Банкеръ Weekly



CCB WANTS ACCUSATIONS OF FRAUD TO BE BROUGHT AGAINST THE BUSINESSMANAvgust Michev was executive director of Hyundai Bulgaria in the 1994-1998 period. A check in company registers shows that the businessman is presently owner and manager of 14 firms (trading, publishing, priniting and high-tech). His name was also involved in the scandal regarding the software for the National Health Care Insurance Fund (NHIF). In November 2001 Avgust Michev rebuked NHIF's management for improper holding of the tender and lavishness in the deal with the Cypriot offshore company AremisSoft. The Director of AremisSoft for Bulgaria Vasko Kolev, on his part, accused Avgust Michev of racketeering against a promise for settling the payments between the company and the NHIF. It is not known if Avgust Michev has initiated proceedings for slander against Vasko Kolev.But Central Cooperative Bank (CCB) might cause problems for the former executive director of Hyundai Bulgaria. CCB's managers have approached the Bourgas Regional Court, insisting that it should accept new evidence regarding their argument with Hyundai. They claim that the gathered documents give grounds for taking the businessman to task under the provisions of article 212 of the Penal Code for gross embezzlement against the bank. If CCB's demand is accepted by the court and Mr. Michev is found guilty, his punishment shall be up to 10-year imprisonment and confiscation of half his property.From February 20 to 22, 2002 Avgust Michev appeared as defendant before the Bourgas Regional Court, where he is sued for using deliberately documents with false content under articles 311 and 316 of the Penal Code. The bill of indictment followed a prosecutor's inquiry after complaints against him were lodged with the court by clients of Hyundai Bulgaria. The State brought a suit against Avgust Michev, accusing him that in 1996-1997 he sold 140 Hyundais worth a total of USD1,038,642, presenting invoices with lower prices. The cars were purchased from the eponymous South Korean company and after their delivery at the Bourgas Free Trade Zone the customs authorities were presented documents where the prices were half the real ones.The prosecutors now claim that the revenue was then defauded by dozens of thousand levs due to unpaid customs duties.Mr. Michev explained that in that period the South Korean car manufacturer had sent to the customs authorities in Bourgas invoices with reduced prices due to defects in the imported vehicles.If Avgust Michev is found guilty of commiting a crime he may get up to 5-year imprisonment. But if the court accepts the documents, gathered by CCB, he might get up to 10-year imprisonment.The criminal action against Avgust Michev is watched closely by CCB's managers because it is directly connected with the USD1,038,642, claimed from the bank by Hyundai Corporation. Since 1998 the South Korean company is sueing CCB to pay the above sum under the bank guarantee, issued in favour of Hyundai for the 140 cars, delivered in 1996. Hyundai Bulgaria had declared to CCB a price of USD 7,750 for each vehicle. As the Bulgarian company has not paid to the South Koreans the imported Hundai cars, since 1998 they have been claiming their money from the bank. However, CCB refuses to pay because back in 1996 it was informed that the total price of the cars was not USD1,038,642, but USD477,050, i.e. USD4,740 per vehicle.The South Koreans instituted legal proceeding against the bank through their representative in Bulgaria Kalin Damyanov. Therefore, USD1,038,000 under CCB's account in BULBANK has been blocked. The legal dispute has not been settled yet and within the December 1998 - February 2002 period CCB suffered losses exceeding USD231,000 because of the blocked money.CCB's lawyers claim that as executive director of Hyundai Bulgaria Avgust Michev has intentionally kept double turnover of documents. They quote a letter from Mr. Michev to Hyundai Corporation, dated October 30, 1997, in which he informs his South Korean partners that the prices are different in the proforma invoices according which we pay for the cars and in the trade invoices which you issue. This places us at an exteremely ticklish situation in front of the tax and customs authorities. Such practices may create problems for Hyudai, for which we have spoken many times.CCB has issued the guarantee for the delivery of the 140 cars on the basis of the documents, presented to it by Hyundai Bulgaria, where the price is USD7,740 per vehicle. At the same time the company has declared much lower prices in front of the customs. Therefore, CCB's lawyers claim that the bank has been deceived by the documents, presented to it by Avgust Michev.

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