The main investigation into Corporate Commercial Bank (Corpbank), which collapsed in 2014, has been completed, the specialised prosecutor’s office announced on February 22. Prosecutors have charged 18 people after interrogating more than 400 witnesses.
In June 2014 Corpbank, then Bulgaria’s fourth largest lender, suffered a bank run that deprived it of liquidity. It was put under central bank administration and an audit showed a BGN3.75bn (€1.9bn) capital hole. As a result, the bank’s licence was revoked and it was declared insolvent in April 2015.
The list of those charged begins with Corpbank’s majority shareholder Tsvetan Vassilev, who has been a fugitive in Serbia since 2014 and has so far avoided extradition to his home country.
It also includes two partners from the lender’s auditor KPMG, former central bank deputy governor Tsvetan Gunev, as well as former Corpbank executives and officials.
The Corpbank case was moved to the specialised prosecutor’s office after investigators decided that the lender had been siphoned by an organised criminal group. The prosecutors will also publish the indictments because of the huge public interest in the investigation.
The Bulgarian Deposit Insurance Fund (BDIF) has paid out BGN3.68bn in guaranteed deposits to Corpbank depositors since December 4, 2014.
In September 2015, international forensic firm АlixPartners found that around BGN2.55bn of Corpbank’s total credit portfolio of BGN4.82bn had been lent to entities reportedly linked to Vassilev. The forensic firm said that such loans usually have very limited, if any, potential to be recovered. There are “strikingly many connections” between Corpbank’s borrowers, the document said.
АlixPartners also found that there had been a multitude of so-called “red flags” evident in extending the loans and in the operation of the borrowers’ accounts, that it said “could have been noticed by a number of parties, such as a competent and impartial credit team, and/or competent management board, and/or the external auditors, and/or possibly the central bank.”
In March 2016, Bulgaria’s commission for the withdrawal of criminal assets (KONPI) filed a BGN2.2bn claim against the tycoon and his associates. However, the following month, Vassilev reportedly filed two counter claims against Bulgaria with the European Court of Human Rights, claiming his human rights had been violated. Vassilev also denies any wrongdoing.