Bulgarian prosecutors on Wednesday brought criminal charges against three officials who had conducted audits of Corporate Commercial Bank from January 2009 until the bank’s collapse in June 2014.  

The Sofia City Prosecutor’s Office brought charges of mismanagement against Snezhanka Veleva-Stefanova, Margarita Goleva and Krasimir Hadzhidinev, the Prosecutors’ Office of Bulgaria said in a statement.

Snezhanka Veleva-Stefanova, head of the Internal Audit Department at Corporate Commercial Bank (Corpbank, or KTB) appointed by the  shareholders meeting, is accused of deliberately failing to exercise properly her duties, which had led to a drop in the bank’s capital adequacy, impairment of its liquidity and finally, a liquidity crisis.

This has led to the seizing of control of KTB by the Bulgarian National Bank (BNB) in June 2014 and a decrease in KTB’s market capitalisation, according to the statement.

Margarita Goleva and Krasimir Hadzhidinev, auditors from KPMG Bulgaria in charge of auditing KTB, are charged with deliberately aiding the bank’s executive directors Orlin  Rusev, Ilian Zafirov, Alexander Panteleev and Georgi Hristov in not taking enough care for managing and safeguarding KTB’s assets, which resulted in a considerable damage for the bank.

With their actions the accused had caused a decrease in the bank’s capital adequacy, impairment of its liquidity and a liquidity crisis, the statement read. The prosecutors also said that as auditors at KTB during different time periods Goleva and Hadzhidinev acted in defiance of their professional obligations stipulated in the Credit Institutions Act and the BNB Law, according to the statement.

“Even though they became aware of infringements in KTB’s operation in the course of their auditing commitments, they didn’t immediately report those infringements to the BNB in writing”. 

The infringements registered in the period 2009-2014 weren’t entered into the auditing reports submitted to the BNB for banking supervision purposes, which prevented the BNB from fully exercising its prudential banking authority over the operations of KTB, the prosecutors said.

The charges against the three auditors come just a day after prosecutors charged the former head of the BNB’s Banking Supervision Department Rumen Simeonov with abuse of office.

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