Банкеръ Weekly



On June 16, 2003, the Prosecutor's Office will have to present in front of Sofia Regional Court (SRC) convincing arguments in favour of its claim for a new, third in a row, legal-accounting experts' report on the criminal case, concerning Biochim's hidden privatisation. The defendants on the case are Borris Mitev, former chairman of the bank's Board of Directors and its executive director, his deputy Zhivko Valchev and the former economist at the Foreign Credit Relations Directorate of the bank Ilian Shamatanov. The three of them are accused under Article 282 of the Criminal Code for attempting in 1993 to transfer the bank's control to firms, related to the notorious Dilian Doron.This criminal case has been lagging in court for more than three years and sixteen hearings have already taken place. The most recent was on April 21, 2003, when the state prosecutors demanded a new legal-accounting experts' report to be carried out. The two previous reports have come to the conclusion that the attempt for hidden privatisation has not caused great financial damages to the bank. These statements are in absolute contradiction to prosecutors' allegations according to which Mitev and Shamatanov had caused damages of BGL384.761MN (prior the lev's denomination) and Valchev - of BGL711.871MN (prior the denomination) with their actions in 1993. SRC announced it will accept prosecutors' claim, but only if it's backed with substantial evidence and gave them time of nearly two months (by June 16) to come up with it.According to the indictment, the operation for Biochim's hidden privatisation had been started on March 23, 1993, when the bank's Board of Directors decided to increase its founders' capital from BGL80MN (prior the denomination) to BGL600MN (prior the denomination). This had been supposed to happen by launch of temporary certificates which to be offered to all of the bank's shareholders at the time (the Bulgarian Consolidation Company owned a majority state of the capital then). In compliance with the Commercial Code each of them had been able to purchase proportional part of its stake from the capital increase. Only then, in case there remain unwritten shares, they were to be offered to new investors.By Order N66 from June 3, 1993, issued by Mitev and Shamatanov, had been printed the temporary certificates to fill in the capital to BGL600MN (prior the denomination). According to prosecutors, this action alone is to be considered as two violations of the law. They say that there had not been any need for a bank's capital increase and that the order had been issued only to enable Dilian Doron to buy temporary certificates and to become majority shareholder of Biochim. Prosecution considers the certificates as being in violation to BNB's regulation, permitting Biochim's capital to be put up only to BGL160MN (old).The defendant Borris Mitev, however, absolutely denies the prosecution's claims. He says that the decision of June 3, 1993 had been taken so as Biochim to be able to fulfil BNB's requirements for minimum capital adequacy ratio of 8 per cent. These requirements had been written in BNB's Regulation N8, published in the March 18, 1993 issue of the Official Gazette. It reads that by May 31, 1993, all banks which perform deals in and outside the country (like Biochim) should have minimum net worth of BGL500MN and their capital base should be no less than 8 per cent. This ratio is calculated by dividing the bank's net worth to the total size of its risk assets (deposits, credits, shareholders' stakes, immovable property).At the last court session (on April 21) Mitev handed to the regional magistrates the rule of the Supreme Cassation Court (SCC) from March 12, 1998. It turns down Doron's claim on Biochim's paying BGL95MN (prior the denomination) as interests on the sums, deposited on payment accounts at the bank for the purchase of temporary certificates. Mitev says that to SCC's rule are attached arguments which prove that the accusations against him are unsustainable. He is convinced that SRC will admit his rightness.

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