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Financial Mirror (Cyprus) - - FRONT PAGE -

The ul­ti­mate own­ers of FBME Bank are seek­ing in ex­cess of $500 mln in da­m­ages from the Cyprus gov­ern­ment through an arbitration process that has been filed with Paris-based In­ter­na­tional Cham­ber of Com­merce, over a decision to place the bank un­der ad­min­is­tra­tion and pro­ceed with a forced sale of the op­er­a­tions.

In July, the Cen­tral Bank of Cyprus is­sued a res­o­lu­tion or­der and placed the branch of Tan­za­nia-owned FBME Ltd. un­der ad­min­is­tra­tion after the US Trea­sury Dept. claimed that the bank was be­ing used for il­licit trans­ac­tion by groups on the U.S. and in­ter­na­tional wanted list, al­le­ga­tions that the bank’s share­hold­ers have re­futed through doc­u­ments pre­pared by ex­ter­nal au­di­tors and ad­vi­sory firms.

The ICC, that may even re­ward a higher amount in fi­nal da­m­ages, served no­tice on the Repub­lic on Novem­ber 4 and the Cyprus gov­ern­ment is ex­pected to pro­vide an ini­tial re­sponse by De­cem­ber 5.

Arbitration pa­pers filed at the ICC by the own­ers of FBME Ltd. sug­gest that the bank has in­voked the bi­lat­eral agree­ment be­tween Cyprus and Le­banon that en­tered into force in 2003, which pro­tects in­vestor rights in each other’s coun­try. They claim that this treaty was ig­nored by the Cen­tral Bank of Cyprus when it is­sued a res­o­lu­tion or­der against the Cyprus branch of FBME Bank on July 21 this year. The ul­ti­mate own­ers have ex­ten­sive in­vest­ments in Le­banon from where their in­ter­na­tional bank­ing op­er­a­tions started sev­eral decades ago, after which they ex­panded to Cyprus and Tan­za­nia.

The Fi­nan­cial Mir­ror has re­ceived sev­eral com­plaints by U.S., Euro­pean Union and other na­tional who de­scribe how their busi­nesses have been de­stroyed by the freez­ing of their ac­counts within FBME’s Cyprus branch by the ad­min­is­tra­tor with­out hav­ing given rea­son and with­out of­fer­ing any other rea­son­able rem­edy.

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