The Real Guilty Parties

24 December 2015

Since at least July 2014 and the onset of its assault against FBME Bank, the Central Bank of Cyprus (CBC) has led observers on a bewildering trail of logic-defying actions which have raised important questions about its credibility as a critical organ of government in a modern European state. For most of these past 17 months, the CBC has remained silent as to its motivations and has only lately started to concoct some form of justification for what has gone on, and this in the face of a losing international legal battle.

The CBC’s latest action has been to revoke the license of the Cyprus branch of FBME. A sparse announcement on the organisation’s website gives no reason, but FBME managers have come to learn that the excuse used is that the branch is inoperable. What the CBC does not say, though, is that this inoperability is entirely due to the CBC taking over the branch in July 2014, and holding it in a state of virtual paralysis ever since.

As from day one, the CBC’s decisions run contrary to EU and Cyprus law, and seem entirely driven by its own secret agenda.

It has made allegations that FBME Bank has allowed itself to be used for money laundering, even though the evidence from independent forensic investigators confounds this argument. While it does not quote the factual backing for its accusations it is worth pointing out that investigations into FBME made by international experts, including those commissioned by the CBC itself, have turned up no smoking gun!

In other words, there is no justification for what it has done.

There is a serious lack of transparency at the CBC. It has taken this decision to revoke the FBME license without care or consideration given to the over 250 FBME employees – over 350 at the start of this episode. In making its baseless allegations, the CBC has destroyed livelihoods and undermined family life.

Were all of these people guilty? What have they done to deserve this massive blow to them and their families?

What of those many other people in other financial institutions here and abroad who dealt with FBME? Are they guilty too? FBME engaged in very little over-the-counter business, so its transactions involved other banks and finance houses all with their own strict standards and procedural adherence to international law. Is it conceivable that the CBC uses its false testimony to castigate all of these too?

There are thousands of FBME clients and all of these have been damaged by the CBC accusations, in contravention of international practices for a state regulator. All have been affected badly by CBC actions over the past 17 months. Are they guilty too?

No, it is clear that the real guilty parties are a small coterie of CBC officials and some shadowy figures external to the organisation. There is very little doubt that they had prior knowledge of the original measures to be taken by the US government agency FinCEN against FBME and probably colluded in their preparation.

What did they seek to gain?

Now that the US courts are questioning the FinCEN measures and have ordered that these be re-examined, the CBC is being exposed. Questions will have to be answered; the hands of people who have been soiled in this process will be revealed.

Similarly, the decision of the international arbitration tribunal at the ICC in Paris to consider the claims of the plaintiffs, the beneficial owners of FBME, in respect to damages and compensation against the Republic of Cyprus, brings even more risk to those around the table who concocted this episode in the first place. Financial penalties will be directed at the Republic of Cyprus, and the country’s taxpayers and their elected representatives will demand to know who has caused this calamity.

They, a small group in the CBC, acting with the support of outsiders who believed they had much to gain, are the real guilty parties. With the courts turning against them now they grow ever more desperate to remain in the shadows.