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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.