The hottest topic in Bulgaria's political and economic life in the last month is the situation at Corporate Commercial Bank. It has generated an entire stream of comments, opinions and positions that poured into the media. We turned to the bank's majority shareholder Tzvetan Vasilev, who agreed to give his first interview for a Bulgarian online media outlet since the beginning of the crisis. The editorial team of Novinite thanks Mr. Vasilev for the accurate and comprehensive answers to the questions and is ready to provide room for other views or positions on the issue.

Mr. Vasilev, what possible outcome do you see in the nearest future of the situation you and Corporate Commercial Bank AD are put in?

Corporate Commercial Bank AD and I have been put in this situation as a result of a perfectly organized setup with the participation of certain media as well as employees of the Bulgarian prosecution service and employees of the Bulgarian National Bank who are used as tools by certain political circles. The visible part of the plan involves the destruction of Corpbank and my reputation and the acquisition of Corpbank’s enticing assets, which could be sold to investors of their choice. The invisible part of the plan is the attempt to eliminate the debts of certain individuals supported by these political circles. This elimination could have been carried out either by absolving the debts or melting them away by causing financial instability and subsequent hyperinflation in the country. The scenario of melting debts away by creating an avalanche of bank runs in Bulgaria did not work. Now the masterminds are left with the less ambitious option of absolving only their debts at Corpbank by artificially causing its insolvency.

Since no government official made any attempt to calm down Corporate Commercial Bank’s clients while the run was taking place, it seems likely that the current government gave its tacit agreement to this malicious plot.

The irony in the story is that the same people who put Corporate Commercial Bank AD and me in this situation, or at least closed their eyes to what was going on, have the authority to resolve the case. Now they want to appear as saviors and prove how bad I am and how good they are, so that the truth never comes out. These people are not interested in providing the best solution for Corpbank’s clients or Corpbank’s shareholders because this would jeopardize the initial plan to destroy Corpbank commissioned by the political circles and would reveal what they have been accomplices in.

The irresponsibility towards Corpbank’s shareholders and clients on behalf of the government and the Bulgarian National Bank is quite revealing. When the BNB assumed supervision of Corporate Commercial Bank on June 20th, they decided to close down all operations of Corpbank. Two days later, before they even carried out talks with Corpbank’s shareholders which is standard practice, the BNB announced that it would put Corpbank’s daughter bank under special supervision as well and that it would nationalize both banks. In our case, I hold more than 50% of the capital and the State General Reserve Fund Oman holds more than 30%. My Omani partners almost had to beg for a meeting with the BNB which did not event want to listen to their plan of recovery because they had already decided on nationalization.

Also, BNB preferred to reject a viable proposal by the State General Reserve Fund Oman and to prolong the bank’s closure until September this year while politicians are thinking of a solution, thus betraying Corpbank’s clients. Corporate Commercial Bank is a systemic bank for Bulgaria: it is the 4th largest bank in the country with hundreds of thousands of individual clients and businesses. What will individual depositors do until September when they do not have access to their money? What will businesses do when their money is blocked? Corporate Commercial Bank services around 12% of the country’s GDP.

Mr. Vasilev, these are really serious accusations. It is strange that the national financial regulator and the Ministry of Finance would not choose the best solution for Corpbank’s clients or the banking system as a matter of fact?!

I believe that actions speak louder than words or beautiful promises. In the past month, we have seen how representatives of state institutions, including the BNB, think that spreading false information is OK and act as if Bulgarian or European law does not apply to them.

The Bulgarian National Bank, in particular, has recently become the queen of dual and triple standards, managing to neglect basic legal and economic principles at the same time. In June we witnessed runs on two banks, but the approach of the regulator was not the same. While the run on Corporate Commercial Bank was at its peak, the BNB did not do anything to calm down Corpbank’s clients: they just issued a minor press release. While the run on FIB was at its peak, representatives of the regulator went to the most popular TV channels to explain to the public how it needed to calm down.

Corporate Commercial Bank survived the withdrawal of more than BGN 1.2 B —more than 20% of its assets—and it was still liquid. I would like to clarify that any other bank would collapse under such pressure in 2 to 3 days. Even on the 6th day of the run, Corpbank was making all payments which proves its outstanding liquidity and stability. Had the run continued at that pace, however, Corpbank would have become illiquid—that is why Corpbank’s management requested special supervision.

When Corporate Commercial Bank requested help by the regulator on June 20th after a 6-day run, the regulator did not provide it with liquidity but decided that it would stop all operations by Corpbank. Two days later they announced they would nationalize Corpbank and its daughter bank which did not face a run. They also assigned a detailed audit of Corpbank which was supposed to take place for 10 days. Honestly, this is not serious. How can you complete an audit of even a small company in ten days? In this case, we are talking about the 4th largest bank of Bulgaria with more than BNG 7 B of assets.

