Scandal! Father of currency board caught Commander in corruption

Over 20 years ago, Steve Hanke furnished proofs to President Stoyanov, the latter called up Kostov to warn

Ivan Kostov

Prof. Steve Hanke, desighner of the currency board in Bulgaria, caught in corruption the ex-PM and architect of the behind-the-scenes economic circles in the country Ivan Kostov. Hanke described the case in an interview to bTV where he was invited to comment on Bulgaria’s entering the Eurozone waiting room.

To utter bewilderment of Svetoslav Ivanov, a journalist who is otherwise loyal to the mainstream of Ivo Prokopiev, the world renowned economist related how over 20 years ago he brought a briefcase with documents incriminating the Commander in corruption to then President Petar Stoyanov.   

“After we curbed hyperinflation in 1997, when I was adviser to President Stoyanov, I told him that the next problem we have to tackle is huge, and it is corruption. He agreed and every time we met I would reiterate that the problem is corruption and he would answer that nothing can be done without evidence. One day we met again. Let me immerse you in the atmosphere: we were sitting in a small office of Stoyanov next to the big presidential office. We were with Ms Hanke, Stoyanov and the interpreter. I just came back from the US and mentioned once again that we must curb corruption and he replied, ‘Professor Hanke, I told you thousand times that if you don’t have evidence I can do nothing. Do you have evidence?’ I replied that I already have evidence, he looked at me confused and asked, ‘Where is it? Then I showed him this. The briefcase I always carried with me in Bulgaria. It was full of documents proving cases of corruption. I took them out and he asked if he may copy them. While the secretary was copying the documents Stoyanov called up Kostov, who then was the prime minister, and started speaking roughly to him on the phone. I didn’t understand what he told him as they spoke Bulgarian but the message was clear: Professor Hanke has caught you red-handed,” Hanke related. He further explained that now he was waiting to see what the prosecution would do.      

“I don’t know the details of this case. I advised the president, he took the documents but I don’t know what he did with them. I know that he informed Kostov right away. If I had to talk with the prosecutor I would say that they got into hot water with Kostov and that he probably nailed the right man because corruption was permeating. For one concrete case I really had evidence,” Hanke explained and recommended to ask Stoyanov himself about the case. The economist also criticised another problem in Bulgaria, namely that the judicial power is controlled by the behind-the-scenes circles around the Commander.

“And, by the way, it depends on the prosecution how to put to an end it all. The problem of the prosecution and judicial system in Bulgaria is that the “wolf has been long in the fold”. I mean that the judicial system itself is corrupt. We don’t know what will happen,” Hanke was adamant.

The story told by Hanke, one of the first financiers who alarmed that there is a serious problem with CorpBank made bankrupt by Tsvetan Vassilev, the banker installed by the Commander, is borne out by hundreds of journalistic inquiries which expose Kostov and his oligarchic cronies as people involved in monstrous corruption and plundering of the state. Under Kostov’s rule the mafia style privatisation was carried out of the state-owned enterprises thanks to which he went down in history as the Commander of the murky transition who for ever gave up Bulgaria’s future for lost. Factories and plants owning assets worth BGN 20-30bn were sold out virtually for small change as only BGN 2bn in fresh money went to the state treasury. Kostov installed Tsvetan Vassilev as a banker in CorpBank, Sasho Donchev got hold of the natural gas tap. Ivo Prokopiev laid hands on Kaolin AD, the only enterprise on the Balkans for extraction of kaolin and quartz sand for construction industry and paid for it only BGN 6,4m, as 10% was paid in cash and the rest in compensatory notes worth between BGN 0,07-0,11. Prior to that he became the proud owner of the biggest winery in Bulgaria, Damianitsa purchased for $300,000 in cash. Of that sum the privatisers paid only $60,000 given the fact that there were 2,4m bottles in the company’s storehouses worth over $4m.

At that time Ognyan Donev, in turn, started his first halftime in acquiring Sopharma. Nowadays, Prokopiev and Donev also found themselves on the wrong side of the bar. Prokopiev for the affair with the sale of the state’s minority share in EVN, Donev for tax evasion worth BGN 62m. His case is submitted to the appellate court after the court of first instance, Sofia City Court, acquitted him. Prokopiev is charged with money laundering related to Kaolin as the Anti-Corruption Commission for illegal Assets Forfeiture (ACCIAF) imposed restraint on his and his wife’s single shares to the amount of BGN 200m.              


More about the mainstream of Ivo Prokopiev and other oligarchic offspring of Ivan Kostov see here.

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