the Bank did not repay to the State budget.

Regulation № 575/2013 of the European Parliament is clear. Its Article 395 expressly states that “an institution shall not incur an exposure, after taking into account the effect of the credit risk mitigation in accordance with Articles 399 to 403, to a client or group of connected clients the value of which exceeds 25 % of its eligible capital”.

Precisely because of connectivity that is revealed in the registry documents, Bivol asked a month ago the central bank (Bulgarian National Bank, BNB) and the Prosecution to conduct a probe to establish or deny legitimate doubts that FIB is in an unacceptable breach of European directives that are mandatory for Bulgarian banks.

The profile Georgios

Despite his large-scale business for hundreds of millions, Georgios Georgiou seems to be in need. He is also working as director of the company LEGNANO ENTERPRISES, owned by the main shareholders of FIB – Tseko Minev and Ivaylo Mutafchiev. At the end of 2013, Georgiou sold to them the company which then owned shares in FIB.

Georgiou no longer has shares in FIB, but he is now a person connected to FIB as its major shareholders control him (within the meaning of Art. 4 § 1, item 38 of the above-mentioned Regulation). For such persons, under Art. 45 of the Credit Institutions Act, the loan limit is 20% of the capital.

Three of the largest exposures of FIB, about which Bivol wrote two months ago, respectively in the amount of 115, 109 and 104 million levs, and about which BNB is adamant that they have been checked by the European Commission that authorized the State aid for FIB, are among Georgiou’s jewel companies. Bivol’s investigation revealed that these three exposures are not regularly repaid and have been renegotiated at the last moment before their maturity date in September 2014, and their interest was even reduced. Just three loans, granted the same final owner, exceed more than half of the capital of FIB and already represent a gross violation of the law.

But the financial influence of the Cypriot is more extensive. He, himself, as well as the connected to him Evdokiya Maklamuzi, Elena Maklamuzi Stavros Konstantinou and Stella Georgiou, Nicky Tenekedzi Anastasia Ioannides, Christine Kone, Nikki Ann Reymundo have accumulated a total of

1.27 billion levs in debt to FIB!

The conclusion so far is that in order for FIB to be a viable bank, eligible for State aid, the anonymous Cypriot tycoon has to work hard and to repay his debts. Otherwise, the “Georgiouses” or those who stand behind them can turn quite costly to taxpayers, literally.

Bank or organized crime?

FIB, however, has large exposures to other emblematic business people from the Transition Period after the fall of the Communist regime, subject to the famous cable of former US Ambassador to Bulgaria, James Pardew, entitled “Bulgarian Organized Crime”, which Bivol published in detail, together with WikiLeaks, as early as in 2011.

It turns out that in a relatively short time Georgiou was able to dominate and to resell nearly the entire road construction business of Vasil Bozhkov, AKA The Skull, known from US diplomatic cables as “one of the most wanted” criminals. Bozhkov’s companies are currently owned by other offshore companies, but all, without exception, have passed through companies of Georgiou. In addition, the infamous betting company Eurobet also has loans.

Companies from the energy sector, related to Hristo Kovachki, (best man of Ivaylo Mutafchiev) have taken loans in the amount of 335 million levs.

The exposure of the sugar factories of Lovech businessman Grisha Ganchev is in the amount of 321.8 million levs.

Bivol already wrote (see link) that the loan of Burgas Sugar Factories, in the amount of 35 million euro, has been assigned to the offshore company GOFF HOTELS MANAGEMENT against 13,337,664.23 euro. The almighty Georgiou is the owner Goff and the company is managed by a FIB employee.

In the last, more modest group, companies with large exposures include those of the late Iliya Pavlov and his Multigroup – BOROLAND and BOROSPORT with a total of 82 million levs; Iliya Pavlov’s widow – Darina Pavlova – is co-owner of BOROLAND and a representative of the Lichtenstein offshore company that owns BOROSPORT. These credits are still secured by operating hotels and ski facilities in the winter resort “Borovets”.

