"The cleanest method of money laundering in Bulgaria is through the stock exchange," financial expert Borislav Bogoev told journalists here at a seminar on "Market Abuse of Financial Instruments: How to Read the Finance Pages."

Bogoev argued that the special-purpose investment companies (SPICs) seem to be expressly set up for this purpose, especially after the introduction of a 10 per cent flat tax on the profit of all economic operators. Some building tycoons have established their own SPICs with shares of a nominal value of 1 lev, he said. With the rise of the price of these securities, an offshore company purchases a block of shares and the founder of the company already owns a large and honestly earned amount of money, Bogoev said. He noted that this money is tax-exempt by law.

The best way to fight abuse of inside information of public companies is the quick disclosure of this information to all potential participants in the financial markets, the expert believes. In Bulgaria, trading in inside information is penalized by fines of 20,000 to 50,000 leva for natural persons and by pecuniary penalties of 50,000 to 100,000 leva for legal persons, and the sanctions reach 200,000 leva for a repeated offense.

At least 15 companies from neighboring countries list themselves on the Bulgarian Stock Exchange merely to declare that they are public company in a EU Member State, Bogoev said. This qualifies them for lower-interest financing. Trading in the shares of these companies is insignificant but still sufficient to claim public status, the expert commented.

Source: BTA