Банкеръ Weekly




Recently the Deputy Governor of BG National Bank (BNB) Bozhidar Kabakchiev amazed the BANKER weekly with a sensational statement. Since the beginning of 2000 till the end of April 2001, the foreign financing received and registered by Bulgarian companies in the central bank exceeds DEM2BN.
Officers from BNB Banking Supervision Department claim that there are more and more western associations, foundations and other types of unions, including religious ones, that transfer money in Bulgaria and finance Bulgarian companies. But the word credit is usually carefully avoided in the agreements signed between the two sides. According to BNB, this type of financing is not illegal but is too risky because operations are not controlled by the central bank.
In the beginning of 2001 BNB was shocked to receive two applications for registration of foreign financing worth USD1.2BN. The applications were made by the ALIDA Economy Development Association, registered in the village of Vetren, near Silistra, in 1997.
Early in 2001 ALIDA asked BNB to register the amount of USD240M it expected from Black Gold Oil Company, registered in the US off-shore Dellaware state.
Another application followed immediately - this time for USD944M. The money was to be paid by the London Deanbrook company. The huge amount of USD1,184M which exceeds all foreign investments made in Bulgaria in 2000, embarrassed the central bankers. Inspectors from the Banking Supervision Department were sent to ALIDA to check if it hasn't exceeded its rights or acted as a licensed credit institution. Inspectors did not find violations but BNB refused to register the money transfers from abroad.
It explained that the first transfer agreement had been signed by ALIDA and Black Gold Oil Company in the end of 1999, before the Bulgarian Currency Law was enforced. The second registration of capital import by Deanbrook was refused because the agreement did not prove the London company was a creditor of ALIDA.
Having refused to register these amounts, BNB sent the case to the Financial Investigation Bureau (a department of the Ministry of Finance) last April. The bureau had to check if ALIDA isn't laundring money. It has not announced the results yet. Known for his reticence, its head Nikolay Ivanov refuses to give any information. People close to him say that the bureau has informed the Prosecutors' Office about ALIDA's operations. The office run by Nikola Filchev wasn't likely to talk either.
ALIDA's partner Yanko Haralambev told The Banker weekly he was not disturbed by the investigation at all. ALIDA's financing scheme will start operating effectively in a month, he said. It will be no surprise if the village of Vetren appears the Balkans' investment centre.
The Economy Development Association was registered in accordance with the Law on Obligations and Contracts as a non-person union of legal and physical entities which keeps their cultural, social, economic and juridical independence, protects their interests and supports their development. Beside unlimited liability partner members, said Mr. Haralambev, the association also includes observer members. They are individuals and companies which present their projects to the association and search for financing. According to Mr. Haralambev, the projects are worth from USD10,000 to USD25M, but entering the association is not easy for them. Applicants should present a pile of documents and in case of being approved, should pay initial EUR5,000 and declare voluntary participation.
The association can use the payments to finance its activity, explained Mr. Haralambev, but it has to repay the money within five years. ALIDA guarantees the payments with a 25% annual accrued interest. Mr. Haralambev assures that payments will be restored, because the scheme for financing the projects is the most safe one. It uses a series of bills of exchange, promissory notes and insurance policies. The collateral includes the supported project, the private property of the representative of the company, the property of the company and the property of partners and relatives. This provides the unlimited liability of the borrower.
The scheme Mr. Haralambev described is quite complicated and the mystery of its participants doesn't provoke confidence. The amounts ranging from USD1.5BN to USD2BN he intends to attract through it sound fantastic. What has ALIDA done to gain the trust of international capitals? Isn't it just the EUR5,000 membership fee?

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