What Happened?

 

On 11 August 2017, Tzvetan Vassilev submitted an application under the US Global Magnitsky Act, which allows the US Government to sanction corrupt foreign government officials implicated in human rights abuses. The two persons nominated for sanctions in his application are Bulgaria’s General Prosecutor Sotir Tsatsarov and influential Member of Parliament and media mogul Delyan Peevski: you can read more about their backgrounds here. Vassilev argues that they deliberately abused his human rights to hide corruption on a massive scale.

Tzvetan Vassilev’s application was supported by Bill Richardson’s Center for Global Engagement. Bill Richardson has referred to Tzvetan Vassilev’s case as “Bulgaria’s Magnitsky.”

Tzvetan Vassilev, his family, his colleagues as well as thousands of Bulgarians have been denied fundamental rights and freedoms by Bulgaria’s corrupt regime. Yet, what exactly happened in Bulgaria?

This is a non-exhaustive summary of the abuses by Bulgaria’s authorities:

A Story of Abuse and Corruption

A prominent businessmen and banker, Tzvetan Vassilev was among the biggest taxpayers and benefactors in Bulgaria. He was recipient of numerous awards for contributions to the Bulgarian economy and ranked as the most influential person in the country by Forbes. He was most well-known as the Chairman of the Supervisory Board of Corporate Commercial Bank (Corpbank), the fourth largest bank in terms of assets in Bulgaria. A member of the International Advisory Board of the Atlantic Council of the United States, Vassilev was a sought-after speaker at numerous international events. Throughout the years, Vassilev was vocal about the corruption in the country and raised concern before international media – see interviews for Der Standart, Handelsblatt, Leaders, etc.

In 2014, Bulgarian Member of Parliament and media tycoon Delyan Peevski asked Tzvetan Vassilev to transfer assets of Corpbank where Vassilev was a majority shareholder and Chairman of the Supervisory Board for “free.” Vassilev refused. What followed was a classic example of “corporate raiding.” Bulgarian state institutions artificially induced a run on Corpbank, so that businesses affiliated with Peevski and the ruling party could plunder its assets. Indeed, in an opinion poll carried out in 2017, 70% of the recipients said Corpbank was “purposefully attacked” in order to have its assets stolen. Indeed, Corpbank had financed strategic assets in a number of sectors – telecommunications, defense, energy, etc. It should also be noted that “We, the Citizens”, an NGO representing more than 7000 of Corpbank’s depositors, have also filed an application under the US Magnitsky Act nominating Tsatsarov and Peevski too.

False Murder Charges

On Friday, 13 June 2014, three innocent men were arrested by Bulgaria’s Prosecution for an alleged murder plot against Peevski and insinuated that Vassilev was behind the plot. Offices of companies affiliated with Vassilev were raided live on television. Peevski’s media and their allies covered the story extensively and published thousands of articles encouraging a bank run. This Hollywood-inspired scenario triggered a major panic among Corpbank’s depositors who withdrew 20% of the bank’s assets in 5 days – pressure which no bank can handle. Much later, Bulgaria’s General Prosecutor Sotir Tsatsarov apologized he made a “mistake” but the damage had been done – Corpbank was down and was forced to ask for special supervision by Bulgaria’s central bank.

At the time of the bank run, Vassilev was on a business trip abroad and decided to stay there as he feared for his life.

