Sven Giegold: ECB should start ‘digging into’ financial crime in Bulgaria

Sven Giegold during the EP Plenary Session on 9 June 2021. [European Parliament Multimedia Centre]

To join the Euro, Bulgaria needs to tidy up its record on financial crime, and the European Central Bank (ECB) should do its job and finally start “digging into this,” MEP Sven Giegold told EURACTIV in a telephone interview.

Sven Giegold is a German politician who has been a member of the European Parliament since 2009. He is a member of the Alliance 90/The Greens, part of the European Green Party. He is a member of the Committee on Economic and Monetary Affairs.

He spoke to EURACTIV Senior Editor Georgi Gotev.

You wrote to me on Tuesday (22 June) via Twitter that you were concerned about Bulgaria and its bid to join the eurozone. Can you be more specific?

I’m really worried because what I hear and when I read all the evidence presented by the Organized Crime and Corruption Reporting Project, there is a structural problem in Bulgaria, first with corruption, but as a consequence, also with financial crime in the financial sector.

There seems to be, in particular with a smaller bank, a certain level of concern that decisions are not always taken based on the business case, but because you have the right people in the right institutions, and this goes against my understanding of EU governance for the financial sector.

As you know, I was following closely money laundering cases in many member states, including Germany, but also in the Baltics, where we had a very similar case when we accepted the three Baltic countries in the eurozone. And afterwards, we had this large crisis. This time, however, we said: first, new members should enter the banking union, and only then the euro.

However, the ECB seems to shy away from really looking into the smaller banks. I think there should be a stronger commitment, in particular by the ECB, not only to look at the largest banks, but also at the LSIs [less significant institutions. And so far, there seems to be no willingness from the ECB to really dig into this.

We have had in the perhaps a very similar situation in the Baltics, everybody knew that financial crime was not properly prosecuted, at least in Estonia and in Latvia. Some years after joining the Euro, some of the largest financial crime cases were uncovered. Bulgaria had a lot of problems in the insurance sector, with IOPA (Independent Oversight and Performance Assurance).  And now I hear from my sources in the ECB, that they are well looking into the larger banks, but they are not daring to look systematically into the smaller issues.

Can you name such smaller banks?

Well, one interesting one is, of course, the First Investment Bank. And that is where my sources tell me this would be a bank, which should seriously be looked at. But in our hope, so on this one, there was even a certain assessment. But the question is, how deep did it go into the into the AML [anti money-laundering] issues, and this is what really matters. And I can only say that, in order to join the Euro, one needs to tidy up with financial crime. And I don’t see the progress in Bulgaria in terms which is normally measured by money seized, prosecutions, supervisory power and practices. I have no evidence that things have changed.

And I think before joining the Euro, this has to be changed. And therefore I’m concerned that the Euro group last week has given greenlight [to Bulgaria] without seriously discussing the matter of financial crime, which is needed in order to take that decision. Quite the contrary. Mr. Donahoe [Paschal Donohoe, President of the Eurogroup], after the meeting has only referred to the ERM mechanism. And this, of course, has no financial crime angle. And this was exactly the mistake made in the case of the Baltics.

That’s my view and political message – it’s not about Bulgarian politics. My messages to the ECB is it’s not enough to look at the Big Bang, you have to take into the LSI. And if you don’t, you are not credible with your preparation for Bulgaria joining the Euro in general. I’m very happy if more countries join the euro.

More in general, how do you assess corruption in Bulgaria?

I can only say that a few years ago, we in the Green group commissioned a study on corruption in Bulgaria and your findings on the state for exactly what we found. And, in particular, we were very concerned that there are basically no prosecutions when it comes to corruption. So, unlike Romania, as you are knowing they are both countries under the same surveillance system after accession, while in Romania, the institutions have prosecuted. Unfortunately, the key people were then driven out by the so-called socialist government at the time. But in Bulgaria, correct me if this has changed, but my impression is, there is no effective prosecution at all.

Actually the situation with the ineffective prosecution is getting worse and worse. But your statements could be misinterpreted, because we have a caretaker government in Bulgaria, we are in a pre-election campaign and former PM Boyko Borissov may say: We have these kind of messages from the EU because I’m not in charge, so vote for me. 

That would be a ridiculous remark. I have been after financial crime since I left university 25 years ago. My motivation is neither national nor party political, I simply don’t like financial crime. Many say I have an obsession with this. To claim that my messages would harm the caretaker government is totally absurd, because these inter linkages between politics, banks, and powerful economic interests in Bulgaria, are much older than the new government.

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