Firstly, I apologize about my Bulgarian
language. I have been here for five years and I can understand 60 %
of the Bulgarian language but it is very hard for me to speak.
Anyhow, I am not feeling comfortable not to speak Bulgarian. I
apologize once again.
I have listened carefully to the speeches of Mr.
Enste and Mr. Ikiz. They gave us useful information about the
shadow economy. I fully support their opinion. As a man who is
coming from the practice I want to give some examples.
I would like to draw your attention to the banking
sector and to make short explanation about how the shadow economy
affects the whole economy through banks.
What is the role of the banks - to collect money
from the people and to distribute this money for the economic
activities. Briefly - to create capital accumulation. Now, the
problem is beginning at the distribution stage. In order to grow
their business, each company needs support from the banks. So, a
lot of companies are coming to the banks asking for credit
facilities. After their application the bank is examining their
Balance Sheets and other figures. From the practice some
conclusions appear:
1. Almost all companies are not showing their real business
turnover and real figures. The firms are decreasing their turnover
and (or) increasing their expenses in a formal way. The reason is
not to show huge profit. This fact shows that the grey economy is
still effective in Bulgaria. The banks cannot have clear picture
for the company's business and this fact is increasing the risk of
the credit. Sometimes, the bank becomes too much suspicious and
starts to refuse financing to proper companies because the bank is
considering them as a part of a grey economy. This event is
strongly valid for the foreign management of the banks in
Bulgaria.
2. The grey economy is a strong factor for increase of corruption
in the banking sector. As the companies are not showing their real
situation, they are trying to obtain financing through offering
bribes to the authorized personnel in the banks. Unfortunately, we
should confess that some times these actions are quite
successful.
3. Besides the bribe the companies from the grey economy are
trying to commit fraud in order to facilitate their financing.
There are a lot of examples for documents with false figures, duly
certified by chief accountants, expert accountants or managers.
4. In the event the company form the grey economy is successful to
receive financing from a bank through a fraud or bribe, there
appears a huge possibility this credit not to be repaid and to be
turned to a bad loan. The increase of the bad loans is not damaging
the particular institution only; this event is really harmful for
the economy of the country.
5. The influence of grey economy in the banking sector is not only
related with granting credits. Another important area is the
attempt for money laundry and export of convertible currency
abroad. As a positive issue we should stipulate that nowadays the
banks in Bulgaria are quite strict and are checking very carefully
the documents accompanying wire transfers. Anyhow using bribes and
documentary fraud sometimes such transactions are performed. In
this event the key role is played by the Bulgarian Bureau for
Financial Investigation.
6. Recently another side of the shadow economy was discovered in
the banking sector. In the banks were caught some false banknotes
with really high quality printed in Bulgaria. Even sometimes the
cashiers were unable to recognize the false money. That means that
the shadow economy is quite strong and has got enough funds in
order to produce such forged documents. This fact leads to some
additional expenses for each bank in order to improve the equipment
and the qualification of the cashiers.
As a general conclusion we could say that the banks
could (and should!) play essential role in the process of
enlightening of the shadow economy in Bulgaria. They have key
position in the chain of the documentary fraud and bribes. Having
strong banks shall interrupt the process of forgery and shall cut
the negative string of criminal attempts. Besides, the efforts to
cheat a bank leads to corruption in the other areas - notary
transactions, accounting and auditing transactions, lawyers, tax
officers, customs, etc. The government should think seriously and
should take certain measures in this area.
Thank you very much for your attention.
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