Банкеръ Weekly



The solid draining of funds from Air Traffic Control (ATC) began during the government of former socialist premier Zhan Videnov. The ministers of finance and transport - Dimitar Kostov and Stamen Stamenov ordered ATC's management to launch BGL600MN to Balkan Airlines from the Aviation Service System Development Fund by December 6, 1995. That amount, along with BGL800MN from the financial ministry's special account, had to be used for the release of two Airbus A 320s, arrested a month earlier in London and Amsterdam because of unpaid lease fees to the Japanese Orix company. ATC transferred BGL600MN to an account of Balkan at the BNB, where the amount was converted into US dollars at the daily exchange rate (BGL70). Thus, USD8.560MN was remitted to the company's account at BULBANK and was then tranferred abroad. The loan was launched as an interest-free temporary financial aid, repayable by December 31, 1998. It was paid off within the deadline. But the USD/BGL exchange rate was already 1:1,665. So, when ATC got back its money it has already depreciated 24 times. The second time ATC self-stinged itself was in the beginning of 1996. According to an instruction from the finance minister Dimitar Kostov and BNB governor Lyubomir Filipov, all state-owned enterprises were obliged to transfer their funds from private to state banks. However, ATC's management did not observe the instructions and burried 50% of its assets (USD15.5MN) in bankrupt credit institutions: USD6.5MN in FPB, USD7.5MN in Elitbank, and USD1.5MN in TSBank.During Stefan Sofianski's caretaker cabinet the managers of ATC transferred USD3MN to Municipal Bank, which has not been paid off so far. The was intended to prove Municipal Bank's right to be relicensed by BNB's Bank Supervision Department.Due to an agreement, signed by the then minister of transport Wilhelm Kraus, ATC launched a USD3MN interest-free credit to Balkan Airline for a 25-day term. The amount was remitted at the exchange rate of BGL3,000 per USD 1. Balkan paid it off with a 20-day delay when the exchange rate was already BGL1,500/USD1. All the above described violations were established by an inspection, ordered by the head of Sofia's State Financial Control Department, dated June 9, 1997. However, it was not the last time that ATC was drained. Right after the end of the inspection its managers signed an agreement with sole trader Plamen Naydenov for restructuring and joint exploitation of a hotel in the Vitosha mountain. USD8.5MN was paid for implementation of the agreement.On June 15, 1999 when Balkan's exclusive buyer was already nominated, ATC launched another credit to the air carrier worth USD3MN. The agreement obliged Balkan to pay off the loan until September 30, 1999, and no interest would be charged by that date. The credit has not been paid off yet. The trustees in bankruptcy of the air carrier, which was declared insolvent on March 12, claim that interests are currently being accumulated on it and had reached BGL1.522MN by mid-2001.The state-owned ATC launched yet another USD6MN to the Netherlands-registered Balkan Airlines Holdings B.V. on December 15, 1999. Newspapers announced earlier that the company was 100% controlled by the new owner of Balkan, Gad Zeevi. Another agreement from the same day transferred the amount from the Dutch company to Balkan. That is how this company became the second largest creditor of the Bulgarian air carrier.

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