Lawrence Mafuru, the person appointed by Tanzanian authorities as statutory manager at FBME Bank and is considered uncooperative in Cyprus, blamed the Central Bank of Cyprus for the delay in refunding depositors, and the loss of value.
“The whole problem with FBME Bank is a direct consequence of the CBC’s (Central Bank of Cyprus’s) rushed, unilateral and not well-thought out decisions which resulted in wrong actions that are now legally challenged in the courts both in Cyprus and Europe,” Mafuru said in an emailed letter to the Cyprus Mail on Thursday. “These actions victimised the bank prematurely and are making it very difficult to undertake any orderly process of managing the outcome”.
The Taznania-based FBME Bank, which US authorities described almost three years ago as of primary money laundering concern and barred US banks from opening or maintaining correspondent accounts with it -effectively banning it from carrying out transactions in US dollars-,carried out the bulk of its operations mainly through its branch in Nicosia. The Central Bank of Cyprus revoked the licence of its Cyprus branch and fined the bank €1.2m in 2015 for failing to comply with anti-money laundering and terrorist financing rules.
In April last year, the Central Bank of Cyprus which initially placed the bank under administration and later under resolution, triggered the deposits guarantee scheme which allows depositors to receive up to €100,000 from their account at FBME. So far, the Central Bank of Cyprus which received 1,200 applications out of 6,500 customers, satisfied up to 700 applications. Total customer deposits are estimated at up to €1.4bn.
The owners of FBME, the Lebanese brothers Ayoub Farid Saab and Fadi Michel Saab deny all money laundering claims and resorted to an arbitration court in Paris seeking up to €500m in compensation from the Republic of Cyprus. The Nicosia court is expected to decide within the next weeks or months on the appointment of a liquidator.
“The fact remains that FBME should never have been placed under resolution and that the CBC acted without informing the bank or the Home Regulator – Tanzania,” Mafuru continued. “It then proceeded to make decisions for the funds of the bank forcing the statutory manager to react to protect the interests of the bank, and all its depositors”.
The Cyprus branch, he continued, “has no legal personality, and can thus own no assets”.
Mafuru, who though he is considered a person with political connections, in December lost his job as head of the Tanzanian Treasury Registry, a body entrusted with all state investments in companies and corporations, and is also involved in a legal battle facing a probable prison term, said that the Central Bank of Cyprus should explain “why after two years of resolution the financial position of the Bank is significantly worse”.
Mafuru, in line with the defence of the shareholders, raised questions about funds “wasted on professional fees,” the necessity of appointing a special administrator, why the Central Bank of Cyprus waited until last April to trigger the deposits guarantee scheme instead of doing so in 2014 or declined to accept a plan proposed by FBME to repay depositors.
The Cyprus Business Mail understands that Mafuru was referring to an idea tabled by the Saab brothers in late 2015 proposing the migration of deposits to Tanzania. “FBME Bank Ltd is in a position to repay its depositors in a structured manner and has been hampered from the start because of the erratic and unreasonable behaviour of the Central Bank of Cyprus,” he said.
Cypriot officials often complained in the past about Mafuru’s reluctance to cooperate with Cypriot authorities to resolve the situation saying that he does not even respond to their letters.
“If there is someone who’s not cooperating that’s Mafuru who is not acting in the best interest of customers,” special administrator Chris Iacovides said in a telephone interview. “He acts with ulterior motives”.
A Central Bank of Cyprus official contacted by the Cyprus Business Mail declined to comment.
“The mishandling of this affair has been so extensive that the questions are increasing by the day,” Mafuru said adding that he will refrain from further comments citing pending procedures in various jurisdictions. In line with that, he did not respond to a question about when was the last time he had communicated with Cypriot authorities.
The Cyprus Business Mail understands that should Mafuru remain uncooperative, in case the Nicosia district court does rule in favour of allowing FBME’s liquidation, the liquidator will be in position to satisfy claims worth several hundred million euros, only a fraction of the estimated up to €1.4bn in customer deposits. In that case, only Cypriot assets which include inter alia land and buildings as well as Cypriot government bonds will be liquated to compensate depositors.
