TBC Bank to Sue National Bank of Georgia

Mamuka Khazaradze, Chairperson of Georgia’s largest bank TBC Bank Supervisory Board is going to sue the National Bank of Georgia (NBG) for their decision to suspend authority for the TBC Bank's Supervisory Board Chairman and Deputy Badri Japaridze.

The statement was made by Khazaradze’s lawyer Zviad Kordzadze.

The lawyer says it is unclear why the central bank is demanding suspension of the authorities of Khazaradze and Japaridze due to the transaction, made 11 years ago.

“It is unclear why such a decision was made regarding the 11-year-old issue and it will be one of the motives for suing,” Kordadze said.

Khazaradze took to Facebook to address the issue. According to him, organized campaign against TBC, him and Badri Japaridze is underway for eight months.

“The NBG wants to distance us from the company we created together 27 years ago and now become successful, international, London-based, multi-billionaire organization with the team up to 10,000 people,” Khazaradze said.

He added one of the most well-known legal companies in the world, Dentons, studied the operation carried out 11 years ago and concluded that no money laundering, abuse of power or any criminal act, and even the conflict of interest took place.

“We will not give up our job, our freedom, our dignity. We will not tolerate injustice and we will defend the legal right of TBC and its shareholders in local and international institutions,” TBC Bank's Supervisory Board Chairman stated.

The National Bank of Georgian explains that after examining transactions conducted by TBC Bank 2007-2008, it was revealed that Khazaradze and Japaridze violated the requirements of the legislation regulating conflict of interests. The NBG released a statement on Thursday, explaining the reasons for the request for suspension of signatory authority for Mamuka Khazaradze and Badri Japaridze.

“The decision is triggered by violations of the requirements of the legislation regulating conflict of interests, which are linked to 2007-2008 transactions. The NBG decided to suspend the signatory authority for the TBC Bank's Supervisory Board Chairman and Deputy. At the same time, the TBC Bank's shareholders' meeting was tasked to recall them from the supervisory board within 2 months,” the statement reads.

The National Bank emphasizes that the supervisory decision and measures of the NBG are not directed against TBC Bank and this “will further improve the quality of the bank's corporate management, which ensures further development of TBC Bank and will make it more attractive for investors.”

On January 9 the Prosecutor’s Office of Georgia (POG) has launched an investigation into an operation carried out by TBC Bank in 2008.

Prosecutor Salome Chikobava said during the briefing held at the General Prosecutor’s Office that the Financial Monitoring Service had begun checking the financial activities of TBC Bank and its shareholders in May of 2018.

She noted an investigation is underway into “facts of the legalization of illicit income.”

The POG claims that in April-May 2008, companies Samgori M and Samgori Trade took loans to the amount of $17 million from TBC Bank. On the same day, a loan was issued to individuals Badri Japaridze and Mamuka Khazaradze, co-founders of TBC Bank Group and its Chairmen.

The agency claims that none of the companies paid back the loans and later they [companies] were replaced by an offshore company but the loan was not paid back to the bank.

Regarding the investigation, TBC Bank released a statement, saying they will not tolerate the “deliberate destruction of the bank’s reputation.

The bank said documents obtained by the Prosecutor's Office are related to the 2008 legal banking operation, which, as they say, has been several times checked by auditors and the NBG during the current and the previous governments.

TBC Bank is the largest bank in Georgia. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.

By Thea Morrison

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14 February 2019 23:58