What is more, recent revelations by journalists pointed that BNB may have violated its own orders of June 20th as it withdrew more than BGN 30 M on June 25th that were deposited by the state fund that guarantees citizens’ deposits. The BNB may have withdrawn money on June 20th when they assumed supervision. This raises questions about their true motivation in this situation: did they ever intend to help Corporate Commercial Bank?

Mr. Vasilev, if the masterminds of this plot had a primary interest in causing an avalanche of bank runs, what stopped them? Why did the BNB bail out FIB, but not Corpbank? Also, after the results of the audit BNB commissioned came out, the BNB made accusations against you and the way Corpbank was governed. What is your response? Did the BNB adapt a different approach to Corpbank because something is wrong with Corpbank?

The masterminds behind the attacks on Corporate Commercial Bank are in a marriage of interest: they all have different purposes for entering this marriage. The current government is a screen and not the initiator of what happened. I think there are two potential explanations. Version 1 would be that the government was only aware of the plan to destroy Corpbank and they had agreed to it. Once they realized the potential repercussions of a run on a bank avalanche, which would cost them their political career, as no government wants to stay in history as the one that could not prevent a major financial crisis, they decided to contain the damage to Corpbank to whose public execution they had originally subscribed. Version 2 would be that the competent part of BNB raised a voice that what was going on was absurd, so they took some action.

The allegations that something is wrong with Corpbank are deliberately spread in order to find artificial excuses for the forceful and illegal nationalization of Corpbank’s assets. The results of the audit, as announced in the press release of the BNB on July 11th, are simply absurd. The BNB claimed that the files for more than BGN 3.5 B worth of loans were missing and thus it considered them to be bad loans. First of all, it is technically impossible for the files to be missing because all loans are registered at the National Credit Registry of Bulgaria. Also, Corporate Commercial Bank’s balances are verified by an internationally acclaimed auditor—KPMG—and the previous audit by the BNB which took place in 2013 showed that Corpbank has around 2% of bad loans in its portfolio. Even if we hypothetically assume that documents are missing, it does not mean that the loans are not being repaid and they are not backed up by sufficient collateral.

The BNB also concluded that Credit Agricole Bulgaria EAD, which Corpbank acquired on June 12th this year, was ‘a good bank’ and Corpbank was a ‘bad bank’. Had Corpbank been a ‘bad bank’, why did the BNB authorize the acquisition to begin with? Furthermore, why was the good Credit Agricole Bulgaria EAD at a loss for several years and the bad Corpbank at a profit since 2001?

The BNB further claimed that on June 19th I had withdrawn more than BGN 200 M cash from Corpbank and I was draining my own bank, contributing to its decline. This accusation would blow anyone’s mind. First of all, I was not even in Bulgaria at the time. Second of all, how can the physical withdrawal of BGN 200 M, which takes a lot of space by the way, go unnoticed in the center of Sofia? Third of all, an official graphological expertise showed that my signature on the documents, which the BNB found to prove that I had taken that money, were falsified.

Right, but Mr. Vasilev, the prosecution changed the version of the BNB. They explained that the while the accounting documents were finalized on June 19th, you have in fact drained more than BGN 200 M from Corpbank systematically since 2011…

This version is equally ungrounded. Corporate Commercial Bank is the project of my life and I have always firmly stood beside it. Why would I do something that would jeopardize my own business? Since 2011, I have have given up on nearly 100 million of dividends to support the bank. Corpbank’s profit for the last three years of more than BGN 190 M was capitalized since all major shareholders preferred to sustain the growth of the bank, instead of benefiting from their dividends.

Since 2011, I have personally put BGN 86 329 M of additional capital in Corporate Commercial Bank AD and I have provided the bank with a subordinated loan of BGN 56.7 M. Since 2011, Corpbank has paid more than BGN 20 M in taxes. This excludes what my firms and I personally have contributed to the state budget.

Why would the prosecution pursue an accusation if it is ungrounded?

Because some political circles have an interest in coming up with an accusation against me at any price. I would like to remind you that fractions of the Bulgarian prosecution have shown their ability to make theater. The reason why the run on the bank started were unprecedented speculations by some employees of the Bulgarian prosecution service on June 12th and June 13th who produced a thriller with the help of certain Bulgarian media, which published more than 1000 articles spreading rumors about me and Corpbank in the span of a week.

On Friday, June 13th this year media under the indirect influence of Delyan Peevski [a Bulgarian businessman whose family used to officially own media and whose election as head of the Bulgarian secret services in the summer of 2013 brought about protests against the government] and some sections of the Bulgarian prosecution service started a major speculation that I allegedly commissioned a murder plot against Peevski. Three innocent men were publicly arrested, their names and faces shown on TV, and presented as ‘suspects preparing the murder of Peevski’. The first withdrawals from Corpbank AD started shortly after this ‘big news’ circulated in most media in the span of hours.

Bulgarian media and employees of the Bulgarian prosecution fueled the rumor for 5 days, insinuating I was a murderer. While the court refused to declare mandatory measures because it did not see any proof, the prosecution threatened it would appeal. It took 5 days of ‘professional acting’ before the Prosecutor General admitted the prosecution service made a mistake and there was no case to be examined at all.

