Thank you for agreeing to this interview. How is life in Belgrade? Tell us about your daily routine?
I have ultimately decided that silence is not necessarily golden — not to say that I have kept silent in the last two years. My daily routine is very different from that in Sofia. In any case, I have not cut myself off from the world nor have I neglected my business contacts, including overseas. I remain focused on my legal defense and have brought several lawsuits against the parties involved in the plot against the KTB. It’s not a dull life, I really can’t complain. I also have more time to read, particularly philosophical works.
What is the state of play regarding the lawsuits you mentioned?
It would be difficult to even produce an exhaustive list. Concerning the multiple criminal proceedings under way, you probably know that two years and a mountain of hardship and Sisyphean efforts later the only idea that the parties opposing me came up with off the top of their heads was that I was the leader of an organised criminal group engaged in a large-scale embezzlement of KTB funds for five years. This stratagem, achieved by a simple trick, was necessary to delay the filing of charges against me. Instead of indicting me, the Metropolitan Prosecution Service (MPS) transferred the casefile to the Specialist Prosecution Service, where it is now handled by the same team of prosecutors from the MPS following their secondment to the SPS to ensure that both the Criminal Investigation Service team and the prosecutorial team gain more time. The lawsuit must be the crowning glory of their careers. I am not saying that it is not a life-defining evening for me. Yet I cannot help but think that filing the lawsuit against me with the Specialist Criminal Court is simply the option that suits them best. I do agree that there is an organised criminal group, but not one under the leadership. There is indeed a group that plotted the downfall of the KTB and I intend to file lawsuits against each and every party involved once certain political changes have taken place.
I will later revisit the big picture. However, I would like to first ask you to share your impressions and opinion of current events. The results of the stress tests of Bulgarian banks were recently announced. What is your opinion of these?
It is hardly a secret that almost no bank has effectively passed the stress tests with flying colours. More importantly, the latest series of stress tests were radically different from those that the KTB was subjected to a couple of years ago. The assessment of KTB’s asset base was performed on the basis of an Asset Quality Review (AQR) — the most conservative available methodology — which had never been previously applied in Bulgaria and was definitely inappropriate to a bank that had just survived a bank run.
I am not opposed to banks but I have to say that most of my fellow bankers went out of their way to help the organisers of the putsch against the KTB. I firmly believe that it not possible to have a robust and healthy bank system in an ailing economy.
Both the old and new management of the Bulgarian National Bank (BNB) effectively belong to the criminal group that accomplished the closure of the KTB. The Central Bank’s position during the attack on the bank can only be described as a disgrace. Governor Iskrov made a painfully reluctant statement only after information about the charges brought against Deputy Governor Gunev was leaked — and in a strikingly organised manner — if I may add. The same group of people then played a central role in the final stages of running KTB into the ground, electing to pursue an inexplicably inadequate policy during the quaestorship and carry out the orders received from the plot organisers to liquidate the Bank by revoking its licence on the basis of the AQR results, which remain undisclosed. To achieve this, they made sure that the shareholders could not challenge license revocation on the ludicrous grounds that they had no standing in the proceedings. The whole idea was to prevent the disclosure of AQR results thereby precluding any meaningful discussion in stark contrast with the settled case-law of the European Court of Human Rights.
Naturally, they are now playing a different part of sweeping the ugly scandal under the carpet on the operating assumption that the KTB was a unique bank, a system aberration, because — you see — there was this arch thief Vasilev at the helm who did nothing but steal money for five years.
Save for a handful of banks that I will not name to avoid accusations of attempting to destabilize the system, all banks operate with a capital shortfall. This is largely due to non-functioning economic environment. In my opinion, this is compounded by the ridiculous capital adequacy requirements. To please the European Central Bank and its Governor Trichet, Iskrov imposed a 12 % capital adequacy requirement on banks fully aware that even 6 – 7 % would be excessive. In 2014, an additional capital buffer of 1.5 % was mandated, compelling auditors and the Central Bank to turn a blind eye during bank asset review.
A year after these events the sale of Vivacom is purportedly now a fait accompli. The company was the crown jewel among the assets acquired with KTB financing. Your comment on this?
Plain and simple, this is the ultimate disgrace. To allow the sale of a flagship telecom for an amount that is four times higher than EBITDA [earnings before interest, taxes, depreciation and amortization or profits on an operating basis] — is a crime.
