Brussels Probes Bulgaria over Govt Darling Corpbank

Business | February 17, 2012, Friday // 09:02|  views

Bulgaria's Corporate Commercial Bank became known as the government's favorite bank in 2010 after data showed that it holds nearly half of the deposits by state-run companies. Photo by BGNES

The European Commission has launched an investigation against Bulgaria on allegations of liquidity support to Corporate Commercial Bank, which is believed to finance the media group of mogul Irena Krasteva.

The document, obtained by Trud daily, obliges Bulgaria's government to reply to thirteen questions and provide information on the relationship history of Corporate Commercial Bank (CCB) with the state owned companies, which have deposited funds in CCB.

The letter has been sent by the European Commission Competition DG to the Permanent Representation of Bulgaria in the European Union on December 21, 2011.

The European Commission launched the investigation following an anonymous tip-off received in Brussels in the autumn of 2010, according to the report.

The letter makes it clear that the EU executive gathered information on the issue nearly a year.

Only six days after receiving the letter Deputy Finance Minister Vladislav Goranov forwarded it to Economy Minister Traicho Traikov, Transport Minister Ivailo Moskovski and Defense Minister Anyu Angelov. The three departments are owners of the largest enterprises, which still have not gone under the hammer.

The written statements by Bulgarian officials, as cited by Trud daily, show that the relationship of state-owned companies from the transport sector with the CCB began in the period 2003-2007, after which the contracts for deposit and current accounts have only been extended.

The officials however refuse to say whether there was a competition for the selection of the bank and what criteria were used, claiming the answer could destabilize the banking system.

Bulgaria's Corporate Commercial Bank holds nearly half of the money of strategic state-owned companies, it emerged in the middle of last year under pressure from the media.

The data was provided by Finance Minister Simeon Djankov at the request of the editors-in-chief of eleven of the biggest print media in Bulgaria, who approached the department, citing the law for access to information.

The data showed that nearly 65% of the monies of Bulgaria's top 18 state-run companies are managed by three banks, whose market share does not exceed 9% - Corporate Commercial Bank (48%), EIBank, where the prime minister's long-time live-in girlfriend Tsvetelina Borislavova held a 18% stake and the Central Cooperative Bank.

The eighteen companies listed included the Bulgarian energy holding and its units (gas monopoly Bulgargas, gas pipeline operator Bulgartransgas, state power utility NEK, nuclear power plant Kozloduy, thermal power plant Maritsa East II), as well as tobacco monopoly Bulgartabac, Bulgaria Posts, Sofia Airport, the Bulgarian Railways Company.

The top companies deposited in banks BGN 856 M by the end of the first quarter of the year 2010, BGN 408 M of the monies was deposited in CCB.

Acting on the suspicious revelations, Bulgaria's finance ministry issued new criteria for attracting deposits from strategic state-owned companies and promised to update the information regularly, but failed to do so.

According to high-ranking governmental officials, speaking on condition of anonymity to local media, there has been no significant change in the data about the banks which serve state-controlled enterprises in 2011 in comparison with last year and CCB continues to hold the biggest share of the money of strategic state-owned companies.

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Tags: CIBANK, Brussels, European Commission, Finance Ministry, Irena Krasteva, Central Cooperative bank, EIBank, DTT, Corporate Commercial Bank, Finance Minister Simeon Djankov


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