From the audit of the Russian Audit Office of Russian banks abroad; the full report can be seen here
Corporate Commercial Bank (KTB) is the heir of Bulgarsovinvest, one of the Vnesheconombank’s companies abroad that were set up in the 70s and 80s of the last century; through them political party money of the USSR was funneled to “countries of capital.” Certainly, Bulgaria was not a capitalist country, but it was interesting as intermediary – both the most faithful ally of the Soviet Union and a country developing active trade with the Third World. Therefore, Bulgarsovinvest, the only such bank created in a “comrade socialist country,” was shining in the “red star” constellation along with major Western financial centers: Mosnarbank (London), Eurobank (Paris), Ost-West Handelsbank (Frankfurt), Donau Bank (Wien), East – West United Bank in Luxembourg and the financial company Eurasko in Switzerland.
The first reason for creating these, essentially, branches of the Central Bank of the USSR was to deal with foreign loans. The second task was the financing of comradely Communist parties. Huge public funds, without very strict accountability, were flowing to these banks abroad. Trusted people were placed to work there; children and relatives of the party elite so that they could gain experience by swimming among global financial sharks.
After the fall of the Berlin Wall, the former allies stopped getting Soviet rubles through bank transfers for their products and these banks quickly accrued debt in the amount of 10 billion US dollars. Their rescue in 1991 – 1992 was again done with Soviet government’s money from the Central Bank. The pumping of banks abroad also included transfer of capital from the USSR Vnesheconombank accounts that were frozen due to the debts, wrote the Russian newspaper “Versiya” (Version) in 1999.
This was followed by a “quiet privatization” that looks like pure robbery. According to the conclusion of Russia’s Audit Office from 1999, all transactions related to assignment of shares to foreign banks of commercial organizations, contracted by the Bank of Russia up to 1998, “are illegal and subject to cancellation.”
A copy of the report of Russia’s Audit Office has been sent to the Federation Council, the State Duma (Parliament), Russian Prime Minister Stepashin and the Prosecutor General’s Office of Russia. However, this conclusion was not followed by any legal consequences and Russian banks abroad continued to live parallel lives: formally owned by the state, they were used for unaccountable syphoning of government money to the “right” people and companies.
How Bulsovinvest became Corporate Commercial Bank
The transformation of the Bulgarian branch of Vnesheconombank happened in 1994. A joint-stock company – “Corporate Commercial Bank” – with capital of 500 million levs (about 20 million US dollars) was registered with a decision of Sofia City Court, dated May 6, 1994, as legal heir of the assets and liabilities, rights and obligations of “Bulsovinvest” bank. From the Court’s rule, we can find out the exact date of registration of Bulsovinvest – November 11, 1988 under Decree 535 from 1980. KTB was managed by a Board of Directors, which included Bulgarians Kalin Kalinov, Lyudmil Gachev and Valentin Stanchev and Russians Yevgeny Krasavtsev and Alexei Simakov.
“There was no interception of accounts abroad of Bulgarsovinvest,” Valentin Stanchev told the newspaper Capital on this occasion. According to him, Vnesheconombank has overcome the crisis. How this happened exactly becomes clear from the investigation of the Russian Audit Office – by “pumping” from the Russian Central Bank.
From the bank of KGB to Bulgaria’s Karadere beach
The former member of the Board of Directors of KTB Lyudmil Gachev was exposed as agent “Mikhail” from Division IV “Economic” of the former Communist-era State Security (DS). His name surfaced in the Board of the company “Madara Europe,” which is getting ready to build a vacation village on one of the last remaining wild beaches in Bulgaria – Karadere – with money from offshore companies. Last week, the same company received a certificate for class A investor from the government.
Before Nova TV, Tim Chadwick, Chairman of the Board of Directors of “Madara Bulgaria Property Fund”, which stands behind “Madara Europe”, explained as follows Gachev’s presence in the Board: “By law we have to have a Bulgarian representative in the Board of Directors and because of this Lyudmil Gachev is present there. He is an independent director.”
On their part, KTB reacted angrily to publications connecting the bank with the case “Karadere” and stressed that the current management, and in particular banker Tsvetan Vasilev, had nothing to do with those who led the bank in 1994 – 1995.
This post is also available in: Bulgarian