TBC Bank Faces Criminal Investigation over 2008 Loan Transactions

TBC Bank, the leading Georgian banking company, is facing a criminal investigation over money-laundering allegations involving a USD 17 million transaction that took place in 2008, the Prosecutor’s Office announced on January 9.

Reports that investigators seized case-related documentation from the bank emerged in the media on January 8. The authorities confirmed the information in a statement on January 9, and provided additional details on the ongoing investigation.

The Prosecutor’s Office said the probe was launched in August 2018, based on the preliminary enquiry by the Financial Monitoring Office, an independent agency answerable to the Prime Minister, which “clearly demonstrated signs of money laundering and other illicit actions.”

According to the prosecution, in April and May of 2008 TBC Bank gave two Georgia-based companies – Samgori Trade and Samgori M – business loans worth USD 17 million.

The Prosecutor’s Office added that the sum was later loaned to Mamuka Khazaradze and Badri Japaridze, chairman and deputy chairman of the Bank’s supervisory board, respectively.

It also said the bank loan was written off in 2012, and the companies were exempt from paying the interest. Khazaradze and Japaridze have not returned the individual loans as well.

TBC denies the charges

TBC bank responded to the allegations in a statement on January 9, saying the transaction was legal, and that it was inspected multiple times by the authorities, the National Bank and international auditors.

Zviad Kordzadze, the lawyer of TBC Bank’s Mamuka Khazaradze, dismissed the accusations as well. Kordzadze said the loaned money was used solely for improving the bank’s liquidity in the aftermath of the 2008 Russo-Georgian war. According to the lawyer, the sum totaled USD 80 million, instead of the prosecution’s USD 17 million.

“The loan was not used for personal purposes; it was used either for attracting more capital or paying back the money that was attracted for [increasing] the capital,” he noted.

The National Bank commented on the matter as well, stressing the company has “adequate level of liquid assets and supervisory capital.” “As per our estimates, the ongoing probe will not affect stability and effective functioning of the banking sector,” it also said.

Assessments in the opposition

Opposition politicians met the investigation with criticism, with Roman Gotsiridze of the United National Movement suggesting this as an attempt by the Georgian Dream party leader, Bidzina Ivanishvili, to take over the banking sector.

Similar messages were voiced by Gigi Ugulava of the European Georgia party, who said Bidzina Ivanishvili launched “wide-scale attack” on the banking sector. “Ivanishvili seeks to take control of the judiciary, and launch wide-scale attack against every individual who may [potentially] be an independent source of money,” he noted.

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