Daylight Bank Robbery

Daylight Bank Robbery

Imagine if you ran a small engineering company and decided to open an account with a bank which you used for several years in ordinary commercial business, only to find that its operations were then terminated. Not only that, but your account was frozen as the bank in question was accused by the US government of allegedly being of primary money laundering concern.

That is what happened to Marcus Berger, co-founder of EPC Contractors Ltd which participates in the engineering and construction of international power and petrochemical plant projects outside the EU.

A German national who now lives in Nuremburg, Berger opened a current account with FBME in 2008. ‘We had some nice business in Bahrain, Abu Dhabi and Oman and we were participating in tenders for projects in Nigeria, the Middle East and Middle America,’ he says. EPC had also undertaken a range of projects in Europe, as well as in Mexico, Bahrain, South Africa and South Korea.

So why did EPC choose FBME? ‘We used this bank because of their standing,’ says Berger. ‘Compared to other banks that we looked into, they were very capable and competent for the type of services we required – extremely conservative in terms of giving credit, and importantly, willing to provide us with a proof of funds for our clients.’

He explains: ‘When we were bidding for new contracts, our clients always asked for our bank details and proof that our company was solvent. Our clients were very pleased when we provided them with the information that we were using FBME Bank, because in the areas where we were doing business – in the Arab world, the Middle East and Africa – they could support us well.’

But in July 2014, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued notice that it considered FBME to be of “primary money laundering concern”.

Berger says that ‘as soon as this FinCEN notice went around the world, our clients called and said your “proof of funds” is invalid and their compliance departments immediately put us under scrutiny. Our business went down the drain almost immediately. Suddenly, all of our bids and ongoing contracts were disqualified because our bank was blocked and our proof of funds invalidated. Within two weeks, all of our clients had taken notice, and they said: “Something’s wrong with you – we terminate our business.” Since our bank account was blocked, our cash flow came to an abrupt halt. Immediately, our service providers and vendors requested up front payment. In order to settle payments that were due we had to liquidate our long-term assets under pressure, and at unfavourable rates.’

The Central Bank of Cyprus (CBC) took over management of FBME and a series of administrators were appointed. In May 2015, the International Chamber of Commerce’s Arbitral Tribunal requested that the Cypriot banking authorities abstain from taking any measures that would irrevocably destroy FBME Cyprus pending completion of an arbitration. The request for Interim Measures was filed by Ayoub-Farid Michel Saab and Fadi Michel Saab, joint owners of FBME and claimants in a dispute against the Republic of Cyprus. The Saabs are the Lebanese owners of FBME, which is registered in Tanzania.

In December 2015, the CBC revoked FBME’s branch licence in Cyprus. FBME, the holding company of Tanzania’s FBME bank, went into liquidation and a deposit guarantee scheme was put in place for customers with accounts in Cyprus. Some of them have since been reimbursed – up to a maximum of €100,000. But there are numerous court cases still underway. Meanwhile, FBME shareholders claim that the bank was scapegoated by the Cyprus authorities to draw FinCEN’s attention away from money laundering elsewhere on the island.

‘I went to FBME and talked to them,’ says Berger. ‘I also tried to talk to people from the Cyprus Central Bank but none of them were available so I sat in their offices from morning to evening but nobody from the CBC would talk with me. Revenues were being paid but we couldn’t access them. Everything came to an abrupt shut down. Our reputation was completely wrecked.’

Berger also wrote letters, both to the CBC and the European Central Bank. ‘It’s not even the fault of FBME,’ he says. ‘All the FBME people that we talked to at a management level were cooperative. We showed up on their doorstep and talked to the special administrator, who was supposed to help. But he was never available. So, what has been published is not in line with what was actually happening. It was like being robbed – a live bank robbery and we couldn’t do anything about it because the authorities were doing it.’

Understandably, Berger feels aggrieved. ‘It appears that the Central Bank of Cyprus is just trying to get as much money as possible out of all the depositors who had accounts at FBME Bank,’ he says. ‘It seems like an act of piracy. FBME was a completely solvent bank and now they are liquidating it. The prerequisites defined by Cyprus to receive deposits have been designed in a way that international companies and individuals are excluded from any refunding.  This is a cheat. They cover up, trying to make it look like villains have been seized and it’s all somehow legitimate and in the interests of the general public, but it appears to be theft by the CBC.’

Berger has received no explanation, no apology, and none of his money has yet been returned. ‘You wouldn’t believe this is happening in Europe,’ he says. ‘The Central Bank of Cyprus couldn’t be less concerned. I had direct contact with people in their legal department, and they wouldn’t meet, they wouldn’t make appointments, nothing.’

Today, Berger is still looking for answers. ‘We expected to eventually read about the evil wrongdoings of people at FBME, or evil clients justifying what had happened on the assumption that we had just been collateral victims,’ he says. ‘But nothing has happened so far. To my knowledge not a single person has been prosecuted for doing anything wrong and abusing accounts at FBME Bank.

‘I am just one of thousands of customers of FBME Bank, one of many small depositors. I don’t know what will ever make the Cyprus government act in the interest of these depositors. Obviously, they have the intent of seizing this money and keeping it. The type of pressure required to hand anything back to the legitimate owners would be substantial. But for now, CBC are the happy looters.’

In May, it was announced that the Tanzanian government had started to take protective measures, entering into negotiations with Cyprus to ensure that Tanzanian depositors at FBME are reimbursed.

So did FinCEN and the Central Bank of Cyprus serve the public interest? For Berger, much more important than the money his firm had on deposit with FBME is that the company’s reputation is restored. ‘It is time that FinCEN and the Central Bank of Cyprus publicly reinstated the reputation of FBME’s depositors,’ he says. ‘The mayhem and damage caused to EPC Contractors and presumably to all other clients of FBME is not reflected by the claimed “protection of public interests”.

Berger points to damage done to the Cypriot economy and consequential damages to depositors amounting to several billion euros. ‘Livelihoods and lifetime achievements have been destroyed,’ he says. ‘Actions taken by FinCEN and the Central Bank of Cyprus have been inappropriate, damaging and unjustified. Accordingly, everyone who has been harmed should be swiftly compensated.’

Dominic Carman

Written by:

Dominic Carman, journalist, writer and legal commentator.

Author: Dominic Carman