Cyprus Central Bank says "vindicated" by Paris court decision on FBME

Source: Xinhua| 2019-02-01 03:04:30|Editor: yan
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NICOSIA, Jan. 31 (Xinhua) -- The Central Bank of Cyprus (CBC) feels vindicated and is completely satisfied by a decision by the Paris-based Arbitration Court which turned down an application by the owners of FBME bank claiming a compensation of 1.44 billion euros for the discontinuation of its operations, CBC spokeswoman Aliki Stylianou said on Thursday.

"The decision is proof of the correct and effective moves made by the management and the personnel of the Central Bank in handling the case," she said.

The statements by the spokeswoman were an indication of the magnitude of the relief the arbitration court's decision brought to CBC and Cypriot government officials.

As the Cypriot Attorney General Costas Clerides pointed out, Cyprus was spared a large amount of money equaling about 7.2 percent of its Gross Domestic Product.

The arbitration started in 2014 after Lebanese brothers Ayoub-Farid Michel Saab and Fadi Michel Saab, who indirectly owned the bank, applied to the Arbitration Court seeking compensation from the Cypriot government for failing to protect their investment.

They cited a bilateral agreement between Cyprus and Lebanon for the protection of investments as the legal basis of their demands.

FBME, which was the holding company of FBME Bank incorporated in Tanzania, was set up in 2005 to provide ordinary banking business in Cyprus.

However, CBC revoked its license in 2013 after the USA Financial Crimes Enforcement Network accused FBME of facilitating financial transactions for multinational organized crime organizations and of becoming a channel for the financing of the Shiite Hezbollah group.

In December 2015, CBC also fined FBME 1.2 million euros for failing to comply with the anti-money laundering law.

FBME was consequently placed under administration and then under resolution by CBC, which in April 2016 also initiated proceedings for the compensation of bank clients who had guaranteed deposits of up to 100,000 euros.

Clerides welcomed the decision of the Arbitration Court, pointing out that it confirmed that "Cyprus Central Bank acted as a prudent supervisory authority and that the (Cyprus) Republic did not violate any of its obligations".