When Bromak and VTB acquired Vivacom in 2012, the value of the company, despite the fact that it was heavily indebted, was much higher than it is at present. It had three types of creditors who were unable to reach a settlement at the time. There was a government claim amounting to more than EUR 120 million; the government had retained a golden share, keeping the company shareholders in check. My team worked out a solution that enabled us to overcome these legal obstacles and Vivacom became Bulgaria’s top telecom offering a full range of services.
The events that are taking place at the moment are a textbook example of grand theft involving a State-owned Russian bank, which the Bulgarian government openly tolerates in exchange for protection of the interests of the parties in charge. In order to obstruct the transfer of ownership of Vivacom, the government allowed the company to be included in bankruptcy estate enabling the Commission for Illegal Assets Forfeiture (KONPI) to file a claim that may result in its confiscation. This moves seeks to ensure obedience — the party that wishes to acquire Vivacom must first bend the knee before the powers that be and earn their favour to have the roadblocks removed. Now, let’s consider the position of the government and that of the Head of the KONPI who reports directly to Borisov. If this semi-literate stooping public official claims EUR 490 million from my family for the purportedly illegal acquisition of Vivacom, will he dare challenge the thieves patronized by the State-owned Russian bank? By the way, the deal was given the green light by the Directorate-General for Competition of the European Commission back in the day. It would therefore now suffice to block the deal in Bulgaria and demand that the new owners pay up the amount claimed from my family in order to have the distraint on the shares lifted. Let’s hope this is what happens, although I really doubt that it will. There is a huge profit to be made.
In what form?
There is only one form — money. Shedloads of money.
In other words, you are saying that those in charge will get a cut from the deal?
Who are the people you refer to?
There are two clans: that of the omnipresent Peevski and the other one of the Prime Minister.
Could you be more specific?
I have heard many things said. Would providing specific details make any difference? What I am saying now — and I have always been open about it — is that the value of the 77 % package financed by the KTB was certainly around the EUR 500 million mark at the time of the attack. The figure does not include the value of NURTS (the largest formerly State-owned radio and television broadcasting company).
Still who will get what in exchange for the deal if it receives the blessing of the powers that be as you say?
I have heard both specific amounts and specific ownership arrangements mentioned. The distribution is as follows: the bogus company of the always-ready-to-step-in Spas Rusev must acquire Vivacom prior to put options being given to several groups of buyers who are to divide the rich takings, i.e. the difference between EUR 700 million and the company’s actual value as a going concern of more than EUR 1 billion. Yes, a telecom with EUR 170 million annual EBITDA has been effectively sold for EUR 700 million. This price comprises the auction price of EUR 330 million and the remainder of the Vivacom bonds issue amounting to a little more than EUR 370 million. The scheme concerns the redistribution of at least EUR 300 million in the following ratio: 20 % for VTB; approximately 20 % for the omnipresent fraudsters Velchevi Brothers and Krasimir Katev for their incessant grovelling to VTB; and 43 to 46 % for the dummy Spas Rusev. However, the dummy will most likely have to part with most of his share, transferring his so-called profit (some EUR 135 million) with those in power. In other words, he will have to share it with those who are still bleeding the company dry and have turned it into the biggest fan and sponsor of Bulgaria’s all-time favourite football.
You mean with Borisov and Peevski?
According to the rumour. As for me, when Peevski deployed his ill-conceived racket in May 2014 he demanded a 10 % cut of the company. The way he saw things was that he was entitled to it because he had supposedly helped me. How had he help me, I wonder, when back in the day I was planning to do the deal back with VTB Capital—VTB’s investment arm—and the Royal Bank of Scotland? But this is how these people understand doing business in Bulgaria. They can’t possibly imagine someone getting into big-league business unless they are accountable to somebody. This is why I have been saying that since 2009 there has been more than corruption in Bulgaria: the country fell prey to a predatory mafia, which is still in power doing its best to control and profiteer from everything.
Speaking about deals, how did the Bulgartabac deal happen and how did Peevski end up as the company’s owner?
