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UPDATE 1 -Prosecutors charge owner of Bulgaria's Corpbank with embezzlement

SOFIA, Aug 12 (Reuters) - Bulgarian prosecutors said on Tuesday they have charged the main owner of troubled Corporate Commercial Bank (Corpbank), Tsvetan Vassilev, with embezzlement and an international warrant has been issued for his arrest.

The bank was hit by a run on deposits in June that led to Bulgaria's biggest banking crisis since the 1990s. Corpbank has since remained shut and angry customers are demanding access to their remaining deposits.

Vassilev was accused of asking two employees at the lender to withdraw 206 million levs ($140 million) from the bank between 2011-2014.

Prosecutors said these funds were then transferred to another company owned by Vassilev, one of Bulgaria's most prominent businessmen, who is currently living outside Bulgaria but whose exact whereabouts are unknown.

The charge against him is the latest twist in the banking crisis that has put renewed scrutiny on the investment climate and quality of banking supervision in Bulgaria, one of the most corrupt countries in the European Union.

Clients unnerved by reports of alleged shady deals involving Vassilev withdrew more than a fifth of deposits in a week-long bank run, forcing the central bank to shut down its operations.

Vassilev, who was locked in a public feud with a rival at the time of the run, has repeatedly denied any wrongdoing and said the run was a plot hatched by his competitors. He has also previously accused elements of Bulgaria's prosecution service of plotting against him.

"Vassilev is indicted in absentia because he is out of Bulgaria, with residence unknown," prosecutors said in a statement on Tuesday, adding they had charged him on July 28. "After his indictment, a European Arrest Warrant was issued for Vassilev ... he was also put on the wanted list of Interpol."

Vassilev was not immediately available for comment.

The prosecutors said they have also charged four executive directors of the bank, who were temporarily removed from their posts when the central bank took over Corpbank in June, as accomplices in a deliberate mismanagement. They have been released on bail but are banned from leaving the country.

In the ongoing investigation into the bank, prosecutors said they found credit papers hidden in a cardboard box, and 14 sacks of shredded documents, whose destruction had been ordered by one of the bank's four chief executives the day after the central bank took over the bank.

Prosecutors detained Corpbank's chairman, Orlin Rusev, on July 11 as well as Margarita Petrova, the lender's chief cashier, in connection with withdrawing funds from the bank on Vassilev's behalf.

Petrova remains in custody while Rusev has been released on bail.

A lawyer for Petrova had said in July that her client would plead not guilty, adding that other accused officials had also denied any wrongdoing.

Efforts by the Bulgarian authorities to rescue Corpbank in July were derailed by a lack of political consensus. Bulgaria's president has said that action could only be taken once the results of an audit of the bank's books are known in October.

The preliminary results of the audit in July showed "actions incompatible with the law and good banking practices", according to the central bank, which also said crucial documentation about Corpbank's loan portfolio was missing.

On Monday, hundreds of angry Corpbank depositors protested in front of the central bank in Sofia, demanding access to their accounts. Deposits have been frozen even though Bulgarian law provides for a deposit guarantee of up to 100,000 euros. (1 US dollar = 1.4646 Bulgarian lev)

(Editing by Susan Fenton)