The Pandora: You drain a bank, racketeer the business, in the end Peevski wins…

Documents from the Pandora-Files reveal that the owners of First Investment Bank Tseko Minev and Ivaylo Mutafchiev are real beneficiaries of offshore companies that have received over a billion loans from the bank. In order to melt the problematic exposures, the bank’s management forces businessmen to take assignments that are uncollectable. Then they were attacked by the Specialized Prosecutor’s Office, and finally their property was bought at a bargain by Peevski’s lawyer Alexander Angelov and his associates Georgi Samuilov.

Video: Dimitar Stoyanov, Maria Yoncheva

“Bad Apple”

First Investment Bank, also known as FiBank, was bailed out three times with injections of state money – under the Triple Coalition, after the collapse of Corpbank AD and most recently after its failure of the ECB’s stress test with a capital increase by BDB. A 2012 report of the BNB Supervision lists the reasons for this instability: Over the years, the bank has formed huge loans to a small number of related parties. Among the large problematic exposures of FIB are mainly those to offshore companies related to its owners, but also to companies related to notorial oligarchs such as Hristo Kovachki – best man of Ivaylo Mutafchiev and Grisha Ganchev. BNB inspectors find that a large percentage of these loans are either non-performing or total damage.

A practice of using depositors’ money to lend bankers’ own businesses was also pointed out by US Ambassador John Beyrle in a confidential 2005 report on Bulgarian banks published by Wikileaks. It says that several Bulgarian banks, including First Investment Bank, are involved in laundering money from criminal activity and lending to related parties.

… Money laundering continues to be a problem for some banks as their owners pour money into related, less competitive firms that have no intention of repaying those loans. This leaves the burden of uncollected bad loans for legitimate investors and bank account holders.

The report shows that financial intelligence and the BNB are aware of these practices, but clearing them is not easy because of political interference. Beyrle defines these banks as “bad apples”, and especially for FIB it writes that it “has stepped into the legitimate retail business and is known as one of the most aggressive and polished banks, while its existence in the darkest spheres of the criminal world.”

See who Georgios Georgiou is

In 2014, Bivol published a study on Fibank’s loan portfolio , which revealed that a Cypriot citizen named Georgios Georgiou had concentrated loans from the bank for over BGN 1.2 billion (see table at the end of the publication). Georgios appeared the ultimate owner of “Yulen” AD, “Vitosha Ski”, taxis “OK Supertrans”, of the companies behind Kremikovtzi, of the company “Bulmarket” with the killer train from Hitrino and many other businesses. The mysterious Cypriot turned out to be the largest foreign investor in Bulgaria.

Now the Pandora Files show unequivocally who is behind Georgios Georgiou. The information is found in the correspondence between the registrar of offshore companies Trident Trust and the Cypriot firm G. Papadopoulos & Co. Trident Trust wants to get detailed information about the real owners of all businesses in the British Virgin Islands that are registered as customers of their Cypriot counterparty. This is necessary due to a change in the legislation in BVI, obliging companies to maintain a register of beneficial owners.

It appears from the list and documents that Georgios and other strawmen are being entered by Papadopoulos & Co. as formal holders of the offshore companies’ shares, but the actual beneficiaries are the majority shareholders in FIB – Tseko Minev and Ivaylo Mutafchiev.

In other words, there is already evidence that the two bankers gave themselves credit not only the entire equity of the bank, but also another 500 million of the depositors’ money.

Cessions and raiding: How bad loans “weaken”

By law, such a concentration of credit should not be possible. But as in the case of CCB, all control institutions in Bulgaria have turned a blind eye over the years.

One of the reasons for this umbrella is that after Corpbank AD was liquidated, the bank “sheltered” the loans of the companies associated with Delyan Peevski. Even the BNB stress test of 2016 did not reveal anything wrong with FIB. But under the threat of the upcoming stress test of the European Central Bank, FIB undertook a “cleansing” of its troubled loan portfolio through various tricks and assignments.

One of the tricks is to reschedule the loan far ahead of time with annexes to the original contract. For example, in May 2021, the repayment of Vitosha Ski’s loan to FIB for EUR 17,750,000 was postponed to the distant 2036.

Vitosha Ski is owned by Ellora Management Limited, whose final beneficiaries, according to the Pandora Files, are again Tseko Minev and Ivaylo Mutafchiev. But there is no trace of them in the Commercial Register. There, the owner of the law firm in Cyprus, George Papadopoulos, was named as a representative of Ellora.

However, there is another trick that goes beyond the edge of the law. Our investigative team followed in the footsteps of a dubious assignment that was imposed on a borrower as a condition to receive a loan.

In front of the BIRD camera, the owners of the company NSA Investment told how they were forced to sign a cession of a receivable from FIB for EUR 2 million to the construction company PST Group. The unexpected extra of two million was a prerequisite to receive a credit of 7.3 million euros. In doing so, they were strongly advised not to attempt to collect the cession.

“In the end, it turned out that we were given a receivable, without giving us any chance to collect this receivable.”