False Embezzlement Charges

While the plan to bring Corpbank down worked, the plan to have Vassilev arrested did not, so Bulgaria’s Prosecution engaged in yet another forgery – claim that Vassilev was embezzling Corpbank. As Vassilev was Chairman of the Supervisory Board and did not have managerial responsibilities, the Prosecution had to invent evidence. In July 2014, four employees of Corpbank were arrested and harassed in an attempt to force them to provide false witness statements against Tzvetan Vassilev. Meanwhile, Peevski’s media and their allies published numerous articles prejudicing Vassilev. One of employees was questioned for 14 hours without a break and threatened that there may be more severe consequences if the “required” statements were not provided. She was kept in custody for months. At the end, Vassilev’s accusation was based on an expenditure slip which the Prosecution argued was signed by Tzvetan Vassilev and false witness statements by people who did not work at Corpbank. During the hearings on the mandatory measures of the arrested employees in August 2014, however, court-appointed experts proved that Vassilev’s signature was forged by one of the Prosecution’s main witnesses. Yet, Bulgaria’s Prosecution had used the accusation to issue a national arrest warrant, a European Arrest Warrant and an Interpol Red Notice for Vassilev. Vassilev has filed an application before the European Court of Human Rights for this abuse.

Forceful Withdrawal of Corpbank’s License and Plundering of Corpbank’s Assets

The fact that Vassilev was out of the picture, however, did not automatically mean that Corpbank’s assets could be taken away. Hence, Bulgarian institutions engaged in another forgery – they needed an excuse to withdraw its license, so that the bank could go into liquidation and its assets acquired by businesses affiliated with Peevski and the governing party.

Firstly, in blatant violation of European rules on state aid, Bulgarian institutions refused to provide liquidity help to Corpbank but provided liquidity to another bank (First Investment Bank), which was also facing difficulties. Secondly, Bulgarian institutions rejected the proposal for bailout by the the major shareholders of Corpbank (Tzvetan Vassilev and the State General Reserve Fund of the Sultanate of Oman) who formed a consortium and attracted international investors. Thirdly, Bulgarian institutions engaged in major forgery – they hired consulting companies to carry out an evaluation of Corpbank’s assets based on a stress-test methodology which had never been applied in the European Union. In the fall of 2014, Bulgaria’s central bank withdrew Corpbank’s license on the basis of this “report” but kept it secret. Bulgaria’s Prosecution, however, starting spreading the fake news that this report constituted an “audit” and there was a major “hole” at Corpbank. In turn, Peevski’s media built the doctrine that Corpbank was a pyramid scheme.

Yet, the companies which carried out the evaluation, are not licensed auditors in Bulgaria, the methodology they used is not standard audit methodology, and their consulting contract which was leaked explicitly states their “consulting report” could not be used as proof in court. Needless to say, this “report” contradicts the results of Corpbank’s regular audits by KPMG, the regular checkups by Bulgaria’s central bank as well as its ratings by Moody’s.

Corpbank’s shareholders, including Tzvetan Vassilev, and Corpbank’s depositors tried to appeal the decision for license withdrawal before the Bulgarian Administrative Court. The court, which many believe is under the direct influence of Peevski and Tsatsarov, rejected their appeal with the “argument” that the shareholders and depositors did not have a legal interest in appealing the decision of the central bank. Judge Yankulova famously dissented on the basis of case law by the European Court of Human Rights against Bulgaria on very similar facts – Capital Bank v Bulgaria. She further clarified that if someone agrees to a blood transfusion (requesting special supervision by the central bank), this does not mean he has agreed to have both of his legs amputated (license withdrawal). Sadly, the decision by the Bulgarian Administrative Court only confirms Bulgaria’s tradition of corporate-raiding.

The reason why Bulgaria’s institutions were afraid to allow the appeal was that Bulgaria’s central bank would have had to make the “report” on the basis of which it withdrew the license public. Hence, its content and the methodology could have been disputed on the merits. In a scandal of leaked taping of conversations between Bulgarian judges known as Yaneva Gate, it appeared that Bulgaria’s Prosecution had exercised illegitimate pressure on the court to influence the decision in Corpbank’s case.

Because of the obvious violation of case law by the European Court of Human Rights, Tzvetan Vassilev and Corpbank’s depositors have submitted applications against the illegal license withdrawal of Corpbank before the European Court of Human Rights. The State General Reserve Fund of the Sultanate of Oman (the second largest shareholder at Corpbank after Vassilev which owned 30% of Corpbank’s capital) has filed a multi million claim against Bulgaria before the International Center for the Settlement of Investment Disputes in Washington DC for fundamental breaches of investor rights and expropriation. According to rumors, Bulgaria’s government has attempted to settle with the State of Oman in order to avoid showing the report on the basis of which Corpbank’s license was withdrawn to the arbitrators.

