Tsvetan Vasilev: I Expect of Court to Do Its Job on KTB with Precision

Interview | December 22, 2014, Monday // 14:13|  views

Photo by BGNES

Tsvetan Vasilev ... courted and reviled, awarded and stigmatized, promoted and humiliated ... In 2014, he was undoubtedly the most mentioned person in the Bulgarian media, in private and in public interviews, in courtrooms and in banking circles. Without doubt 2014 was also his most important and most controversial year. In 2012 the Bulgarian edition of Forbes put him second in influence in the country after the then Prime Minister Boyko Borisov, a year later the same magazine placed him at the head of the most influential personalities in Bulgaria. He has received the "Banker of the Year" award; a Doctor Honoris Causa of the Mining and Geology Institute and member of the Board of Trustees of the University of National and World Economy in Sofia. In the summer of 2014 Corporate Commercial Bank (KTB), where the majority owner is his company Bromak, was placed by the BNB under special supervision, while Tsvetan Vasilev himself is now in Belgrade, where he is expecting a decision of the Serbian court on Bulgarian authorities' extradition request.

Novinite's editorial team turned to Mr Tsvetan Vasilev - naturally via email as he is not currently in Bulgaria, with questions which were prepared by the entire team and which certainly matter not only to depositors in KTB, but to the whole Bulgarian society, including numerous state and public institutions. Novinite's editorial team is ready to provide the opportunity of other opinions on the serious issues raised by Mr Vasilev.

Mr Vasilev, you recently said KTB had fallen victim to a campaign, to politicians and key figures in Bulgaria's prosecution. Who are they? Why did they turn on you?

I have said this a lot of times - KTB AD fell victim to a set of institutions – of the politically-economic circles around the Movement for Rights and Freedoms (DPS) which since 2004, but most notably in the past few years acquired considerable influence in key sectors, the judiciary, the [Bulgarian National Bank] BNB, the National Revenue Agency, the Bulgarian Development Bank, security services, etc. This influence, unfortunately, has so far been tolerated by all governments which allowed, probably not a coincidence, that the unsound interests of these circles should determine national policies in entire sectors of the Bulgarian economy, as well as the appointment to leadership positions at state institutions. The puppet government ofPlamen Oresharski, in which [former Finance Minister] Petar Chobanov and [former Interior Minister] Tsvetlin Yovchev played a key role, cemented the DPS as one of the hegemons in the state apparatus. Is is hardly a peculiar coincidence that some of these cadres were selected to the party's election tickets for their merit.

Bulgaria's prosecution makes no exception. You could figure out the names of magistrates who took part in the organization of the ignoble attack against KTB AD by thinking who are those among them that are constantly engaged in giving interviews wherein they violate fundamental legal principles such as the presumption of innocence and non-retroactivity of laws. They also incite violation of Bulgarian and European legal norms. Ill-considered statements of those magistrates are the same reason for instilling panic among depositors and the subsequent wave of mass withdrawals from the bank.

As to the question, why does the political and economic circle of the DPS, and also politicians from other parties maintaining it, turned against me, mobilizing the entire state apparatus against KTB AD - the reasons are complex. I would like to point out again that companies enjoying protection from certain politicians are interested in melting down their debt at KTB AD. Furthermore, I have more than once underscored that many Bulgarian politicians consider themselves untouchable - they abuse their office to achieve personal benefit. In March this ear, they started blackmailing me to give away part of Vivacom, threatening than unless I did, there would be fatal consequences. I think I have been observing these consequences over the last six months. It is not insignificant that, unlike many other people subject to pressure, I did not hold my tongue and commented corruption in the Bulgarian state apparatus more than once, including to foreign media outlets and diplomats.

The culmination of arrogance and an evidence of the strong political dependency of the prosecution was the refusal to investigate into my blackmailing signal against Delyan Peevski submitted May 2014. It was quite comfortable that I received an official refusal only recently, after 6 months of professional theater which led to the collapse of KTB AD. Last week's attempt at overtaking Vivacom through an internal coup is also a proof that the appetite of Bulgarian politicians to the company is on the rise.