PST Group is one of the favorite companies of the governments of Boyko Borisov in awarding large public procurement contracts for roads and a contractor under the famous “in-house” procedures of “Avtomagistrali” AD The credit exposure of FIB to “PST Group”, according to the latest report, which was published for 2019, is between BGN 100 and 150 million.

“PST Group” AD is owned by the Cypriot “Kolvik Services” and with declared ultimate owner Kamen Kichev – former Deputy Minister of Transport. He declined to comment on the case of the cession to our reporter.

But before Kolvik, the owners of the shares of “PST Group” are the companies “Galliano Worldwide Limited” and “DVG Bulgaria”, which in turn is owned by “Comeita Group Limited”. Thanks to the Pandora Files, today we know that behind Galiano Worldwide Limited and Comeita Group Limited are again the main shareholders in FIB – Minev and Mutafchiev.

However, when the company “NSA Investment” began to make some steps to collect the receivable, its owner surprisingly became a “client” of the Specialized Prosecutor’s Office and spent 5 months in custody. His company has difficulties to repay the loan and very quickly FIB draws the properties that are collateral for the loan.

One of the most lucrative properties was sold much below its cost to the company “A.A. Invest”. The owner of this company is Adv. Alexander Angelov – one of the most trusted people of the oligarch Delyan Peevski, sanctioned under the global Magnitsky Act. Angelov’s relationship with Peevski also comes out of the Pandora Files. BIRD has already revealed that Peevski has personally signed a document declaring himself the real owner of the shares in the offshore Verum International Limited and transferring them to Atty. Angelov.

The other building set by NSA Investment was bought by Insa Oil of Georgi Samuilov. Samuilov is also considered particularly close to the oligarch. He also acquired the Berlin Hotel before Peevski was sanctioned under the Magnitsky Act.

It seems that the purging of FIB’s loan portfolio goes together with a neat scheme for taking over a business. Borrowers are forced to buy against approval for a loan uncollectable receivables of companies related to the owners of FIB. If they go to absorb the receivable, the Specialized Prosecutor’s Office attacks them. When they fail to repay their debts, their assets are sold at reduced prices to companies associated with Peevski.

The tandem “FIB – Peevski”

The data from the Pandora Files illustrate in more detail the business relations between the owners of FIB and oligarch Delyan Peevski, for which until now there was only indirect information.

For example, the offshore company “Galliano Worldwide Limited” owned by Tseko Minev and Ivaylo Mutafchiev is represented by Ivan Sharlandzhiev, former CEO of the Plovdiv cigarette packaging factory “Yuri Gagarin”.

After 2006, the shares of Yuri Gagarin were held by Barranco EOOD. It is managed by Westwood Invest Limited. The Pandora files reveal that this company is also owned by Minev and Mutafchiev. Subsequently, Delyan Peevski entered the factory directly through Komso Tabaco.

The Pandora Files also open a reference letter from FIB for Delyan Peevski dated 13.11.2016. It says that he is “a correct, reliable and respected client of the bank”. The letter was signed by two directors of FIB from the Lending Department.

At present, FIB should not maintain accounts of the oligarch sanctioned under Magnitsky. The BNB assures that all Bulgarian banks have terminated their relations with it and with the companies on the sanctions list. However, it is not known what the state of the loans of companies related to Peevski to the bank is.

The institutions: No comment

The BSRD sent questions to the European Central Bank and the BNB about the new data on FIB’s problematic exposures to offshore companies owned by its owners. We asked if these data were detected during the stress tests conducted by both the BNB and the ECB.

For this purpose, we also provided a representative sample of the loans to several offshore companies whose ultimate owners are Tseko Minev and Ivaylo Mutafchiev and which as of 2016-17 exceeded the legal requirement for lending to related parties by no more than 20% of the bank’s capital.

The ECB’s press office in Frankfurt declined to comment on the data and said it never commented on information about individual banks.

A response from the BNB was not received until the editorial closure of the article.

After the publication of the article, a response was received from the BNB:

The Bulgarian National Bank adheres to the established practice within the Single Supervisory Mechanism of the ECB, including not commenting on facts and circumstances in the public domain relating to specific supervised institutions, their shareholders and clients.

As an institution mandated to supervise the activities of banks, the BNB analyses the entire volume of supervisory and prudential information during the supervisory review and evaluation process for each of its supervised banks, which is reflected in the relevant risk assessment and the related additional own funds requirements.

No response to the inquiries to FIB was received.

The Pandora files contain information on 14 offshore registration and maintenance companies leaked to the International Consortium of Investigative Journalists (ICIJ). To study this array of nearly 12 million documents, the consortium brought together 600 journalists from around the world for a global investigation called the Pandora-Files. BIRD.BG is the Bulgarian partner in this investigation, which is the largest coordinated cooperation of investigative journalists to date.

Atanas Chobanov, Dimitar Stoyanov, Maria Yoncheva – video reporter

Annex: FIB’s exposures to Georgios Georgiou as of 2014 Source Bivol

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