Peevski is generally believed to be the owner of the company, and not just by Bulgarians. Had there been a proper investigation, the truth would have come out. I keep certain documents which conclusively show that the owner is Irena Krasteva, and not Peevski. You will also find her name in the files of the Walch&Schurti law firm. The agreement was that Irena Krasteva would be one of the nominal owners of the foundations that hold the shareholding capital of LIVERO Establishments — the company that had signed a special contract with VTB Capital in respect of BT Invest in the capacity as purchaser of the 80 % shareholding interest in Bulgartabac. This has never been a secret there. BT Invest is owned by Peevski—or rather by his family—especially after the purchase of LIVERO’s debts by EFV and Ventracor. There is no doubt about this. [EFV and Ventracor are the two companies which financed the privatisation of Bulgartabac privatisation in 2011. Currently, EFV is under Vasilev’s control and is financed via KTB. Ventracor it believed to be a vehicle for the underhand dealings of the owners of Vinprom Peshtera AD.]
The foundations that first owned LIVERO were subsequently ousted and other foundations stepped in. I don’t know the ins and outs of the precise share distribution arrangement made at this stage. But it all comes down to BT Invest playing dirty and I am certain that certain transfers have been made in exchange for debt. The loan of one of the creditor companies was purchased by the Dubai-based company TGI Middle East [a company linked to Peevski], which is a link in the chain for smuggling cigarettes into Turkey via Kurdistan. So I can make a pretty safe guess as to where the refinancing money has come from.
As far as I am concerned, the question is not whether the real owners are Peevski or his mother. The real question is what the ownership arrangements and the share distribution scheme is. I cannot rule out the possibility that Peevski might have ceded a share in Bulgartabac in exchange for his debts to the main Middle East dealer, Salam [Salam Kader Faraj]. The truth is known solely by those who keep the book of shareholders of BT Invest and handle the legal paperwork of the foundations.
In other words, you suspect that Salam is a shareholder of Bulgartabac?
I cannot rule it out—at least not if Peevski wanted to save his own skin. In late 2013 when he launched his crusade to gain control of Bulgartabac, he lied to Salam. Salam had advanced a considerable amount so that Peevski could settle his debts first with EFV, and then with Ventracor. Similarly, Bulgartabac’s debts to the KTB were probably refinanced in April or May 2014 by transfers made via a large foreign bank.
Do you know how much money Salam has transferred?
More than USD 150 million. As far as I know, Peevski has not paid it back has to this day. And judging by Bulgartabac’s financial situation, he now has even more limited options.
By the way, the sale of Bulgartabac was one of the better initiatives of the first government led by Boyko Borisov. Had the company not been privatised, it would have landed right in the centre of the smuggling scandal of 2014-2015 as a State-owned enterprise. I firmly believe that the scandal was the reason why Peevski was declared persona non grata in Turkey. Anyway, before the privatisation the business of Bulgartabac depended, more or less, on this channel and the major distributor, Salam. How far did Peevski go? The answer is certainly known by many both in the intelligence and other competent services and by his own string puppet, Ventsislav Cholakov, who represents him in all money-laundering vehicles set up along the chain. All companies are Dubai-registered and used to transfer money from the smuggling operations of the companies Peevski owns. Before the privatisation, a company called Kaledon acted as intermediary. After the privatisation Peevski set up the Dubai companies and transferred everything to them. In a nutshell, this is all about the mind-blowing criminal income of the Peevski clan and those who had a vested interest in Bulgartabac.
Who are the parties with a vested interest in Bulgartabac?
These names are publicly known. There is no point in repeating them.
They have never been announced officially. Can you state them for the record?
I can state them for the record, of course. At least as far as the arrangements made in the past are concerned. Alexander Angelov should be able to give you a full lowdown on the Liechtenstein-based companies — what has been registered there and how.
To conclude, what was the initial ownership arrangement for Bulgartabac?
According to Peevski bonuses [10 % of the privatised share under a scheme described in Miroslav Ivanov’s blog] were to be received by Borisov, Dogan and Staliiski for having given the green light to the deal. Few are privy to the fact that the initial idea was that my group and I participate in the privatisation of Bulgartabac in a consortium with Korean Tobacco. It was suggested to me, in a firm and unambiguous manner, that such a deal was out of the question, although I had already concluded consultancy agreements with Rothschild in Paris. So I paid the consultancy fees and abandoned the idea. The Padishah wanted a different deal.
You do realise, don’t you, that you have just said that the Prime Minister of a European Union Member State has an undisclosed shareholding interest in Bulgartabac?
