UPDATED: NBG Ordered TBC Shareholders to Remove the Chairman of the Supervisory Board

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The FINANCIAL — National bank of Georgia has ordered TBC shareholders to remove the Chairman of the Supervisory Board, Mamuka Khazaradze and his deputy Badri Japaridze from the Supervisory Board. NBG motivated its decision by conflict of interests related to transactions in 2007-2008 being investigated by Prosecutor’s office. 

Khazaradze said during the last eight months there was the orchestrated campaign against him and Badri Japaridze, vice chairman, which ended with NBG’s order, aimed to limit relation of founders with the bank.

Khazaradze responded in facebook post that one of the most famous law company DENTONS examined issue and concluded that there were no illegal operation or violation of law by TBC founders. Khazaradze thinks that the NBG’s decision is linked to his business in ANAKLIA, multibillion project initiated by TBC, which attracted international funds.

TBC Bank, largest bank in Georgia was under investigation by the National Bank of Georgia (NBG) and the country’s office of public prosecution, concerning certain transactions that took place in 2007 and 2008.

The investigation alleges that certain transactions between TBC Bank’s unit, TBC Bank JSC, in Georgia and some entities were illegal, the group said.

The country’s central bank believes that these entities were related to the chairman and deputy chairman of TBC Bank Group, the company said, and the investigation alleges that these transactions were not in compliance with a Georgian law on the regulation of conflicts of interest.

A company spokesman identified current chairman and deputy chairman as Mamuka Khazaradze and Badri Japaridze, respectively, as the executives that NBG cited in its allegations.

Khazaradze was recently criticized by Georgia’s shadow ruler, billionaire Ivanishvili, who claimed that TBC bank and Bank of Georgia monopolized local market and set unfair conditions for borrowers. He also said contributed to the conflict between state and business interest.
On 9 January, TBC Bank Group slammed ‘media portals‘, without specifying which ones, for conducting a ‘black PR campaign’ against the bank.

Leading business association in Georgia ICC defended TBC’ Bank’s interest and criticized the government. It said many businesses have been under attack by government structures in the past six years, the last episode being an attempt by the Prosecutor Office to harass, harm and undermine the largest financial institution in Georgia, TBC Bank.

ICC-Georgia said it stands fully by its member TBC Bank and calls on government to stop harassment of this institution in particular and of businesses in general.

see also: Statement of the Office of the Prosecutor General of Georgia
2019-01-09 14:20:23

Financial Monitoring Service started studying financial activities of TBC Bank, its customer legal persons, bank administrators and certain shareholders in May 2018, and arrived at the conclusion that in this activities clearly showed the characteristics of legalization of illegal income, i.e. money laundering, and other illicit acts.
The said materials were forwarded to National Bank of Georgia and the Prosecutor’s Office of Georgia for further response.
National Bank studied the matter within its competence and responded to uncovered violations in an appropriate manner.
As for the Prosecutor’s Office of Georgia, it launched investigation into a criminal case of legalization of illegal income on August 2, 2018, the offense punishable under Article 194§3(c) of the Criminal Code of Georgia.

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Investigation has revealed that Samgori Trade LLC and Samgori M LLC received 17 million USD In total as a loan from TBC Bank in April and May 2008, without any security and through accelerated procedure. As soon as the loaned funds were credited in the accounts of the companies, Mamuka Khazaradze and Bardi Japaridze borrowed the same amount which TBC Bank had lent to the aforementioned companies for the purpose of financing working capital. By the end of the year of 2008, TBC wrote off the said loans without any grounds and earlier than stipulated by banking regulations and moved them to external balance account while in 2012, even exempted these companies from the liabilities they owed the bank, when agreed to transfer theses liabilities to an offshore company. Interestingly, loans of Samgori Trade LLC and Samgori M LLC were written off in such manner that these companies have not paid any commissions and these loans have not been repaid to the bank. Furthermore, Mamuka Khazaradze and Badri Japaridze have yet to repay the loan to Samgori Trade LLC and Samgori M LLC.