After this attack did not manage to succeed, in the period June 18th -19th the same media and fractions of the prosecution service started spreading the news that the Head of the Supervisory Division at the central bank of Bulgaria was accused by the prosecution because he failed to exercise his duties which led to a deviation of funds from Corpbank into my companies. Once again, this news was spread in the span of hours and I was ‘convicted’ by most media. This piece of news caused the peak of the run on Corpbank.

It is quite curious that the main conclusion of the ten-day audit of Corpbank was that they discovered accounting documents to prove that I had been draining Corpbank which fitted the thesis of these media from June 18th-19th. But how did these media have the information about the alleged draining in June before the BNB made their audit in July? Also, coincidentally, my signature on the documents that the BNB found and which supposedly proved the draining, was falsified.

Clearly, this is a set up. I argue that it has a strong political dimension.

Media claim that the run on Corpbank started as a result of a rift between you and Mr Peevski. What is the cause of that rift? Does he owe money to Corpbank? There are other rumors that the rift is linked to the construction of the South Stream pipeline?

While there is a rift between Peevski and me, I believe that some media have over-concentrated their attention on it to deviate attention from what is truly happening in Bulgaria. I believe Peevski is used as a tool in the larger scenario to destroy Corporate Commercial Bank AD, acquire its assets at prices below their value, and eliminate the debts of certain people.

The reason for the rift between Peevski and me is that we have a different approach to how business should be done.

Corpbank’s representatives have also pointed out that companies that are indirectly linked to him have loans to Corporate Commercial Bank they stopped repaying, so it could be argued that they have an interest in what is taking place. But they are not the only ones.

Regarding the South Stream speculations, there are a lot of rumors that I am the person who promotes Russian influence in Bulgaria. This is a major misconception. I support all reasonable projects and I have business partners from all over the world—from the US, to Europe, to Asia. All these speculations are fueled because VTB Capital acquired a share of Corpbank several years ago, but people forget that VTB Capital is a reliable partner that has made investments in many European countries.

Last Friday the Ministry of Finance announced that they would give the Omani investors the opportunity to recapitalize Corpbank. Do you consider that the reopening of Corpbank is possible at this stage and does it have enough resources to cover all the demands of the clients now? What further action will you pursue?

I believe that Minister Chobanov’s decision came too late and illustrates the despair and helplessness of the current government to resolve the crisis in Corpbank which it encouraged to please the master puppeteers. This decision should have been taken right after Corpbank was put under special supervision and not now. The State General Reserve Fund Oman had a plan for recapitalization at the end of June.

The government caused irreparable damages to Corpbank, its clients and employees, and generally to Bulgaria’s image before the investment community. Now it wants to transfer the responsibility for its actions and omissions to somebody else. This is criminal in my opinion.

First of all, what bureaucrats do not understand is that businesses and individual clients have daily needs. Their funds have been blocked since June 20th and recently the BNB prolonged the closure until mid-September. Currently, individual and corporate clients suffer enormous losses and inconveniences. I know individual clients who only have accounts at Corporate Commercial Bank—how would they pay their bills, how would they live until September? Also, should businesses stop working for three months: they all have contracts they should execute, employees they should pay, and they should finance their production process, exports, etc., somehow. Who will compensate the clients for the losses and damages?

In addition, through their actions state institutions humiliated Corpbank’s employees who have to feel ‘guilty’ that they did an amazing job and were on the team of one of the best banks. Many of these people have been tortured daily to make confessions of things they did not do or see, so that the thesis of the masterminds is proven. After all, the masterminds made so much noise: they need a scapegoat, so that their tracks are covered.

Third of all, state institutions managed to purposefully destroy Corpbank’s image and to jeopardize the investments in it. Now they are afraid that clients want to withdraw their money from the bank right after it reopens as a nationalized entity or not and they are trying to get out of the embarrassment. That is why they were putting forward absurd, populist measures for a long time.

Generally, the policy of the government towards Corpbank is ‘destroy a house to build a cabin.’ In this case, they destroyed the house, but now they transfer the responsibility for the construction of the cabin to those who built the house. Due to all damages caused by the state institutions, the recovery of Corporate Commercial Bank would be difficult. This, however, does not mean that it is impossible. Since Corpabank was put under special supervision, my mission has been to minimize the losses of our depositors. This may happen through additional investment on behalf of current investors as well as through attracting additional capital from other foreign investors. To realize this, nevertheless, the state should provide certain guarantees. The patience of Corpbank’s depositors will also be necessary.

I also believe that many entities who were shamed by this purposeful campaign will file lawsuits against all tools who helped the puppeteers to realize their plot.

Sooner or later those who were liable for this scandal will face a judge they cannot influence.

Regarding the attempts to fabricate an accusation against me based on the false confessions extracted after torture of witnesses and the falsified documents used as proof of whatever the masterminds have decided, I believe that justice would triumph. For sure, I will fight till the end.

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