Corporate Illegalities Related to the Failure of the Fourth Biggest Bank in Bulgaria

Abstract

Built on the perception of the bank's employees in one of the Bulgarian banks placed under conservatorship in 2014, this study aims to identify the factors that appear to stimulate criminal activities in the banking industry. Following illegalities associated with the collapse of the fourth biggest bank in Bulgaria, this study examines the propensity to willful blindness. A survey was carried out by distributing questionnaires to all bank employees in addition to semi-structural interviews and ongoing media monitoring for the period of seven months. The findings reveal that bank criminal activities are mostly due to inadequate organizational culture, missing internal control, weak supervision performed by the central bank and lacking coherence among governmental authorities, including public prosecution. Although financial supervision as well as chartered accounting services needs more responsibility and control over bank activities, detecting willful blindness is the most important signal for corporate illegalities. The research outcome proves that anonymous questionnaires that contain no identifying information are more likely to produce evidences for discovering willful blindness among employees.