By Stelios Orphanides
The owners of FBME Bank Ltd, which resorted to international arbitration after its Cyprus branch was placed in resolution, have tripled their claims against Cyprus, sources familiar with the matter said.
“They now demand €1.5bn in damages,” a source said on condition of anonymity.
While a second source confirmed the information, none provided background about how the owners of the bank justified their new demand.
The owners of the bank initially resorted to the Paris-based arbitration court of the International Chamber of Commerce demanding €500m in damages, citing the provisions of a bilateral agreement between Cyprus and Lebanon protecting investor rights.
In the meantime, the Central Bank of Cyprus is reviewing the situation before deciding its next steps following last week’s Nicosia district court ruling that rejected the appointment of a liquidator at the Tanzania-based bank.
The Cyprus Business Mail understands that the Central Bank will have to decide whether it will appeal against the ruling or file another request to appoint a liquidator for the Cyprus branch of FBME only, which was in charge for more than 90 per cent of its business. In addition, the Central Bank will also have to decide whether it will modify the mandate of the special administrator it had appointed at the branch.
The Cypriot bank supervisor, which in December 2015 revoked the branch licence of FBME’s Cyprus unit and fined it €1.2m for violating anti-money laundering and terrorist financing legislation, received assurances for cooperation from the Bank of Tanzania, the African country’s supervisor.
Bank of Tanzania which decided on May 5 to appoint a liquidator at FBME Bank, did not immediately respond to a request for comment.
The decision came days after a US court rejected an appeal against the imposition of “measure 5” of the US Patriot Act against FBME, which effectively bars it from carrying out transactions dollar, upholding the position of US Treasury’s Financial Crime Enforcement, which considers the bank as a financial institution of primarily money laundering concern with ties to Lebanon’s Hezbollah, the Iran-backed militia considered a terrorist organisation in the US and the EU.
Following this development, Attorney-general Costas Clerides said the police continues to investigate in FBME matters.
“Criminal prosecution is pursued in specific offences for which there is good evidence,” he said in a text message to the Cyprus Business Mail.