After the forceful closure of Corpbank, companies allegedly affiliated with Peevski and the governing party started plundering the bank’s assets. Unsurprisingly, despite the fact that an array of letters of complaint about this have been sent to Bulgaria’s Prosecution, it refuses to investigate.

Mass Production of Fake Reports

As Bulgarian authorities know very well that they will have to present the secret report on the basis of which Corpbank’s license was withdrawn either before the European Court of Human Rights or the International Center for the Settlement of Investments Disputes, they started considering inventing more fake evidence to substantiate their actions.

The first step was to form an Extraordinary Parliamentary Committee to investigate Corpbank’s case in 2015, which is anti-constitutional as Bulgaria’s Parliament does not have investigative powers. The person who headed the investigative committee (Desislava Atanasova) spent her career in the medical sector, which means she has no expertise in banking regulation. Other members of the same committee were in blatant conflict of interest – notably, Yordan Tzonev and Petar Chobanov. Tzonev is a close friend of Peevski as the two often engage in legislative initiatives together (mostly on Corpbank). Chobanov was a minister of finance at the time the bank run took place and mysteriously joined Peevski’s party DPS shortly after the bank run. Most of the meetings of the committee were secret too. Needless to say, the Extraordinary Parliamentary Conclusions reached the same conclusions as Peevski’s media – Corpbank was allegedly a pyramid scheme drained by Vassilev. You can read Tzvetan Vassilev’s commentary on why their allegations are absurd and politically motivated here. In simple words, Corpbank was financing its projects through SPVs – instead of assessing Corpbank’s assets, the Extraordinary Parliamentary Committee closed its “analysis” at the SPV stage and argued Corpbank was financing “empty companies,” thus showing overt ignorance of the role of SPVs in the financial sector.

While the report of the above-mentioned committee conveniently reached the conclusions Peevski and Tsatsarov wanted, it still could not serve as proof in court. Thus, those who plotted against Corpbank came up with a new idea – to pay a foreign company (AlixPartners) to reach the same conclusions as the Extraordinary Parliament Committee. AlixPartners’ report was blurred in mystery for a long time. To this day, Bulgaria’s government refuses to make the contract between Bulgaria and AlixPartners’ public, thus hiding its scope (allegedly the contract says that they should show Vassilev drained Corpbank rather than evaluate Corpbank’s assets). After months of speculation, Bulgaria’s government made the report itself available only for Members of Bulgaria’s Parliament and only in Bulgarian even though the original document is in English. It appears that AlixPartners themselves have insisted for a provision in the contract which states that under no circumstances the original should be provided to anyone else. In the report itself, AlixPartners explicitly state that their analysis “is not legal, but pragmatic.” In addition, it is rather striking that AlixPartners set up a special vehicle (AlixPartners Services) just for this contract with Bulgaria. All this suggests they were aware of the forgery in which they were getting involved and wanted to exclude the liability for damages for providing false information about Corpbank later on. For example, to challenge their slanderous and highly disputable claims about Corpbank in AlixPartners’ jurisdiction of incorporation, one needs the original report. However, AlixPartners repeatedly refuse to provide the original to affected parties.

With regard to this attempt at forging proof, Corpbank’s depositors sent a letter to Bulgaria’s institutions asking them if they are incompetent or they are accomplices in the attack against Corpbank. Members of Bulgaria’s civil society raised concern that AlixPartners have relied primarily on the questionable report on which the license of Corpbank was withdrawn as well as the report by the Extraordinary Parliamentary Committee as they were cited multiple times within the document.

Bulgaria’s Prosecution quickly discovered it could not use AlixPartner’s “report” for fabricated charges against Vassilev and so it hired a new company – Baker Tilly (Cyprus). While their report is not public yet, it would allegedly rely on an obscure “retroactive” methodology which evaluates the historic value of assets based on their current value, as estimated by Baker Tilly. It should be underscored this is not a well-accepted methodology in the financial sector.