Against the will of Vivacom's shareholders, the Supervisory Board voted the dismissal of the Governing Council's Chair. Members of managerial bodies confessed to me that a lawyer close to the DPS and GERB personally hinted to key Vivacom executives that if they do not vote as required they should await physical consequences. Unfortunately, the same methods of intimidating and pressure are being applied in Bulgaria since the 1990s - it is just the PR of those "moves" that has developed for that time. Many people argue the same lawyer could often be met at the Investigation Office or on the road between Dubai and Liechtenstein. It is quite interesting whose interests he defend by sending "signals" to executives at Vivacom - his own or those of the parties to which he is affiliated.

Voices can be heard within the public space saying KTB was razed down by the same circles which created it. Some journalists called KTB "the bank of power." Do you owe your success to being close to politicians?

KTB was successful for the sagacity of its management and the professionalism of its team. This is why it became a thorn in many people's side, people who started fearing there is a player on the scene which is successful and independent and cannot  be easily blackmailed. It is no coincidence that since 2009 KTB has been subjected to a carefully planned negative campaign from certain media servicing political and respective economical interests. Tendentiously, society had been instilled for years there is concentration of state money in KTB. Little does society know, however, that due to these texts the attackers of KTB AD had submitted a signal to the European Commission, arguing there is concentration of state money in the bank which amounts to state aid. The Commission carried out a detailed inspection and, to the regret of attackers, concluded there was not a single reason to suspect state aid or concentration. Those who disseminated the "state money" myth for years are categorically shunning this fact.

KTB provided services to state entities after having won tenders where it had offered much better conditions than its competitors had. What is more, state funds accounted for less than 7% of the bank's assets. There are hundreds of state entities in Bulgaria and I can assure you most of them have not been serviced by KTB. KTB has always worked mostly with private firms from structural sectors of Bulgaria's economy.

What are the reasons for the rift between you and Delyan Peevski? Was this that started the bank's trouble? Does the South Stream project have any role?

The thesis that the attack on KTB AD followed a rift between me and Delyan Peevski has been comfortably disseminated by the organizers of the punitive action carried out against the bank. To me, Peevski is one of the visible instruments used for the fulfillment of the plan, but the scriptwriters' names are yet to come up in court. KTB AD was attacked because I stood against the political model in Bulgaria and refused to be blackmailed by the country's leading political parties. Unfortunately, in Bulgaria the mafia has coalesced with power. This is why they did not hesitate to throw all the weight of the state apparatus and also to sacrifice human destinies - to accuse people of what they did not do, to deprive depositors of access to their savings, to tarnish the development prospects of many customers who used KTB as a servicing bank and held their working capital there. The organizers of the campaign against KTB AD are thoroughly motivated by the insatiable and animal appetite for theft and are blatantly using state institutions to their own advantage.

How would you comment on the Supreme Administrative court (VAS)'s decision on December 15 to postpone for February 9, 2015 the trial against revoking KTD AD's license?

At this stage I think it is too early to comment on the court's actions. I can however tell you with certainty that as the owner of the majority shareholder in KTB I will fight to the end against the absurd and illegal withdrawal of the license by the state regulator. The BNB was the main tool in the plot against the bank and was not ashamed to break repeatedly both Bulgarian and European legislation to satisfy the interests of political circles that control it. It literally laughed at KTB shareholders and customers and did everything to deteriorate the state of KTB and hinder its recovery.

Firstly, the regulator applied a double standard by granting state aid to First Investment Bank when it was in the same circumstances, and declining that to KTB on the grounds that KTB is a "specific" bank. It is very strange why the BNB authorized KTB to acquire Credit Agricole Bulgaria EAD if it was convinced there is something wrong with KTB AD? It is no coincidence that the attack on the bank started on June 12, 2024 - the day when the acquisition was finalized. Secondly, the BNB had refused for months to meet shareholders, who had a working plan to recover and restructure KTB AD. Furthermore, I have to remind you, the BNB closed down and halted the activities of KTB contrarily to the Credit Institutions Act. Special supervision means managing the bank on behalf of the BNB, not liquidating it.

