Georgia’s Chief Prosecutor’s Office has announced that they are investigating TBC Bank over possible money laundering and ‘other illicit acts’.
The authorities announced on 9 January that they had launched a probe in May 2018 concerning $17 million worth of loans that were fast-track to LLC Samgori M and LLC Samgori Trade in 2008.
The Prosecutor’s Office said that after TBC issued the loans to the companies, the bank’s Chair, Mamuka Khazaradze, and Deputy Chair, Badri Japaridze, took loans of the same amount from the two companies.
The authorities said TBC then wrote off the debts ‘without any grounds and earlier than stipulated by banking regulations’.
The National Bank of Georgia separately investigated the matter, fining the bank ₾1 million ($380,000) for violating regulations related to conflicts of interest.
TBC said the transactions in question had already been looked into by the National Bank in 2008, and that no regulatory action followed. The bank is challenging the recent sanctions in court.
On 9 January, TBC Bank Group slammed ‘media portals‘, without specifying which ones, for conducting a ‘black PR campaign’ against the bank.
A day before the Prosecutor’s Office and the National Bank confirmed their separate probes, Georgian news site Kvira alleged that TBC Bank Chair Mamuka Khazaradze may face money laundering charges.
Similar unsourced reports surfaced in several Georgian news sites as early as July.
Two banks have ‘eaten up the whole country’
According to Gigi Ugulava, one of the leaders of the opposition European Georgia Party, the latest revelations came after Khazaradze failed to ‘sort out relations with Bidzina Ivanishvili informally’.
‘It is a fact that the business does not breath freely anymore’, Ugulava wrote on his Facebook page.
Several months after his comeback to formal politics, Ivanishvili, the former Prime Minister and current chairperson of the ruling Georgian Dream party, lambasted TBC and Bank of Georgia for having ‘eaten up the whole country’.
Ivanishvili accused former Prime Minister Giorgi Kvirikashvili, who resigned in June after a fallout with Ivanishvili, of lobbying for the banks instead of addressing ‘over-indebtedness’ and predatory lending.
[Read Tato Khundadze's opinion on OC Media: Bank reforms touted by Georgia’s Prime Minister–to-be could spell the end of predatory lending]
Bank of Georgia and TBC are Georgia’s largest banks.
JSC TBC Bank is a subsidiary of TBC Bank Group PLC which is listed on the London Stock Exchange.
Another of its subsidiaries, TBC Holding, owns the Anaklia Development Consortium, set to develop the Anaklia Deep Sea Port complex in the western Georgian seaside resort.
The Anaklia Development Consortium, together with the US-based Conti Group LLC, won a bid to develop Anaklia City in 2015 while Kvirikashvili was the Minister for Economy.
Several local media outlets have speculated that Anaklia Development Consortium winning the bid was the primary reason for Kvirikashvili’s falling out with Ivanishvili, something Georgian Dream leaders have not denied.