Danailov's two million dollar bank guarantee

The challenge by Silvio Danailov, the manager of Veselin Topalov, was issued a day after FIDE announced that the new world champion Vladimir Kramnik would be playing in the Mexican World Championship. Details of the challenge are to be found here. A week ago Danailov informed us that FIDE had rejected the bank guarantee his side had provided, to which FIDE replied that it was not FIDE but their Swiss bank UBS that had not accepted the Bulgarian bank that issued the guarantee. Only one of the following four Bulgarian banks would be acceptable: DSK, Bulbank, UBB and International Asset Bank.

During the tournament in Wijk aan Zee Silvio showed us a new bank guarantee that had been issued by Bulbank and had been sent to FIDE last Friday. Below is a transcription of the text and the original documents in facsimile.

The cover letter from the Bulbank, which is addressed to the FIDE Secretariat in Athens, says: "Please find herewith enclosed the original of our Bank guarantee No. ILG007094 for USD 2,000,000.00 valid until 30-04.2007, issued in your favour."

The bank guarantee itself says:

BANK GUARANTEE No. ILG007094

Dear Sirs,

Whereas a World Chess Championship match between World Champion Vladimir Kramnik (RUS) and challenger Veselin Topalov (BUL) is being negotiated to be held in 2007, the World Chess Federation (hereafter referred to as FIDE) with offices in Athens, has requested the side of challenger Veselin Topalov to provide a bank guarantee of USD 2,000,000.00 (say two million US dollars only) as security against any default in respect of obligations of the challenger's side, in whole or in part, set out in the official regulations of FIDE for the organisation of a World Chess Championship match.

This being stated we, BULBANK AD, 7, Sveta Nedlya Sq., Sofia 1000, Bulgaria, irrespective of the validity and the legal effects of the above mentioned relationship, waiving all right of objection and defence arising therefrom, hereby irrevocably undertake to pay immediately to you, upon your first demand, the sum of USD 2,000,000.00 (say two million US dollars only) upon receipt of your written request for payment and your written confirmation stating that the side of challenger Veselin Topalov has not fufilled his obligations in conformity with the above regulations.

For the purpose of identification, your request for payment in writing has to be presented to us through the intermediary of your bank confirming that the signatures thereon are legally binding upon you.

This guarantee is valid until 30 April 2007 and expires in full and automatically, if your claim has not been received by us at our counters at 7, Sveta Nedexlya Sq., Sofia 1000, Bulgaria on or before that date, regardless of such date being a Banking day or not and irrespective of whether the present document is returned to us or not.

The cancellation of the present guarantee prior to the expiration of its validity is subject to the return of its original to BULBANK AD, 7, Sveta Nedexlya Sq., Sofia 1000, Bulgaria.

Signed M. Koleva / D. Vlahova