More Fabricated Charges and Abuse

As noted above, the main reason why Bulgaria’s authorities engaged in massive production of fake reports was because it was quickly discovered that the initial embezzlement charges against Vassilev were based on a document on which Vassilev’s signature was forged by one of the Prosecutor’s main witnesses. Hence the Prosecution had to alter its story and needs “proof” to hold it together.

In June 2016, they accused him of running a criminal ring (organized crime group) along with 18 of his colleagues and the bank’s auditors in the period 2009-2014 aimed at “draining Corpbank.” The accusations are peculiar for a number of reasons. Firstly, it is unclear how a bank, which was allegedly “drained,” was among the most profitable in Bulgaria. Secondly, it is unclear how none of the audits by reputable companies and the regular checkups by Bulgaria’s central bank did not discover any irregularities. Thirdly, it is unclear why the Prosecution does not hold any of Bulgaria’s regulatory authorities liable. Fourthly, reputable media have discovered that the indictment which was submitted to court in July 2017 is largely a compilation of Wikipedia pages and dissertations from an obscure site which sells assignments to students. Corpbank’s depositors have also raised concern that the allegations are fabricated and that the destruction of Corpbank was a political decision.

A few other “coincidences” also stand out. As many judges raised their voices against the Prosecutor’s illegitimate interference in their work, the Prosecution chose to move the Corpbank case to Bulgaria’s Specialized Court for Organized Crime where its influence is undisputed. In addition, in August 2017 Bulgaria carried out controversial changes to its Code of Criminal Procedure which were deemed anti-constitutional and violating the European Convention on Human Rights by the Association of Bulgarian Judges, the Association of Bulgarian Lawyers and 19 NGOs. Members of the civil society raised concern these amendments were made intuitu personae – entirely meant against Vassilev and Corpbank’s employees.

Political Prosecution of Tzvetan Vassilev’s Family Members

Despite the continued abuse and denial of fundamental rights and freedoms, Vassilev remained vocal against corruption in Bulgaria. Yet, each time he voices his opinion, Bulgaria’s Prosecution retaliates.

In November 2016, for instance, he gave a ground-breaking television interview to top Bulgarian journalist Sasho Dikoff in which he presented documents evidencing corruption at the highest ranks. You can read an English transcripts of the two parts of the interview here: Part I and Part II. In retaliation, Bulgaria’s Prosecution raised fabricated charges against Tzvetan Vassilev’s wife – Professor Antoaneta Vassileva – and put her on Interpol’s list in violation of Bulgarian law and international conventions. You can read more about the abuse here.

Moreover, just three days after Tzvetan Vassilev submitted his application under the US Magnitsky Act, Bulgaria’s Prosecution attempted to trap his daughter Dr. Radosveta Vassileva who is a young legal scholar. On 14 August 2017, they raised fabricated charges against her, issued a national arrest warrant, a European Arrest Warrant and an Interpol notice: all on the same day, once again in blatant violation of Bulgarian and EU law. The goal was to trap her while she was traveling to present her scholarly research and allegedly force Vassilev to withdraw his application under the Magnitsky Act. You can read Radosveta’s article “How to Purge a Scholar? A Guide to Bogus Interpol Notices from Bulgaria” which analyzes what happened here. You can also watch her video post “How Bulgaria Retaliated Against an Application Under the Magnitsky Act”. Members of Bulgaria’s civil society have raised concern that Radosveta was accused solely in retaliation for Vassilev’s application under the Magnitsky Act. Some have asserted that even the Mafia does not prosecute the children of their opponents. Others have called the Prosecution’s accusations against Radosveta “an Albanian vendetta.”

Further Links:

You can find a full list of Tzvetan Vassilev’s interviews here.

Vassilev also regularly comments current events in the news section of his personal website and on Twitter.