To this regard, the BNB appointed conservators who do not meet the requirements of the Credit Institutions Act. It allowed misusing customers' personal data which absurdly and unprecedentedly leaked into the media despite being subject to a "bank secret" and despite the fact that this is illegal. For a long time the BNB did not allow clients to pay off their loans with the assets they have at disposal on their deposit accounts. As a whole many colleagues from KTB complained over inadequate and unprofessional attitude from the conservators. If what came to my ears is true, this is a completely unacceptable behavior - employees were fired against Bulgaria's labor law, spoken instructions were given at odds with the bank's statute, documents and objects were taken out without a protocol and without a trace, and so on.

The culmination of this deliberate campaign aimed at KTB AD's liquidation is the so-called audit which gave grounds for starting a rumor that there is a "gap" at KTB AD worth more than BGN 4 B. On the one hand, the analysis carried out by consultancies does not have an "audit" status - consultants themselves refused to sign the document as an "audit." On the other hand, the analysis was carried out using methodology which had not yet been applied to no other Bulgarian bank and has neither been officially accepted in the Eurozone. As far as I know, there are ideas that is should be applied well after 2018. I am curious to see what the result of similar "audits" on other banks in the country will be! Thanks to this methodology, KTB assets were devalued many times so that the BNB could create the respective "gap" to formally reach the condition to scrap KTB AD's license - a negative equity - to prove the investigative office and prosecution's charges and to instill in the Bulgarian society the liquidators' thesis that the bank has been drained out.

In case the court accept your arguments and KTB is returned its license, what is the best solution for KTB AD?

The real chance to restore KTB in its previous form was lost when conservators authorized the so-called cessions. Regrettably, neither the government nor the BNB took the measures necessary to keep the bank afloat, thus demonstrating complete indifference to KTB depositors, bondholders and international shareholders' interests. However, I believe KTB should be restructured and sold together with its license to a strategic investor, and not in the barbaric way that is currently planned - piece by piece, as if we were on a rural market. Certainly, maintaining the license ill make it impossible for the attractive assets of KTB to be acquired on the cheap by certain political and economic circles who have long been preparing for this.

As both my colleagues and I have commented, KTB needed liquidity and help in reining the media hysteria which sparked panic among depositors. The crisis could have been overcome very swiftly, painlessly and without damage to depositors and customers who trusted KTB as a bank servicing their business.

We should remember what triggered the first wave of withdrawals - public statements by the prosecution that it had prevented the assassination of an MP from the Movement for Rights and Freedoms [DPS], arresting the "murderers," and insinuations that I had been the guarantor. Weeks later the Chief Prosecutor said the prosecution had committed a mistake; and it was only months later that the court ruled those arrested were not guilty. Panic, however, had already been spread and the BNB did not take adequate measures against disseminators of false rumors.

It is strange also how such mistakes can be committed publicly and so much media fuss can be stirred unless there is 100% certainty about the veracity of the allegations.

What was the bank's state before the media attack carried out on it?

KTB AD has always been an exemplary bank - with impeccable indicators, a clear development strategy and lots of satisfied customers. Trust of international investors with good reputation from across the globe which it has deserved over the years, is a clear evidence of its profitability. One should note that Credit Agricole preferred to sell its Bulgarian subsidiary to one of the few Bulgarian-owned banks. This is why the attack on us is not a coincidence. Huge resources, including that of state institutions, was used to bring KTB to an artificial default, so that its attractive assets could on the one hand be acquired by firms related to Bulgarian politicians, and on the other to stop growth at one of the few private Bulgarian banks, independent institutions. Let us not forget that the attack was not only in the media, but a textbook example of the rough, mutra-style approach applied in Bulgaria - the annihilators of KTB AD did not hesitate to force customers into withdrawing their money, to exert pressure on auditors so that they support certain theses, etc.

Why did KTB offer so high (non-market) deposit interest rates? Is it true that the bank used this to secure liquidity after attempts to withdraw from it part of state companies' money?

As I already underscored, deposits at KTB of companies that include state participation accounted for about 7% of the bank's assets. If we use numbers, KTB had assets worth over BGN 5 B before undergoing forceful closure, and deposits of companies with state participation amounted to slightly above BGN 200 M. KTB never needed to keep interest rates in line with the share of state companies within its portfolio.

