A WEALTHY Arab sheikh has filed a lawsuit alleging that he was defrauded out of a €100m investment in a Bulgarian bank days after Austria lifted a veto on the country joining Schengen.
Dr Adil Saeed Ahmed Al Shanfari is taking legal action against Bulgaria’s Investbank AD after alleging they forged documents to steal his shares which by that time were worth around €100m when he started asking uncomfortable questions about the way the bank was being operated.
The complaint, a copy of which was seen by newsX, was filed on Monday at the Sofia City Court and is a major embarrassment for Bulgaria just days after Austria lifted its veto on the country’s entry into the Schengen group of 27 European countries that have abolished internal border checks.
Adil Saeed Ahmed Al Shanfari’s legal team say he purchased shares in Investbank AD as part of a capital increase in 2011 and 2013 that gave him shares worth 50 million Bulgarian lev, representing 31.7% ownership.
This rose further to €100m with additional investments in the bank, but he claims that when he clashed with his other partners over the bank’s activities, he discovered he had been removed as a shareholder from the Central Depository, and his shares were transferred to another entity, Festa Holding AD, without his consent.
The filing was confirmed by the Sheikh’s lawyer, Veselin Georgiev, who said it was filed at the court against defendants Festa Holding AD, which received the shares, and Investbank AD.
Gresham Barrett, who served as special adviser and chief of staff to the executive director of the World Food Programme and spotlighted the case of the Sheikh, demanded the US do more to tackle corruption in foreign countries, especially with regards to Investbank AD.
In an article he wrote in the Washington Times he also quoted former US Ambassador to Bulgaria John Beyrle, who described Investbank in a classified diplomatic report as a “bad apple bank”, noting that its business “practices are repeatedly cited as questionable or shady, funnelling money for known criminals in money laundering schemes”.
Investbank AD holds a full banking licence and has a two-tier management structure. The primary shareholders are Festa Holding AD (83.8%), Petya Barakova-Slavova (10.55%), and other minority shareholders. Barakova-Slavova is also the main shareholder at Festa Holding AD and controls directly or indirectly controls 93% of Festa Holding AD.
Investbank is one of Bulgaria’s biggest banks, and during the past two years, operating profit has increased by a quarter while total assets are up 13%.
The bank claims he signed a written transfer mandate, but Al Shanfari denies this, having filed affidavits to confirm his lack of involvement, and also claims that the money allegedly paid for the shares was never transferred to his bank account.
Al Shanfari has filed lawsuits and complaints with various Bulgarian institutions, including the Registry Agency, DANS, the Financial Supervision Commission, the Bulgarian National Bank (BNB), and the President of Bulgaria.
In an interview, he said: “I never believed that something like this could happen with a country in Europe.”
He said that despite complaints to the relevant bodies, no thorough investigation had been conducted, and the complaints have been largely dismissed or left unanswered, with officials refusing to carry out an in-depth investigation into the alleged theft.
In his legal complaint he said: “Regardless of all legal actions taken by me to alert the responsible institutions on the committed crime, involving the confiscation of the shares owned by me, and the efforts to protect my property, the official authorities of the Republic of Bulgaria did not take any measures.
“Although Bulgarian National Bank and Investbank AD claim that the documents submitted to them (a letter and an order) have been signed by Adil Saeed Ahmed Al Shanfari, there is not a single piece of evidence that such documents have originated from me.
“Under no circumstances have I ever signed such an order for the disposal of the shares owned by me, and I have never informed the Bulgarian National Bank about my intention to sell the Investbank AD shares to Festa Holding AD.
“In this sense, there is a preparation of documents which only appear to have been signed by me. I have not received in my bank account the eventual price for the allegedly sold shares, as required by the Bulgarian legislation…”
Further, Al Shanfari alleges that a prior agreement to sell him up to 70% of the shares in Investbank was not honoured, which would have meant any share sale of his minority holding would have been rendered impossible anyway.
“None of the institutions alerted by me in the Republic of Bulgaria took any measures to reveal the fraud perpetrated with the financial instruments held by me,” Al Shanfari goes on.
He added it was particularly shocking that something like this could happen in Europe, saying: “Despite the supposedly stringent regulations within the European Union, it seems that Bulgaria offers loopholes that are being exploited by international actors.
“How much trust can be placed in the safety of investments in a country that is neither able nor willing to prevent or properly investigate such cases of fraud?”
The FSC was contacted by newsX about the filing and claimed that “Investbank AD is not a supervised entity ?? the FSC” and Investbank itself insisted that they comply with “all banking regulations and statutory requirements of Bulgarian and European legislation” but declined to address the allegations of the stolen shares.
This case, however, according to Gresham Barrett, indicates that not enough is being done, saying: “Our political leaders must take strong, decisive action to clean up the corruption in Eastern European countries and promote the rule of law.”
