Cyprus Mail
Business Cyprus

CBC’s ‘crass stupidity’ over FBME

Roger Mewis

By Elias Hazou

IRATE CUSTOMERS of the Cyprus branch of FBME say they are being held hostage by the way the Central Bank of Cyprus (CBC) is handling the lender.

In mid-July the CBC took control of FBME’s operations in Cyprus, following a report from the US Treasury describing the bank as a “primary money laundering concern”.

FBME, headquartered in Tanzania, had denied the allegations, saying the US Treasury had compiled the report without its input.

The CBC subsequently appointed an administrator for FBME Cyprus. The regulator said it was selling the branch to protect depositors and prevent contagion after correspondent banks froze and/or closed the branch’s US dollar accounts and have suspended transfers on behalf of the branch.

Dinos Christofides, the special administrator, temporarily suspended FBME’s operation on July 23, 24, 25 and 28. He nominally reopened the branch on July 29 as he was required to by the terms of the resolution decree.

But according to account holders, this made no difference as, in effect, all transactions remain barred – with no explanation whatsoever forthcoming from the Central Bank or the administrator.

Roger Mewis, director of Imperial Xeon Group Limited, multi-jurisdictional pension fund managers based in Cyprus, told the Sunday Mail that he has sent a series of emails to the administrator.

The emails can be viewed on the new website set up by FBME shareholders and customers here.

The posts on the website suggest several customers are planning to take legal action against financial authorities.

For some time now Mewis has been asking for special authorisation for the release of funds from his company’s account, as well as his personal account, in order to pay salaries, government taxes and utility bills.

The administrator has only acknowledged receipt of his emails, but no more.

Growing increasingly frustrated, Mewis wrote again to Christofides asking to be informed of the procedure to file a complaint against him. Again, nothing.

In an aggravated email to CBC governor Chrystalla Georghadji dated August 22, Mewis was certainly not mincing his words.

Complaining of the unjustified withholding of funds and the total lack of response, he wrote: “The crass stupidity and mind numbing ignorance of your actions towards the FBME Bank defy logic.

“Are we supposed to gain confidence in your alleged ability to be Governor when your flawed reasoning and actions have caused unnecessary unemployment? Indeed, because of your failure, and that of your Special Administrator, to issue the necessary authority for the release of our company funds to pay the employees, we have had to lay off our employees because we cannot pay them.

He went on to add: “Your arrogance, and that of Mr Christofides, is unbelievable; it is only eclipsed by your joint asininity and apathy.”

And in another email, Mewis puts the CBC governor on notice that “if it transpires that your illegal actions caused my company and/or myself loss, I shall file an application into Court against you and the Central Bank of Cyprus.”

Mewis tells the Mail that his company, set up in Cyprus two-and-half years ago and with a cost base of around €3m, will not be bringing any more funds into the island.

They have meantime opened bank accounts in other EU states.

Mewis said he wonders how the Central Bank is acting in FBME’s best interests by choking the life out of the bank.

Similar complaints were made by MikeDavies, managing director at The Alterego Group, which also banks with FBME.

In an email addressed to the Mail, Davies said reports of transactions being allowed at FBME – pending the administrator’s approval – are inaccurate.

He said that when the head of the bank’s customer services was approached by depositors “they were directly told that the only transactions being dealt with are those that were ‘in the system’ at the time of the original suspension and no transactions have been processed other than those.

“Our attempts to receive funds to pay our CyTA and electricity bills have consistently been met with this response,” Davies added.

When contacted, the Central Bank referred the Mail to FBME’s administrator.

Christofides declined comment, citing a blanket “no comment policy”.

In a statement earlier this week, the holding company of FBME Bank said it held the CBC liable for damage and loss suffered by the lender, its depositors and owners.

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