Observers say the move against the bank weakens not only the financial institution but the country as a whole
Сhairman of the supervisory board of one of Georgia’s largest banks, TBC, Mamuka Khazaradze and his deputy Badri Japaridze are at the heart of an inquiry into alleged money-laundering launched by the prosecutor’s office.
NGOs and observers say the case is ‘politically motivated’ and masterminded by the country’s ‘informal leader’, Bidzina Ivanishvili. Some believe that Khazaradze may face the same fate as Russian oligarch-turned-dissident Mikhail Khodorkovsky.
Ordinary citizens are concerned, with many wondering: is it not time to withdraw my savings from TBC bank?
JAMnews looks into what the prosecutor’s office holds against the country’s largest bank, and explains why the matter is important not only for one bank, but for the whole country.
A laundered $17 million. What is the prosecutor’s office looking for?
The Georgian prosecutor’s office has put forward a serious charge – that TBC has laundered some 17 million USD.
Information that the prosecutor’s office had demanded documentation from TBC Bank first appeared in the media on 8 January. Later, the prosecutor’s office claimed that the investigation had begun as far back as May of last year.
In August, the prosecutor’s office launched an illicit revenue investigation. TBC Bank’s top brass – chairman of the supervisory board Mamuka Khazaradze and his deputy Badri Japaridze – were involved among others. Now, they have already been questioned as witnesses.
The case being investigated by the prosecutor’s office dates back to 2008. The prosecutor’s office says that in April 2008, TBC loaned $17 million to companies Samgori M and Samgori Trade, but that the funds were allocated in an ‘expedited manner’ and with procedural violations.
But then: the accounts of the chairman of the supervisory board of the bank Mamuka Khazaradze and his deputy Badri Japaridze were credited with $17 million – the money was sent by the companies who had borrowed money from TBC.
The prosecutor’s office claims that the $17 million has not been returned to TBC bank itself to this day.
Moreover, in 2012, TBC completely freed Samgori M and Samgori Trade of their debt obligations and allowed them to transfer the $17 million loan to companies registered offshore.
The prosecutor’s statement calls these funds “black cash”, rather without explanation.
The investigation continues. If the prosecutor office’s version proves right, the country’s most famous banker may end up behind bars.
Another interesting detail is that Samgori M and Samgori Trade are owned by businessman Avtandil Tsereteli. He also owns TV company TV Pirveli, a small but quite successful television company that broadcasts only in Tbilisi and which employs many journalists who at one time or another decided to leave state-run television channels.
The response of TBC Bank
TBC Bank denies the charges, and says that the case in question – deemed money laundering by the prosecutor’s office – was a perfectly “normal, legal banking operation” that has been repeatedly checked by government agency employees, international auditors and even the National Bank of Georgia itself – at no time have any irregularities been uncovered.
TBC Bank is one of the leading banks in Georgia, serving about two million customers. It was created in 1992, and has the largest assets of any other bank in the country and is a leader in terms of deposits. Taking into account the bank’s subsidiary companies, the bank employs about 7,000 people.
The bank has pointed out how old the case is, and bank lawyer Zviad Kordzadze says that during 2007 and 2008, Mamuka Khazaradze and Badri Japaridze borrowed a total of $80 million from lenders, individuals and international financial institutions to increase their capital turnover.
This includes the $17 million taken from Samgori M and Samgori Trade and spent on the needs of the bank.
Khazaradze says: “What is happening negatively affects the reputation of the largest financial institution in the country and the reputation of its founders.”
He has also expressed his belief that the case is politically motivated, and that over the 27 years of the existence of TBC Bank, “[it] has on multiple occasions been a target, in any period of rule of any political party”.
One thing unites all speculations about this case: nobody believes that the prosecutor’s office has dared to come after one of the country’s main financial institutions without the knowledge and consent of Georgia’s informal ruler, Bidzina Ivanishvili.
– Some believe that Ivanishvili sees Khazaradze as a political rival and that he is ‘clearing the political field’ on the eve of parliamentary elections slated for 2020;
– Others say that the attack against Khazaradze is a result of his friendly relations with the former prime minister of the country and former favourite of Bidzina Ivanishvili, Giorgi Kvirikashvili;
– Yet another theory posits that Ivanishvili wants to take over TBC Bank;
– There are parallels with the events of 2004 in Russia, when Vladimir Putin attacked his potential competitors, businessmen and media magnates – Gusinsky, Khodorkovsky and others.
Observers also draw attention to the fact that the criminal case against TBC Bank “kills two birds with one stone”, targeting both influential banker Mamuka Khazaradze and the owner of increasingly popular TV channel Pirveli, Avtandil Tsereteli.
