CBC says FBME 2014 action necessary to protect entire system


By Stelios Orphanides

Central Bank of Cyprus Governor Chrystalla Georghadji said the supervisory authority was compelled to take action against FBME in July 2014 in order to protect the Cypriot banking system, and indirectly questioned the lack of action by other government bodies against the bank’s owners.

Three years ago, when the Financial Crime Enforcement Network (FinCEN), a division of the US Treasury, issued a statement describing FBME as a financial institution of primary money laundering concern and terrorist financing, “our entire banking system was at risk with respect to transactions in dollars,” she told reporters in Nicosia on Friday. “With its decision, FinCEN banned transactions by any US or US-based bank with FBME”.

“We were lucky back then to have the troika in Cyprus and (so) we were advised by international advisors,” she continued in reference to the central bank’s decision in 2014 to place the Cyprus branch of FBME under administration and subsequently resolution.

“Our actions saved the rest of the banking system,” Georghadji said.

In its 2014 decision, FinCEN barred US banks from opening and maintaining correspondent accounts with FBME. The Cyprus Business Mail understands that the decision was the result of irregularities in the implementation of Western sanctions against Russia in response to its annexation of Crimea, which is part of Ukraine.

The central bank governor was responding to a reporter’s question whether the central bank was prepared to assume responsibility in the event the Cypriot taxpayer is forced to foot the bill should the arbitration court of the International Chamber of Commerce in Paris rule in favour of the owners of FBME. There, the Lebanese brothers Ayoub Farid Saab and Fadi Michel Saab, are demanding up to €1.5bn in compensation from the Republic of Cyprus for the alleged failure to protect their investment, citing the provisions of a bilateral agreement with Lebanon. The Saabs initially demanded €500m in compensation.

Georghadji, in an obvious reference to Banca Privada d’Andorra which US authorities also blacklisted after it was accused of money laundering, added “the alleged owners of FBME themselves argued” that authorities arrested the bank owners.

“I didn’t notice bombastic comments when the FinCEN ruling (on FBME) became official,” after a US court dismissed the Saabs’ appeal last month, she continued.

Attorney-general Costas Clerides said on May 25, that authorities filed no charges in the FBME case, citing the lack of evidence, and added that the police continued to investigate the case. The police on Wednesday declined to comment.

Earlier this month, the Nicosia district court rejected a request by the Cypriot central bank to appoint a liquidator to the Tanzania-based lender, days after the Bank of Tanzania, which supervises banks in the African country, decided to appoint a liquidator at the bank.

In an impromptu interview on Friday, Georghadji said that the central bank decided to challenge the ruling. “We filed an appeal,” she said.

Earlier, she said that she was surprised by criticism in Cypriot media for taking “strict measures” against the Cyprus branch of the Tanzanian-based lender adding that when the central bank is lenient, it is also accused of that.


About Author

Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: [email protected]

  • Mist

    Caption Comp “Look I can still eat with one chop stick with my eyes closed”.

    • peemdubya

      Or would it be “does my eyeliner look OK now?”………

  • Justice

    How is this woman still in a job? Was she not under investigation herself? What was the outcome of the investigation?
    Why would the CBC want to appeal a decision to liquidate the FBME bank in Cyprus when a competent authority in Tanzania is already in the process of doing so. What has she to gain by taken this action? This is making Cyprus look very bad in the eyes of investors.

  • Nemisis

    Georghadji’s KNOWS her mismanagement and possible collusion/conspiracy against the FBME is going to come out, so know she, in the true spirit of an arrogant fool, is trying to share and put the ‘blame” with and on others with comments like… “We were lucky back then to have the troika in Cyprus and (so) we were advised by international advisors,”…&… ” and indirectly questioned the lack of action by other government bodies against the bank’s owners.”
    The truth is that SHE has put the Republic of Cyprus in a very deep and expensive hole, and even now she’s just too dumb to stop digging!

    • Alex Leighton

      There is a simple question that this alleged journalist can ask; can we see the notes of the meeting, with the Troika, in which they advised the CBC to take the specific actions the Governor claims were taken to “save the banking sector”? I think you’ll find that they don’t exist except for in the imagination of those at the CBC…really a sad and bad cohort of people.