Unlike most banks on the Bulgarian market, KTb has always approached flexibly and has taken into consideration the needs of its customers. Firstly, KTB AD had two percent lower administrative expenditure if compared to the average ones in Bulgaria's banking system; this is a fact which has been quite comfortably ignored by a number of "experts", including international ones. Besides, we had a long-term strategy fro development and growth of our customer basis by balancing the high deposit interest rates with an adequate selection of borrowers. Unlike many other competitors, KTB AD never used forms to assess borrower candidates; those forms were approved from the other side of the world and were in line with other conditions.

We have always counted on the expert opinion of local specialists who are familiar with the specific conditions on Bulgaria's market, who have entered into details and have drawn are attention to the risks and opportunities of the given market. To the huge discomfort of most banks, bad loans at KTB have always been below 2%. All institutions on behalf of the BNB and affiliated experts are aiming to tarnish the image and to put KTB's professionalism into question.

Do you believe that one day the bank might be opened again, as was the case with Victoria Bank?

I am not optimistic about Victoria Bank not because it has no potential, but because it fell within the criminal circles and in the hands of the Bulgarian National Bank [BNB], which depend on political and economic groups. It was placed under supervision without any well-grounded reason: there were no mass withdrawals of deposits there. The BNB implemented at Victoria the same destructive policy as at KTB. It started to deliberately sell off the institution's credit portfolio. Key cadres of the bank were forced to quit, limiting its possibilities to develop.

Recently the BNB changed its leadership and is acting as if it owned the bank, ignoring the interests of KTB shareholders. Rumors go about that the BNB's Governor personally offered Victoria for sale to the Bulgarian Development Bank, which is under the control of various political forces at the moment. I am convinced there are appetites toward its plundering, which makes me extremely sad, since we had developed, alongside colleagues from KTB and consultants, a thorough plan for the institution's long-term development.

If we return to the issue of KTB, it might become operational again in a new form, but with management of quality and international investment. All implications that it is absolutely useful for Bulgaria to nationalize KTB are just a veil to cover the pillage committed by firms which are directly dependent on political formations in the country.

Is there any chance that you get Victoria Bank back and it starts operating again a bank of yours?

Certainly the main shareholders in KTB will fight until the end for their rights and will make everything possible to stop excesses on both KTB and Victoria. Unfortunately, the whole state engine has been mobilized to make plundering of both institutions easier. We have gathered a significant team of international men of low which will lay up claims in European courts on every single issue that has not been solved in the spirit of Bulgarian and European law.

Why have you been observing silence lately? When should we expect you in Bulgaria?

Regardless of how much I would like it, I cannot solve the KTB case with words thrown into the public. My words might have their weight in courts, mostly in European ones, on which the Bulgarian political and economic mafia cannot exert any control. This is why I have dedicated my time to protecting the rights of all people who have been unfairly accused in this absurd scandal.

I will return to Bulgaria only if my physical security is guaranteed, apart from a fair trial. But currently there are no indications for this. Quite the opposite, the mafia is more and more predominant in the political system and is putting forth a racketeering approach to governance.

There is one (perhaps the most important) question which nobody has ever asked until now. How will the entire story with KTB reflect on Bulgaria's investment image? We know that a group of investors are not only suing the state, but would also like to start a large-scale media campaign to explain how risky the market is...

What the organizers of the attack against me and Corporate Commercial Bank failed to understand is that the country's economic stability has fallen victim to their own interests. Even though bankers from their environment are going around television studios explaining how favorable Bulgaria's investment climate is, we are de facto being pushed to the bottom by policies implemented since 2009.

You have said you will fight for justice to prevail... How do you see the end of this?

The end will not come soon due to the simple reason that I am waiting for the court to do its job in a precise way and to thoroughly make itself familiar with the facts. However, I believe attacking others are digging their own graves. This is why I know that, sooner or later, low-minded passions will stand out increasingly, and the question who professes what values will become clear to more and more people. Sun Tzu said if you wait by the river long enough, the bodies of your enemies will float by. They are in an unholy alliance and will destroy one another well before the court has handled them.


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Tags: Tsvetan Vasilev, Corporate Commercial Bank, KTB, KTB AD, Delyan Peevski, Victoria Bank, special supervision, conservators, audit, Plamen Oresharski, Credit Agricole Bulgaria


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