ECB governor protests over Slovenian police operation

European Central Bank (ECB) governor Mario Draghi has officially protested over a Slovenian police investigation in the offices of the Slovenian central bank, which is part of the Eurosystem, a system of central banks of the euro area, noting that confidential ECB information was seized during the investigation.

The Slovenian police on Wednesday carried out several probes as part of preliminary proceedings regarding alleged irregularities in the financial rehabilitation of Slovenian banks in 2013.

The probes included a search of the central bank's offices. The police confirmed that the operation was based on a criminal report alleging that some senior officials of that institution, including governor Bostjan Jazbec, abused their office because at the time of the Slovenian banking crisis, they made the situation in banks look worse than it really was, after which those banks were bailed out with public money.

After Jazbec informed Draghi of the police investigation, the ECB governor sent a warning letter to European Commission President Jean-Claude Juncker and Slovenian prosecutorial authorities. In it he criticised Slovenian authorities for violating rules on the functioning of the ECB and encroaching on the internal system of the Slovenian central bank, calling on them to stop the investigation or he would launch legal proceedings in line with Slovenian laws.

According to the criminal report filed with the police two years ago by an association of small shareholders, several physical persons, banks and audit companies in 2013 adjusted particularly strict criteria for the bailout of state-owned banks to enable banks to unjustifiably write off ownership stakes and rights concerning so-called subordinated bonds, thus favouring banks and the state as their majority owner. This way 257 million euros of illegal gain was acquired by Slovenia's biggest bank, NLB, alone, the small shareholders allege.

The dispute between the owners of written-off bonds and the state has not been resolved yet and a ruling by the Slovenian Constitutional Court is being awaited. Separate proceedings in this case have been launched before the Court of the EU in Luxembourg as well.

Last update: Thu, 07/07/2016 - 12:45
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