Two years ago the fourth biggest bank in Bulgaria - Corporate Commercial Bank or CorpBank belonging to Bulgarian banker and businessman Tsvetan Vassilev - was closed down and then declared bankrupt.

Right away the central bank and the prosecutor's office accused the bank's majority shareholder and top executive of siphoning it off, making public information of his having granted credits without the necessary guarantees, to companies and individuals, but most of all his own companies, friends and relatives, knowing full well that this money would never be paid off. Two billion euro was discovered to be missing from the bank. Under the bank deposit guarantee law over 1.5 billion euro was paid out to more than 100,000 depositors, with the state also chipping in - it took out one more external debt, as there wasn't that kind of money to be found in the deposit insurance fund.

The bank's owner Tsvetan Vassilev used to be a very wealthy and influential man with a say in top government circles and among the top functionaries of the major political parties in the country. Because of this wide mesh of above board and underhanded connections and influences and under pressure from the tens of thousands of defrauded depositors, the task of laying bare the truth and of trying to help collect the credits due was assigned to a specialized foreign company. The idea was that the company of international repute would be most competent and impartialin its investigation into the matter and would not be swayed by different business or political lobbies in the country. A British company of proven expertise and experience was selected in an attempt to unravel the financial tangle. Its report on the problems connected with CorpBank was made public a few days ago.

The worst prognosis and darkest suspicions were proven true. Adducing arguments and facts, Alix Partners reached the conclusion that the chief culprit in the bank's bankruptcy was its principal shareholder Tsvetan Vassilev. Out of the more than 2 billion euro that have gone missing from the bank, 1.3 billion was embezzled by the banker personally and by his companies. The man, once declared Banker No.1 of Bulgaria, used his own bank as his personal pocketbook - when he needed to buy something, he would just dip into it. Simple and fool-proof, because there was no one above the banker to exercise any control. In theory there should have been - the central bank. But while everybody watched the clouds gathering over CorpBank and the colossus with feet of clay crumbling from the head down, the Bulgarian National Bank nonchalantly reassured the public, in all possible forms of mass media, that the banking system in the country was stable and that nothing jeopardized the savings of citizens or companies. Then, all of a sudden it seemed to sober up and started coming up with stories better suited to financial crime novels, stories of bagfuls of money carried out in the dead of night etc. In both cases it turned out the central bank management either did not know the truth or simply invented boogeyman stories. Not for nothing was the head banking supervisor investigated by the prosecutor's office and the central bank governor resigned under a cloud. The owner of the bank sneaked out of the country and has been living abroad for two years, with the Bulgarian authorities making attempt after attempt to have him extradited; Tsvetan Vassilev himself has not stopped trying to justify his actions and accusing political opponents and hostile media of bringing the bank down. And all the while the assignees have been doing their job, trying to bring as much of the credits granted back to the bankrupt bank. In this regard the independent British experts are not optimistic, saying that no more than 400 million euro may ever be returned. Evidently, this does not cover the 1.2 billion euro the Commission for the Confiscation of Criminal Assets is demanding of the bank's former CEO Tsvetan Vassilev.

The Bulgarian National Bank now has new management, and the Corporate Commercial Bank no longer exists. There are no financial perturbations in the country either and the banking system should now be running smoothly. Whether that is so is something we shall find out from the results of the stress tests the central bank will subject all credit institutions to in the coming months.

English version: Milena Daynova