He was promised such an interest. I know as much. We have not discussed the matter in person. This was the situation back then. On the other hand, the diagrams published on certain websites had indeed been sketched by Peevski’s lawyer — Alexander Angelov. I have incontrovertible proof of this. But I cannot say whether this is still the case. If someone wants to find out, I say go ahead. All secrets are in the hands of two Liechtenstein-based law firms.
Peevski is a topic of enormous magnitude. How did you first come to meet him? What was his role in the bank? Did you need him at all?
I have been asked this question many times. As these things happen, we met by chance. Gradually, he started to make inroads into my business. He was useful in some respects and has helped me on occasion …
In what way was he useful to you?
In many ways. He has inexhaustible energy and is very active. Back in 2003 – 2004, he decided to elope, so to speak, with Dogan; in a way, he acted as an intermediary between me and the Movement for Rights and Freedom (DPS). This gave me a sense of comfort in my relationship with DPS because the corporate role of the Turkish ethnic party role is hardly a secret.
The development of the Bank has been fraught with difficulty. In 2004, the then Chair of the Managing Board who held more than 20 % of the shares tried to blackmail me. I am talking about Yanko Ivanov who was acting on behalf of the energy sector lobby pandering to Bogomil Manchev. I refused to give in. At the time Peevski helped me to secure the support of the DPS and forestall a more serious attack on the Bank, which was very small at the time.
How did DPS help back then?
They did not do anything specific but business relationships and politicians’ interventions do not always involve specific things. I supoose ultimately a decision was made to leave the Bank alone because of the alleged DPS interest in its affairs. I really don’t know any specifics. The KTB has often been described as the Bank of the DPS but it has never had any direct links the ethnic party, either at the time of the purchase or afterwards. But the institution did rely on the DPS insofar as big business in Bulgaria are always reliant on the more aggressive political figures. Putting in a good word goes a long way in these circles.
Similarly, in 2008 there was a lot of tension around Alexey Petrov’s attempts to take over the bank at the time when Stanishev was Prime Minister. At least this is what I learned from Peevski. Looking back, I am not quite sure whether this was true. I don’t know whether Alexey Petrov had a genuine interest in the bank or not but in those days the State Agency for National Security (DANS) and the Prosecution Service treated Alexey Petrov as they are treating Peevski now. Back thenthe Head of the DANS was Petko Sertov and the flying squad lead by Roman Vasilev held all the reins.
Did you get along with Roman Vasilev?
I have met Roman Vasilev but so have many other people. There is this notorious photograph taken at a cocktail party organised by the Bank. The Capital Weekly kept publishing it to imply that I had close relations with Roman Vasilev. This is an exaggeration. If a relationship must be concealed, it will be concealed. If I were in any way dependent on Roman Vasilev, I wouldn’t have had my photograph taken with him at a cocktail party.
Let us continue about Peevski …
He gradually got under my skin. And I let it happen. This was my biggest mistake. I keep sayint it and I mean it. Wherever he went, Peevski acted as my representative. He presented his wishes as if they were mine. This eventually resulted in my isolation and vilification as Number One Oligarch. Of course, the circle around Prokopiev played a key role too. I remember the statements made by US Ambassador Warlick in 2011. He kept talking about the KTB capital having unclear origin supposedly on account of an unknown equity interest. After I gave an interview to Dikov in 2016, Prokopiev’s impudence was so great as to go to the journalist and tell him this did not necessarily mean that the undisclosed equity interest in KTB was that of Oman. In any case, this does not explain why the Oman Fund and the State of Oman have initiated proceedings against Bulgaria in the International Centre for Settlement of Investment Disputes in Washington D.C.
So, little by little, Peevski became a permanent peresence in my circle. This came to an abrupt stop in 2014.
Other than acting as a political shield, did Peevski contribute in any other way?
He was proactive. When the US Ambassador made this ill-conceived statement, Peevski did a lot to lower the mounting tension surrounding the Bank … At the time Prokopiev’s clique had instigated a check of my business, including an investigation by the European Commission. It received broad media coverage in Bulgaria. By the way, I have to point out that when the investigation was over, having found no irregularities, the circle around Capital Daily omitted to publicise the fact.
