* Corpbank clients staged week-long bank run in June
* Corpbank seen as having close ties to the state
* Bulgarian parliament could be key to rescuing Corpbank
By Matthias Williams and Tsvetelia Tsolova
SOFIA, July 25 Bulgaria's President Rosen
Plevneliev urged lawmakers on Friday not to try to hush up the
activities at troubled lender Corporate Commercial Bank
(Corpbank) or risk opening themselves up to blackmail
about their connections to it.
Clients unnerved by reports of shady deals by Corpbank's
main owner withdrew more than a fifth of deposits in a week-long
bank run in June, forcing the central bank to take control of
the lender, shut down its operations and order an audit.
The main owner, who was locked in a public feud with a rival
at the time of the run, has repeatedly denied any wrongdoing and
said the run was a plot hatched by his competitors.
The crisis has put renewed scrutiny on the investment
climate in the poorest and one of the most corrupt countries in
the European Union. Protests against the murky ties between
politicians and businessmen raged in Bulgaria for months last
year, bringing tens of thousands of people onto the streets.
Corpbank was seen as having close ties to the state as a
large proportion of state firms kept their money there.
Plevneliev compared the situation at the lender with the
period after Bulgaria shook off Communism in 1989, when secret
files compiled by the Darzhavna Sigurnost, the Soviet-era secret
police, were used to blackmail politicians about their past.
"If we allow the truth about the bank to be brushed under
the carpet, traded off, if we turn these files into the new gold
mine for blackmailing politicians like we did with the files of
Darzhavna Sigurnost, it would be a strategic mistake for the
state," he said.
The Bulgarian parliament could be key to rescuing Corpbank,
as for example it has the powers to approve or reject proposals
by the government to raise new sovereign debt in order to
finance a state bailout of the lender.
In his first address to parliament since the government
resigned on Wednesday, Plevneliev said Bulgaria now had the
chance to end what he described as a pretend 25-year-long
transition from Communism to democracy.
"If the whole truth about the illegitimate connections of
politicians, judges, prosecutors and public figures with the
Corporate Commercial Bank is revealed, then Bulgaria's "pretend"
transition period will come to an end and the genuine one will
begin," he said.
Preliminary results of an audit carried out by E&Y, Deloitte
and a local consultancy showed activities in the bank
"incompatible with the law and good banking practices",
according to the central bank. It also said that crucial
information about Corpbank's loan portfolio was missing.
Four officials at the bank were arrested after the results
of the preliminary audit were announced, and the interior
ministry said the audit indicated a "serious felony" had taken
place at the lender.
Bulgaria was seen as the Soviet Union's most pliable ally
before fall of the Berlin Wall, but has since joined NATO in
2004 and the EU in 2007.
(Editing by Raissa Kasolowsky)