One can also find other notable individuals among the borrowers of FIB. INTERPIPE of Kiril Zahariev is in liquidation and owes 41 million levs, of which 14 million have been assigned to GOFF, while the other 27 million are somehow hanging secured. ROAD CONSTRUCTION, also an offshore property, has a credit of 43 million levs.

One employee with multimillion credits

The company SEMITA BUILD of Vidin businessman Dimitrov Nanovski has one employee with registered social and health benefits, according to public records. This has not prevented it from receiving a loan of more than 40 million euro, or about 80 million levs, from FIB.

See now how it’s done:

The company was established on September 5, 2013. It has equity of 1,000 levs. Without having any business activity or having proven its reliability, just days later, on October 1, 2013, it has been granted a loan of 25 million euro. Next month, in November of the same year, the amount of the loan has been already increased to 35 million euros. With a subsequent annex, the loan reached the true record amount for such commercial entity of 40,150,000 euro! It is especially interesting that this really shocking huge credit has been approved nearly two months after FIB fell into a liquidity crisis and received State aid in the summer of 2014. The repayment term of the loan has been deferred from September 2014 to September 2016. The collateral for those tens of millions is…. a property of 6 decares in the city of Haskovo and an obscure “commercial enterprise”! A justifiable question arises – how this company, only several-days-old, with 1,000 levs in capital and only one employee has met the strict requirements for lending, which every Bulgarian knows?! Whether this looks like a normal banking practice to anyone who has ever applied even for a small consumer loan with a bank? Is it important that the tiny company, financed with skyrocketing amounts, is registered on 2B, Marinkovitza Street, which is also the headquarters of other large borrowers of FIB? Is it a coincidence that the same office is occupied by the group of NADINE companies? Bivol wrote in detail in an earlier investigation about the relationship of FIB with NADINE in the privatization of Kremikovtzi.

There are other companies “blessed” with public money after FIB received the aid. CRYSTAL ASSET MANAGEMENT of the Lovech-based Kaloyan Enchev has received 28 million US dollars on October 31, 2014. A few days earlier, the newspaper Capital described the scheme for refinancing “Petrol” through this company, which at the end of 2013 had only 150 thousand levs in assets, and no revenues in 2012.

“The big unanswered question now is how Crystal Asset Management has raised funds for the refinancing,” the authors of the article wondered. The question may be considered elucidated.

US diplomatic analyses are now bitterly confirmed

In conclusion, the investigation of Bivol confirmed by documents and facts the findings made ten years ago by former US Ambassador John Beyrle. He describes FIB as a “bad apple”, “considered to have one foot in the legitimate retail world… as well as one in the murkier criminal realm (see here). In Bulgaria, however, “the criminal realm” is already standing with both feet in the higher echelons of the judicial, executive and legislative power. It has conquered the rule of the entire country. The Mafia also needs appropriate financial tools for the syphoning and looting of public funds. It needs to put the public reaction to sleep and the robbery of the next several generations of Bulgarians is performed through wild propaganda of media corporations that were tamed in the last eight years with similar limitless financing. The State institutions and the Mafia-State, instead of investigating the criminal schemes and save the nation from total bankruptcy, now openly unmasked themselves as guardians of both, the backstage rule and the neo-Communist satraps of free speech that is shacking the mainstream censorship.

The rest is media silence and social agony.

* The investigation has used data from the Trade Registry ( where registered pledges and their deletion are listed. We have noted only active pledges for which there are available documents in this Registry. The figures in the investigation reflect the current state of the credit. Some loans could be serviced and might have decreased; others are in arrears and could have increased over the accumulation of interest. In its investigation, Bivol, as a media, cannot be held liable for false or incomplete records in the Registry of the data submitted by FIB itself and its borrowers. That is precisely the duty of the institutions in charge in the country, such as BNB and the Prosecutor’s Office. They must order and start a check of Bivol’s information since it is based exclusively on official and current documents of public interest! The failure to conduct such thorough and objective probe would be meaningful and highly-discrediting for the legitimate activities of these institutions. Of course, serious attempts of manipulations by the investigated party are to be expected as well.



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