The report on the Deposit Insurance Fund is censored in favor of the robbers of Corpbank AD

The audit report of the Bulgarian Deposit Insurance Fund (BDIF) published by the National Audit Office (BDIF) has been drastically cut and its findings have been replaced. This conceals facts about the organized plundering of Corpbank AD by persons and companies related to Delyan Peevski, MP sanctioned under Magnitsky.

BIRD has the text of the draft audit report, which has been suspended from publication, “jurkan” is very serious and is ultimately published in a severely truncated version. From the comparison of the text of the draft and the text of the published report it becomes clear that the findings for a significant part of these violations have been dropped, which is in violation of the National Audit Office Act and the international auditing standards. A comparative reading immediately shows that the summary and conclusion in the final audit report do not reflect the facts and circumstances found, but contradict them.

The final report on the BDIF came after a delay of half a year, during which time illegal actions were taken to censor the report by an extremely designated commission of close employees of the then leadership. All this is done in gross contradiction with the legal requirements and internal acts and with the intervention of senior MRF politicians. BIRD also published evidence of such interference – a photo of Ramadan Atalay from the MRF, on a secret visit to the National Audit Office to Deputy President Goritsa Grancharova – Kozhareva.

The draft audit report of the BDIF audit duly established and indisputably proved a large number of key violations of laws – the Bank Insolvency Act, the Public Sector Financial Management and Control Act, the Independent Financial Audit Act, etc. There are also many violations of the Fund’s internal rules – the Rules for the Organization of the Work of the Governing Council, the Bank Insolvency Policy and Early Interventions, the Procedure for the Election of a Trustee in Bankruptcy and the Procedure for the Selection of an External Expert – Assessor of the Assets and Property Rights of the Bankruptcy Estate.

The final audit report of the BDIF adopted by the National Audit Office does not contain information on a significant part of these violations, which is in violation of the National Audit Office Act and the international auditing standards.

The result of all this is the replacement of the findings, which can only be in the interest of the persons who have benefited from the lack of described property of Corpbank AD in bankruptcy, the sometimes understated valuations of attractive assets, as well as their opaque sale.

For comparison, the overall conclusion of the draft audit report, which is fully justified and corresponds to the audit evidence, supported by the external expert “Alix Partners” states:

“During the audited period, the failure to provide sufficient staff and an appropriate organizational structure, as well as the lack of an effective internal control system of the Fund, did not create adequate conditions for effective performance of the Fund’s functions in bank insolvency proceedings.

The reimbursements from cashing of credit exposures for over eight years are on average more than 16% less than the forecasts of an authoritative international company (Alix Partners editor’s note), which should have been raised for 12 months.

The circumstances stated show that the statutory purpose of fairly satisfying the depositors and other creditors of the bank in the shortest possible time has not been achieved. The interests of the creditors of the bank, as well as the public interest in connection with the bank insolvency proceedings, are not sufficiently secured.’

In the final report of this text only remains:

During the audited period, the BDIF’s activities on bank insolvency were carried out in accordance with the requirements and objectives of the Bank Insolvency Act and the regulations.

As you can see, such a conclusion can not be true, given such a drastic discrepancy with reality – for eight years of work the Fund has collected less than predicted in a year.

Further in the final report, the miserable achievements of the BDIF are justified as follows:

“Due to objective reasons and regardless of the control exercised by the Fund, within the 12-month period recommended by the company, the predicted results for replenishment of the bankruptcy bank’s property have not been achieved.”

The Manager’s Lost Conflict of Interest

In the final text is deleted the fact that the Chairman of the Board of the Fund Matey Matev until taking up the position was a legal consultant to the trustees in bankruptcy of CCB, who in their new capacity should control under the Bulgarian National Bank Act. According to the reports on the concluded contracts, the trustees in bankruptcy of Corpbank AD have concluded on 30.04.2015 an indefinite contract for consideration for legal services with Matey Matev. Under this contract, until 28.02.2019, a monthly remuneration was paid, which was approved by the BDIF Board with decisions approving the draft monthly budgets for the maintenance expenses of CCB, as well as with the decisions approving the activity reports and reports of the trustees in bankruptcy.

In addition, the finding that Matey Matev did not inform that the trustees in bankruptcy of Corpbank AD paid regular remuneration for legal services to his son was deleted – Adv. Veselin Matev. Matey Matev is expected to control the trustees in question and the conflict of interest is crying, but obviously not for the committee that crippled the initial report.

Regarding these conflicts of interest, which cannot be completely silenced, the final report inspires an additional description of the law, arguing that the head of the Fund of Funds does not fall within the scope of the Law on Combating Corruption and Consumer Policy. This interpretation conflicts with art. 6, para. 1, item 18 of the Law on Combating Corruption and Social Policy, which determines that persons occupying
Higher public authorities within the meaning of this Act shall be the heads of state institutions. The BDIF is such an institution established by a special law and the establishment of conflict of interest under its head should be done by the KPKONPI, not by the National Audit Office.

The Missing Credit Files of Corpbank AD

The draft report correctly states that the credit files of Corpbank AD have disappeared

There are no inventories of the available securities, contracts and receivables of the bank, data and information on credit records, inventories of properties and belongings under art. 110, para. 1 of the Property Act.

The audit report concludes that, as a result,

“There is a lack of reasonable assurance as to the true, accurate and comprehensive description of the bank’s property in impermanence.”

None of this remained in the final report of the Court of Auditors.

The cheaper “printing house of Peevski”

The case of the leasing company “Partner Leasing” AD, a large borrower from CCB. / over 133 mln. Lv. at the closure of the bank on 20 June 2014 /. As Mediapool wrote, a scheme for draining Corpbank AD has been applied with the trucks owned by this company.

But the same company is also behind the financing of the printing house of former media mogul Delyan Peevski and his mother Irena Krasteva, as an investigation of the KTBFiles project found.

The findings of the draft report state that the total value of the receivables from the total credit exposures of Partner Leasing has been estimated by Pricewaterhouse Coopers Bulgaria at approximately EUR 15 million. “Alix Partners” has estimated the same at BGN 30-40 million.

In the final report, the assessment of Alix Partners was removed.

This discrepancy raises very serious questions about the objectivity of the valuation of the assets of the bank in bankruptcy. Moreover, this is another case of problematic work of a registered auditor in the case of CCB.

Either way, it was found that not a single lev was collected from the assets of “Partner Leasing”. As a result of the lack of control by the BDIF, the interest of creditors related to obtaining the maximum value of the bank’s property sold is not respected. And the BDIF is a major creditor.

Only 15% of assets were collected with a forecast of 37%

The finding that the real percentage of assets collected is more than twice as low as projected was also deleted from the final report. The draft report states:

The recovery rates reached above are significantly below the projected percentage (37.2 per cent) calculated on the basis of the impairment of assets by audit companies as at 30.09.2014.

Such a finding in the final report is missing.

It is reported that for a period of seven years (22.04.2015 – 30.06.2022) only BGN 1.4 billion have been collected. of BGN 6.8 billion in assets of Corpbank AD or 20.5%. The percentage is even lower because groups of assets are included, the cashing of which is not indicative of the efforts made by the trustees and the Fund. If you do not count cash and cash balances at central banks and financial assets of CCB, the collection rate drops to 15%.

The deletion of proven and important facts and circumstances, which are fully supported by the external audit consultant, is a gross violation of the National Audit Office Act and the international auditing standards. But as the former second in GERB said – “there is no one to punish them.”

See the full text of the draft report /in the right hand column in red/, compared to the final report /in the left in green/ here: fgvb-check

 

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