And yet, the most credible account seems to be connected with Anaklia Port.
This version of events has it that Ivanishvili has been displeased by TBC Bank’s involvement in the implementation of the most important project in Georgia – the construction of the Anaklia Port. Ivanishvili himself does not hide his irritation.
In his interview after returning to politics last year, Ivanishvili stated that two banks in Georgia, TBC Bank and Bank of Georgia, have “devoured the whole country”.
In the same interview, Ivanishvili criticized then-Prime Minister Kvirikashvili for lobbying the interests of these banks, and particularly for the fact that TBC Bank won the tender for participation in the construction of the Anaklia Port under the prime ministership of Kvirikashvili.
The TBC Group of Mamuka Kharadze, which includes TBC Bank, is a co-founder of the Anaklia Development Consortium.
The consortium is implementing an ambitious project: it is building the first deep-water port in Georgia, which many observers say is the largest project being implemented in the country.
In terms of importance, it is compared with the Baku-Tbilisi-Ceyhan oil pipeline project, the implementation of which began back in the Shevardnadze era.
The United States is interested in the successful implementation of the project, as there has been much private American investment. The port is an important infrastructure project, opening the export route for cargo from Central Asia to Europe and vice versa.
The first deep-water Georgian port hopes to compete with Turkish ports, as well as the ports of other states in the region. A total of 2.5 billion dollars will be invested in the project.
Economist Roman Gotsiridze, a member of the United National Movement, adheres to this version of events:
“Anaklia Port has raised Western interest in Georgia. Accordingly, Kvirikashvili and Khazaradze had the opportunity to gain politically. This, of course, was felt by Ivanishvili and destroyed his own perspectives [to gain].”
Political analyst Gia Nodia believes that there is “a politically motivated and organized campaign against the financial organization”. He, too, thinks the Anaklia Port is the centrepiece of this play:
“After the resignation of Kvirikashvili, many expected Ivanishvili to end up in a standoff with Khazaradzee, his friend,” says Nodia.
Time to withdraw deposits from TBC Bank?
TBC Bank enjoys a high level of trust among residents of Georgia, and is especially popular among the middle class. Many keep their savings in the bank. The recent history of Georgia, particularly the 1990s, is rich in cases of bank failures.
The memory of these events lives on, and thus the actions of the prosecutor’s office have provoked a feeling of instability among the people.
From January to September of last year, TBC had the highest profits – around 262 million lari, which accounted for 44% of the total profit of the banking sector during that time period.
This was a 23% jump in comparison to the same period the year before.
The National Bank of Georgia has tried to reassure the population, stating that TBC Bank is a healthy credit institution and that its clients are not in any financial danger.
Economist Gia Khukhashvili, who one time was close to Ivanishvili, calls events concerning TBC Bank ‘sabotage’.
Khukhashvili says that the charges threaten not just the bank, but the country itself. However, he does note that the case, in all likelihood, will soon be closed since it has no prospects:
“It is completely incomprehensible as to what basis the investigation is speaking about when it comes to ‘money laundering’. This case has another problem – it is outdated.”
Gia Jandieri, the Vice-President of the New Economic School of Georgia, says that everything happening to TBC Bank has a negative impact on the international image of the country and, accordingly, on the mood of investors.
“When investors see that the state can attack such a strong player in the banking sector so openly, they will think a hundred times before coming to our country with their capital,” says Jandieri.
Will Khazaradze enter politics?
Mamuka Khazaradze tried to mend his relations with Ivanishvili and prove his loyalty in the last presidential election when in a special statement, TBC Bank called on its employees to support the pro-government candidate Salome Zurabishvili.
But the fact is that for Ivanishvili, these attempts of Khazaradze were ‘lacking’.
Today, Khazaradze is almost enemy number one for the authorities, against which a powerful information campaign is being waged.
Anonymous Facebook pages, suspicious websites, which during the presidential elections of 2018 worked against opposition candidate Grigol Vashadze, have today turned to discrediting Khazaradze.
Some political observers believe that Khazaradze must go into self-preservation mode and enter politics and continue the struggle in the political field.
Leader of European Georgia party Gigi Ugulava expressed similar thoughts on his Facebook page.
However, the majority does not believe that Khazaradze will enter politics. Economic expert Gia Khukhashvili says it is almost impossible:
“Khazaradze … will wait for the development of the situation … This case in the prosecutor’s office has no prospects, because it is absurd and fabricated,” says Khukhashvili, adding that in the end, Ivanishvili has already been defeated in this story.
“In fact, the process of degradation continues: Ivanishvili not only cannot stop him, on the contrary, everything is developing faster and faster,” says Khukhashvili.