MUSCAT/SOFIA: Oman's biggest sovereign wealth fund has started legal action against the Bulgarian government over the collapse of Corporate Commercial Bank (Corpbank), a source at the fund told Reuters on Wednesday.
Oman's State General Reserve Fund owned a 30 percent stake in the Balkan country's fourth-biggest lender, which was felled by a bank run and shut down by the central bank, triggering the country's worst financial crisis since the 1990s.
News of the legal action came as a Bulgarian parliament commission on Wednesday accused the main shareholder of running Corpbank as a pyramid scheme under the lax supervision of the central bank and the intelligence service.
Corpbank's main owner, a Bulgarian tycoon called Tsvetan Vassilev, has been charged with embezzlement since the bank run and an independent audit ordered by the central bank forced Corpbank to write off nearly two-thirds of its assets. Insolvency proceedings in Bulgaria are ongoing.
A consortium of investors including the Omani fund had submitted proposals for rescuing Corpbank in October, but a month later the central bank stripped the lender of its licence and ended any chance of a turnaround.
"The arbitration is in European courts," said a source at the fund, speaking on condition of anonymity. "Our demands are to get the book value of our investment as per the day the bank was stopped as well as interest," the source added, declining to give further details.
"The Finance Ministry does not have information of launched cases against the Bulgarian state at European courts, nor for registered arbitration cases against Bulgaria on the initiative of the State General Reserve Fund of the Sultanate of Oman," the Finance Ministry said in an email.
The run on Corpbank started after reports of shady deals at the lender surfaced and amid a public dispute between Vassilev and a business rival.
Vassilev, who is in neighboring Serbia and awaiting a court decision on whether to extradite him, has denied any wrongdoing and said the bank run was a plot hatched by his competitors in collusion with some state officials.
The fallout continues. Prosecutors have charged two auditors from the Bulgarian unit of consulting firm KPMG with not reporting shortcomings in Corpbank's activities. KPMG did not comment on the charges. Two former central bank deputy governors are also being investigated. They have denied wrongdoing.
The parliament commission's report said more than two-thirds of Corpbank's loans were extended to firms linked to Vassilev or to shell companies, echoing the findings of the audit commissioned by the Bulgarian National Bank (BNB).
"The bank is one financial pyramid with its majority owner at the top," said Snezhana Dukova, a member of the commission that was set up in March, accusing regulators of being "asleep".
The report said Corpbank could not profit from the loans it was extending to favoured parties, meaning it was forced to raise funds by offering interest rates to depositors that were double the average rate for the sector in Bulgaria.
"Failure to address these practices at Corpbank has allowed the bank to function as a pyramid scheme. Here lies the big responsibility of its main shareholder Tsvetan Vassilev, the management of the bank as well as of the banking regulator BNB," the report said.
The Corpbank saga has soured relations between lawmakers and the central bank. Central Bank Gov. Ivan Iskrov tendered his resignation in June, months before his term is due to end, and hearings to choose a successor are ongoing. Iskrov last year accused parliament of using the crisis as a "political toy".
Oman takes legal action against Bulgaria over bank collapse
Oman takes legal action against Bulgaria over bank collapse
Emerging markets driving global growth despite rising risks: Saudi finance minister
RIYADH: Emerging markets now account for a growing share of global output and are driving the bulk of world economic expansion, Saudi Arabia’s finance minister said, even as those economies grapple with rising debt and mounting geopolitical risks.
Speaking at the opening of the annual AlUla Conference for Emerging Market Economies on Feb. 8, Mohammed Al-Jadaan said the role of emerging and developing nations in the global economy has more than doubled since 2000, underscoring a structural shift in growth away from advanced economies.
The meeting comes as policymakers in developing markets try to keep growth on track while controlling inflation, managing capital flows and repairing public finances after years of heavy borrowing. Saudi Arabia has positioned the forum as a platform to coordinate policy responses and strengthen the voice of emerging economies in global financial discussions.
“This conference takes place at a moment of profound transition in the global economy. Emerging markets and developing economies now account for nearly 60 percent of the global gross domestic product in purchasing power terms and 70 percent of global growth,” Al-Jadaan said.
He added: “Today, the 10 emerging economies and the G20 alone account for more than half of the world’s growth. Yet, emerging markets face a more complex and fragmented environment, elevated debt levels, slower trade growth and increasing exposure to geopolitical shocks.”
Launched in 2025, the conference this year brings together economic decision-makers, finance ministers, central bank governors, leaders of international financial institutions, and a select group of experts and specialists from around the world.