I have always worried that something might trigger a chain reaction of panic among the Bank’s clients. This risk was cleverly exploited by people like Peevski who were aware of my fears in this regard. In order to protect KTB I have made more concessions than I should have to accommodate all manner of plainly ludicrous intentions on their part. My aim was to secure adequate media and political comfort that would allow the Bank to continue to operate and grow. One such folly was, of course, the purchase of the Weekend Newspaper after the purchase of many other periodicals.
Did you have direct contacts with Dogan?
I do know Ahmed Dogan but have met him only two or three times in the last 14 years.
Why did you meet?
There was a lot of small talk. He rather fancied himself as an energy expert. Once or twice we talked about the Bulgarian economy and the problems faced by the energy sector.
What did DPS gain from the bank in exchange for providing protection?
Nothing except financing for various ventures that originated from Peevski. But I don’t know how Peevski reported to his superiors.
What were your relationship with the other political parties at the various stages of the Bank’s evolution? For instance, what was Rosen Karadimov’s role at the time of the Tripartite Coalition?
The entire moronic plan for Bulgaria’s digitalisation was conceived by the Peevski – Karadimov tandem together with Veselin Bozhkov [Chair of the Communications Regulation Commission — ‘KRS’]. Hence the problems with digitalisation. In Austria, there’s one multiplex with 12 channels. In Bulgaria, it was decided that there should be four multiplexes with 52 channels, supposedly to create a free market. But there aren’t as many television channels! Anyway. It would be ridiculous to claim that big business in Bulgaria is independent from politics and politicians. Big business here has always been linked to those in power because they set the rules. Especially after 2009. Until then the market was actually growing and there was enough business generated by the market itself. Afterwards business became excessively dependent on the government. Naturally this whetted the appetite of those who represented, and still represent, the State.
Which people in power did you have contacts with before 2009?
I know them all but in reality I did not have any particular contacts with government officials, except for the work I did in a couple of economic sectors. We worked with the energy sector and this necessitated contacts with government ministers and prime ministers since energy is a strategic sector. Likewise, we had contacts with the Ministry of Defence or the interdepartmental committees because of the military/industrial complex. However, this was related to business logistics.
What did politicians want from you to allow you to develop your business at that time?
If someone claims that he’s been doing big business in Bulgaria without being forced to report somehow to someone, then I suggest he should sit a lie detector test and confess. Bulgarian political elite bulldozes businesspeople into making it corrupt because otherwise, it will mobilize the forces of the state machinery.
After Borisov came into power in 2009, the bank went through the period of its fastest growth and greatest strength. What was your relationship with Borisov like?
The timing of Borisov’s first government coincided with the timing of the crisis that affected markets. We followed a different strategy: instead of limiting our activity, we expanded it, following the ancient Chinese saying, “When a storm comes, you should build windmills, not walls”. This was the main reason for KTB’s growth, not the widely spread supposition that Borisov’s government supposedly pumped up some state money into the bank. This is a downright lie. Simeon Dyankov is a bald-faced liar who claims that de did not want to take the money out of the bank because KTB was going to go bankrupt. This is not true at all. The bank worked with the current accounts of several companies from the energy sector and a couple of transport companies who had deposits. There wasn’t a lot of money in this and it didn’t exceed about 10 % of the total leveraged amounts. This lie was proved wrong but, alas, after KTB’s closure.
Well, it’s not a secret that I was on good terms with Borisov although they were quite conflicting. I’ve seen some understanding but a great lack of understanding, too, mainly on the part of his government ministers.
At that time, a lot of market opportunities were created, both due to the crisis and the withdrawal of foreign banks. Our philosophy has always been to do merchant and investment financing, i.e. to look for project financing, to look for challenges, and there are many challenges during a crisis. This is how we acquired some companies during the crisis which wouldn’t have survived otherwise. I’m talking here about Rubin in Pleven, the factory in Parachin, and the shipyard in Rousse. Petrol AD owe their survival to us. We’ve also had some targeted acquisitions such as Vivacom. I thought it was a good deal that would reap a profit. The media that belong to Peevski wrote, however, that Vasilev took part in Bulgartabac’s privatisation to make money. Wow, what a shame! Isn’t it shameful to participate secretly, not to be able to show yourself like him and the rest of the beneficiaries! This is exactly why I did this – to make money. Of course, my practice was to bring back to the bank the profits from the so-called ‘fuses’ created by Peevski’s servant, Biser Lazov. This was my goal.
No wonder we saw such rapid expansion.