In a surprise move PM Boyko Borissov sacks CEO and entire board of Bulgarian Development Bank

The bank is notorious for lending substantial sums to companies close to power

Stoyan Mavrodiev (left); PM Boyko Borissov (right)

Capital Weekly reported last week the Bulgarian Development Bank had issued a 75-million-leva loan to a company with 5000 leva profit. This was only one in a long series of large-scale loans the state-owned (and financed) bank - under now former CEO Stoyan Mavrodiev – have given out to questionable beneficiaries. Before this Mavrodiev was the head of the Financial Supervision Commission while the fourth largest Bulgarian bank, the Corporate Commercial Bank (KTB) went bankrupt.

Parliament recently voted to transfer an additional two 700-million-leva packages to BDB to use to support suffering businesses during the coronavirus crisis. These have not yet been tapped, Mavrodiev said in an interview. The 75-million-leva loan was by his own account, business as usual. The company, St. George Group would use the funds to buy bad credits from two banks. BDB’s management issued a statement attempting to explain the loan as part of a new program of the bank, designed to increase liquidity in the financial system.

In any case, amid the coronavirus crisis, ‘business as usual’, apparently did not sit well with the PM. He joined the daily press briefing dedicated to the COVID-19 crisis on Wednesday, April 8 and took the floor specially to announce he will be ordering the removal of Mavrodiev along with the entire board of the bank. "Let me answer the question you are not asking me," he opened, before announcing his "disgust" with the decision by the bank to loan the 75-million.Such a public stance in of itself is very unusual, let alone it being a prelude to sacking the entire high management of the bank.

The state-owned bank is meant to help out medium and small businesses, but is instead known for giving out scandalous over-the-top loans to companies, close to power. Any loan exceeding five million leva must be approved by the Economy Minister, however, so the bank’s dealings are almost always approved by the government, as should have this one as well.

Observers suggested the move by PM Boyko Borissov is an open clash with the Movement for Rights and Freedoms (DPS) lobby in the government. While DPS is not part of the majority, nor an opposition, the party is thought of as the cornerstone of Bulgarian power, be it in terms of control over the media landscape or the vast network of connected companies close the party, which have essentially monopolized the business of winning public procurement contracts.

In an interview with bTV's Tsvetanka Rizova, Mavrodiev commented on his removal and asserted the PM had obviously been greatly misled by fake news and that "this attack" comes from the media group Capital, "which acts as the terrorist organization IRA." 

According to official information, Mavrodiev was the highest-payed government employee in the country with the staggering 35’000 monthly salary. For context, the PM’s salary is about 6500, while president’s is about 8500.


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