Georgia: founder of largest bank accused of laundering $16.7 mln

Founder of TBC Bank – the largest commercial bank in Georgia – Mamuka Khazaradze and his former deputy Badri Japaridze have been summoned to the General Prosecutor’s Office, where they were officially charged with large scale money laundering. 

The Prosecutor’s Office says the pair laundered almost 17 million USD back in 2008. 

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Several days ago, Khazaradze announced that he was going to establish a civil movement in September. Many politicians and experts interpreted this initiative as Khazaradze’s plans to go into politics and prepare for the 2020 parliamentary elections.

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What are the exact charges against Khazaradze? 

The case dates back to April 2008, when the prosecution claims that TBC Bank gave a $16.7 million loan to Samgori M and Samgori Trade companies to replenish working capital. The Prosecutor’s Office says that the loan was allocated in an “expedited manner and with procedural violations.” 

Later, the accounts of Mamuka Khazaradze and his deputy Badri Japaridze were credited with the same $16.7

The money was transferred by the same companies that TBC Bank had lent the money to in the first place. 

The prosecutor’s office claims that this transaction was a money laundering scheme and that the $17 million has still not been returned to TBC Bank itself.

Speculation of political incentive over construction of Anaklia Port

Why is the prosecutor’s office raising the issue 11 years after the allegedly illegal transaction took place?

Many say that the main motive behind the case is the construction of the first deep sea  port in Georgia – Anaklia [ed. located in western Georgia, in Samegrelo region].

Mamuka Khazaradze’s TBC Group, which owns TBC Bank, is a co-founder of the Anaklia Development Consortium, which is building the port. Experts say that it is currently the most ambitious and important project being implemented in the country.

Experts believe that the port is crucial for both the sovereignty of Georgia and for Euro-Atlantic security and trade, connecting China with Europe through a central land corridor.

On June 11, US Secretary of State Mike Pompeo, after meeting with Georgian Prime Minister Mamuka Bakhtadze in Washington, expressed the hope that Tbilisi would complete the construction of the port of Anaklia and thereby lessen “the influence of the economies of China and Russia.”

Russia does not hide the fact that this US interest is of annoyance. 

In the past months, the consortium has repeatedly stated that the strategic project is under threat. 

Such statements were made at the beginning of 2019 for the first time exactly when the prosecutor’s office began to check the legality of the transactions made 11 years ago by TBC Bank.

These statements were made because the criminal case looking into Khazaradze and his business associates deters potential investors and partners.

The Georgian political opposition, as well as most experts, say the former prime minister of Georgia and the informal leader of the country, Bidzina Ivanishvili, are trying to block the construction of the port in order not to annoy Russia, whose interests are affected by the appearance of another competitor on the Black Sea. 

Political rival?

On July 9, Mamuka Khazaradze, who is in open conflict with the informal ruler of the country Bidzina Ivanishvili, said that by September 2019, he would create a pro-Western social movement whose main goal would be to unite the country and preserve independence.

Mamuka Khazaradze announced this in a letter published on Facebook.

Many politicians and experts interpreted this initiative as Khazaradze’s plans to go into politics and prepare for the 2020 parliamentary elections.

Political analysts say Ivanishvili sees Khazaradze as a political rival and is trying to clear his way to an easy victory in the upcoming elections.