“Yulen” Scheme or Bank Drain? Mind the horns!

In a series of documentary investigations (see here, here, here and here) Bivol revealed how more than 1.2 billion levs in loans have been granted by private lender First Investment Bank (FIB) to the same individual – Georgios Georgiou from Cyprus. The huge credit billionaire proved to be associated with the major shareholders of the bank – Tseko Minev and Ivaylo Mutafchiev.

Акционерите на ПИБ купуват от Георгиус Георгиу дяловете в кипърска фирма, която също е акционер на ПИБ

Georgios is the final owner of numerous offshore borrower companies. They are not repaying their loans to FIB, but are investing in private projects. For example, Yulen JSC, the company concessionaire of the Bansko ski zone, which is majority-owned by Georgios Georgiou, has received a loan of 77 million levs from FIB. The annual accounts of Yulen indicate that the company does not operate at a profit. How will it repay such large loan?

Naturally, it will not. Lending to connected parties that do not intend to repay the loans, leaving the damage to be borne by honest depositors is a key feature of banks “bad apples”. That was the pattern of the collapsed Corporate Commercial Bank (CCB), through which 3.8 billion levs were stolen, and taxpayers were burdened with a loan in order to pay the guaranteed deposits. FIB’s scheme is similar.

The cycle of this pyramidal structure is simple – attracting depositors with unrealistically high interest and bringing together a lot of money in one place; the attracted money is then granted as loans to connected offshore companies which are controlled by the owners of the bank; the loans are not repaid and the bank is facing bankruptcy. From that moment on, either the bank goes bankrupt or it receives State aid, but in both cases the taxpayers foot the bill. In the first case, part of the bill is paid by depositors with more than 100,000 euro in the bank, which is still fairer.

This scheme is hard to achieve if there are functioning regulators and if the State monitors public interest. The behavior of the State, however, is just the opposite – in favor of the private interest of thieves “banksters”, who have drained the money of depositors and poured them into their own offshore pockets, and perhaps in someone else’s “institutional pockets”? This can be called State Mafia or Mafia State – the meaning is the same.

The example with government support for the second ski lift in Bansko is another proof that the State is collaborating, instead of stopping crimes. It was forgotten very quickly that Yulen JSC has already breached the law in invading hundreds of decares in the Pirin National Park over the limits of its concession. Instead of sanctions, Sports Minister Krasen Kralev and Tourism Minister Nikolina Angelkova are now cynically lobbying for Yulen’s interests.

Let’s return to FIB that gives the money. Bivol’s revelations show that FIB strongly violated restrictions on concentration of loans and lending to connected parties. De facto, the Bank currently has negative equity and BNB is mandated by law to revoke its license. In 2006, former US Ambassador to Sofia, John Beyrle warned that this “bad apple” is “one in the murkier criminal realm”. De jure, however, the State continues to support it, propping a dead body. What is the purpose?

We presume that the goal is to conceal the plundering before light is shed on the ugly truth about the drain. The aim is for banksters to escape unharmed with what they robbed. The authorization for the second lift does not necessarily mean that such will be built, but it surely means that the price of Yulen will rise. This is the real goal – sell and run.

The bill for this drain will be paid again by depositors and society. Corruption has been established in the rank of government policy.

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