A number of investigative and procedural activities have been carried out in course of investigation, individuals involved in the matter, including Mamuka Khazaradze, have been interviewed. At this stage of investigation, it could be necessary to obtain and study additional documentation and information in order to thoroughly investigate the alleged criminal acts, to which end the Office of the Prosecutor General of Georgia has petitioned Tbilisi City Court to request information from JSC TBC Bank. The petitions granted by the Court were served upon the JSC TBC Bank for their execution. Considering the interest of the public interest in the case, the Office of the Prosecutor General will keep the society posted on the progress of the investigation.

Partners of Anaklia Development Consortium are:
(Source: Anaklia Development Consortium)

Conti International (USA), which was founded in 1906 and is the designer of capital asset projects, with an exceptional construction management track record, oversees the development for the concession and acts as Program Manager (All construction related works will be performed by local and international constructors). Conti International acts as a project developer and a principle partner of Anaklia Development Consortium.

SSA Marine is one of the largest terminal operators in the world and has its headquarters in Seattle, WA, U.S.A. The company oversees more than 250 strategic operations across five continents, servicing 27.2 million containers (TEU) and managing terminals in nine different countries. In addition, SSA Marine handles over 75 million tons of dry bulk globally, manages cruise ship operations in Mexico and the United States and operates over 30 intermodal rail ramps for U.S. Class I railroads.

Wondernet Express, an interregional company with offices in Uzbekistan, Georgia, Kazakhstan and Azerbaijan, carries out its main activities in transportation and complex forwarding services of export-import and transit cargo by rail and other modes of transportation on the territory of CIS countries and the Baltic states, in particular, Georgia, Azerbaijan, Kazakhstan, Latvia, Lithuania, Tajikistan, Turkmenistan, Uzbekistan and Estonia.

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G-Star Ltd., is a company situated in Bulgaria with various businesses globally through its subsidiaries, including but not limited to Forex operations and investments in real estate projects.


FEB 21, 2019

Khazaradze Leaves TBC Bank Supervisory Board Due to Pressure From NBG
25 secs ago

Joint Statement of TBC Bank and NBG

Over the last few days, we have had detailed discussions around events concerning TBC Bank. Regarding this, we would like to announce the following:

Announcement from TBC Bank

Since TBC Bank takes into account the possible damage to the country’s investment image and respects the role of the National Bank, as a qualified regulator, and despite the fact that the decisions of the National Bank was appealed in the court, JSC TBC Bank would like to announce that it will implement a restructuring of its Supervisory Board whereby the founding shareholders will not be represented at the supervisory Board of JSC TBC Bank. The founding shareholders will maintain their positions as the Chairman and Deputy Chairman of the Board of Directors of TBC Bank Group PLC (a London-based, 100% shareholder of JSC TBC Bank). TBC Bank withdraws all court cases against the National Bank of Georgia and will pay approximately GEL 1 million, which was previously requested by the NBG and disclosed by TBC PLC on 9 January 2019.

In addition, TBC Bank continues to cooperate with the NBG to further improve the quality of the Bank’s corporate governance. In order to prevent any questions from any third party regarding corporate governance, TBC PLC will engage with a reputable international firm to conduct a review of the group’s related party transactions, practices and procedures.

Announcement from the National Bank

NBG welcomes this decision. This will have a positive effect on the transparency of the Bank and will increase investor confidence, which will ultimately have a positive effect on the development of the Bank and the country’s financial sector.

NBG stresses that TBC Bank is one of the leading financial institutions in the country and in the region and is led by a highly qualified executive management team and independent members of the Supervisory board. TBC Bank is a strong and stable credit institution and fully complies with economic normative requirements and limits set by the National Bank.

Additionally, the NBG would like note that, in this case, its supervisory focus was on the risks associated with matters concerning conflicts of interest and instances of the breaches of the regulation on conflicts of interest related to the 2007-2008 transactions.

Within the scope of its mandate, the NBG continues to monitor the implementation of the abovementioned decisions.

With this, from both sides this matter has been closed. We call on all the parties to stop speculations on this topic.


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