Two years after Bivol’s alert:

Prosecution Confirms Central Bank Report on Private Lender Draining and… Goes after Judge

All facts uncovered by our investigation are confirmed, but there is no evidence of a crime
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Nearly two years after Bivol’s publications on the draining of First Investment Bank (FIB ) by connected parties, Bulgarian prosecutors issued a decree confirming the facts, but still refusing to launch pre-trial proceedings. Ironically, according to Bulgarian Capital daily, Prosecutor General Sotir Tsatsarov has ordered disciplinary proceedings against judge Miroslava Todorova over that same prosecution probe on grounds of delayed permission for disclosure of banking secrecy.

At the end of 2014, in a series of publications, Bivol revealed that companies associated with FIB had received loans amounting to hundreds of millions that are currently non-performing. The companies are managed by former employees of the Bank. The prosecutor’s office ignored the publications, and Bivol’s journalists Assen Yordanov and Atanas Tchobanov alerted in writing the Prosecutor General at the beginning of 2015. The case number 11/2015 simmered in the National Security Agency (DANS) until November 7, 2016, only to be terminated by the supervising prosecutor Doytcho Tarev with the opinion that there is no evidence of a crime.


Sgp Pib 11 2015

In the course of this probe, a lifting of the banking secrecy has been requested. This lifting should happen within 24 hours, but Judge Todorova has delayed it by three weeks, writes Capital. This is the reason for the order of disciplinary proceedings by the Prosecutor General.

At the same time, while the prosecution has been foot-dragging the probe,  FIB has managed to get rid of the toxic loans in a questionable manner and by committing an offense stemming from a disadvantageous loan assignment for the non-collectable money from the offshores. The assignment has been for 20% of the amount of the loan, melting the 70 million euro to 14 million.


The damage amounts to 84 million euro from the depositors’ money in the Bank

The offshore companies that have taken the 70 million euro are owned by Georgios Georgiou, a dummy of the bank’s owners and majority shareholders, Tseko Minev and Ivaylo Mutafchiev.

Prosecutor Tarev confirms in his termination decree that FIB is being drained along with other brazen offenses. It turns out that the prosecution has based its findings on a classified report by the central bank (Bulgarian National Bank, BNB) on the state of FIB which Bivol published two months ago.

The authenticity of this report has not been challenged by the BNB, and is now fully confirmed by the Prosecutor’s  Office. Here is what is written in the conclusions of Prosecutor Tarev. We would like to stress here that these are quotes from an official document, not media interpretations:

In the course of the inspections, there have been findings regarding the high cost of the first and second tier capital and some obscurity concerning the methods of financing and origin of the capital in the purchase of bonds issued by the Bank. In this context, recommendations have been given to the Bank about the need for fresh investments by the shareholders of  the capital and in connection with the finding that these shareholders cannot secure them.


And more:

The accountability of the Bank is highly distorted and does not give a real idea of its condition. Despite the findings and the instructions to remove inaccuracies in reporting data, subsequent remote inspections have established that these have not  been removed.

436 million for Kremikovtzi

At the end of 2014, an investigation by Bivol found 220 million euro in exposures of FIB to companies selling the scrap metal of the now-closed Kremikovtzi steel mill. The prosecution provides the exact account and it is:

436,796,000 levs or 46% of the eligible capital of FIB, which exceeds the regulatory threshold of 25% of eligible capital

The connection between the three companies (that have bought the remnants of Kremikovtzi) has also been detected by the BNB in the course of the inspection in the state of FIB by December 31, 2014. Curiously, neither the prosecution nor the BNB see a problem in such vast exposure, violating the legal restrictions.

It been further established that the managers of the three companies Nadin Metals Trade, Valpet Consult and Eltrade Company are former employees of FIB, just as revealed by Bivol, and they have continued to receive loans from the Bank, transferring them to offshore destinations.

The main loans have been granted at the time to the original owners of the three companies. Within three months after the granting of the loans, the companies have been resold to offshore companies. On September 25, 2013, Nadin Metals Trade, Valpet Consult and Eltrade Company received new loans from FIB which they had provided as loans to the parent companies. These credits have been granted to the new managers of the companies who are former employees of FIB.

So far, everything described in Bivol’s signal from January 2015 has been confirmed. Moreover, as proved by Bivol, the offshore companies Spicata Consulting Limited, Bessian Management Limited and Toledo Associated Limited are all owned by Georgios Georgiou.

This is how the bankers stuff their own offshore pockets with tens of millions from the deposits of naive customers.

The prosecution probe has also examined the loans of the connected to FIB companies Yulen, which destroys the Pirin National Park and Vitosha Ski, which does the same in Park Vitosha. It turns out that:

The concluded numerous annexes have repeatedly increased the size of the loans; have renegotiated grace periods on interest payments, deferral of commissions on principal and interest;  have changed the interest rate on loans in order to prevent their provisioning in the BNB. This way, the renegotiated loans appear not to be in arrears.

According to BNB data, in the last three years, there were no payments on these loans, only loan fees have been paid.

The BNB further notes that all collateral on loans are not readily convertible into cash as is its provisioning policy and are not eligible as collateral under Regulation 575/2013.

A substantial part of the conclusion of the prosecution’s probe is devoted to State aid. Instead of focusing on data on loans to offshore companies, the prosecutor explains at length how the State aid has received approval from the European Commission, without questioning whether this approval has been based on false data submitted by FIB and the BNB.

According to the prosecution, the State aid for FIB, in the amount of 1.2 billion levs, was fully secured by a pledge of receivables from the portfolio of the Bank.



Under the BNB Act, Art. 33 para. 2. “The Bulgarian National Bank may grant loans in Bulgarian levs to a solvent bank for a period not longer than three months if they are fully secured by a pledge of gold, foreign exchange or other similar high-liquid assets.”

The question arises whether the European Commission has been informed that credits, which the BNB, itself, deems not secured,  in arrears and allocated to connected parties, have been accepted as a pledge to grant State aid.

Despite all of the above, the prosecutor has decided that there are no grounds for criminal proceedings.

Bivol will appeal this decision to the next higher instance.



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