July 17, 2013 / 2:52 PM / 4 years ago

Bulgaria seeks to block pension fund sale

SOFIA, July 17 (Reuters) - Bulgaria’s ruling Socialists have asked the local financial watchdog to halt the planned sale of the country’s biggest private pension fund Doverie because of poor transparency over the deal.

Vienna Insurance Group (VIG) said on Monday it had agreed to sell its 92.5 percent stake in Doverie to a UK-based company called United Capital Plc for an undisclosed sum.

But the deal has sparked concerns in the Balkan country due to a lack of public information on the buyer. Media reports said it was a dormant firm controlled by a string of offshore units, whose ultimate ownership was unclear.

Doverie has more than 1.25 million contributors in Bulgaria and almost 1.8 billion levs ($1.2 billion) under management.

“This sale should be stopped because of the unclear origin of the capital of the buyer,” senior Socialist deputy Yanaki Stoilov told parliament. “Where we have public funds involved, we shouldn’t allow companies that cannot be controlled by Bulgarian institutions.”

Under the Bulgarian pension system, all workers born after 1959 must enrol in a mandatory scheme and pay 5 percent of their wage to one of nine regulated private pension funds, among which Doverie has the largest share.

The fund’s management board along with its chairwoman Daniela Petkova tendered their resignations over a lack of transparency in the sale. “We have not seen any representative of the new buyer, we do not know anything about it, about its key activities or capital, nor has this company carried out due diligence,” Petkova told Reuters.

In response to an emailed request for information about United Capital, a spokesman for VIG referred questions to the company concerned and declined further comment.

United Capital has no stock market listing and no website. The company is listed in registers of British businesses but only has an mailing address in Essex, eastern England, and no phone number.

One of the smaller shareholders in the pension fund, Bulgaria’s trade union CITUB, has also expressed concerns that the deal could put at risk the pension system and the savings of many in the European Union’s poorest country.

Stoyan Mavrodiev, head regulator at the Financial Supervision Commission, told parliament his institution would check the necessary data but had yet to receive any documents on the sale.

“I want to assure you that we will in no way allow (a purchase by) companies that do not meet the regulatory criteria for transparency, solvency and competence,” Mavrodiev said.

$1= 1.4887 Bulgarian levs Editing by David Holmes

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