Cartu Accuses Central Bank of Political Crackdown
11 November, 2011


JSC Cartu Bank, owned by Georgian tycoon Bidzina Ivanishvili, currently a political opponent of Georgian government, claims that the underway on-site inspection by the central bank, performed in Cartu is a part of political crackdown aimed to assign there a temporary administration.   “Cartu Bank is held under politically-motivated pressure, inter alia, by the National Bank of Georgia (NBG). The NBG is seeking a pretext, no matter how unjustified, to bring in a temporary administration of theirs,” Supervisory Board of Cartu

Bank declared on November 2 in response to the NBG statement  made on November 1, which informed that the ongoing probe launched in Cartu on October 19 under alleged money laundering suspicion is purposefully being hindered. “Despite the repeated appeals to the Supervisory Council of JSC Cartu Bank it has not ensured so far access of the inspection team to the information required for examination,” The NBG stated adding that Cartu management wrongly interpreted the NBG’s earlier statement made on the commencement date of the NBG probe in Cartu elaborating inspection reasons and promising that the inspection would not hamper stable and smooth operation of Cartu. Moreover, the NBG expressed its readiness “to consider the issue of complex support of Cartu, if necessary, and proposed specific financial assistance to the Supervisory Council of the Bank.”

Nodar Javakhishvili, Chairman of Supervisory Council of Cartu Bank, assures the Bank has no financial problem at all of which the NBG is perfectly aware and counterclaims that the NBG deliberately ignores any objective request by Cartu for the Bank’s sustainability needs as well as any attempt of rehabilitation of reputation and return of the large amount of cash seized illegally.

Moreover, the NBG inspection team is already acting like a temporary administration.

“That’s not true that we withhold any information to the NBG inspection team, we open all our information to them, allow to supervise all financial operations and transactions, but they require technical computer program too that is completely illegal. Moreover, the NBG still did not present any inspection program required by law based on which and not spontaneous decisions they should carry out the probe,” Javakhishvili elaborated to Georgian Journal. “Program is absolutely necessary in the best world practice; some banks are 200 years old in the west and are central banks supposed to check all century-old papers during an ordinary probe?”

The NBG did not comment the question to GJ. One banking sector pundit [who asked to keep the name confidential] agrees that central banks should inspect all financial institutions, not only banks, based on detailed inspection program.

“But the NBG does not know what to inspect because Cartu has no actual problems, they want to assign temporary administration there and duplicate situation of Standard Bank [owned by late Georgian tycoon Badri Patarkatsishvili, which faced problems as soon as Patarkatsishvili opposed Georgian government and was sold to Arab investors and renamed as Kor Standard Bank eventually] but it is impossible for people to support Cartu now,” the source said.

Cartu faced a sharp demand in cash as a large amount of its clientele withdrew accounts under governmental pressure in order to undermine the Bank’s financial stability. Moreover, Cartu doubts Georgian partner commercial banks also sustain certain pressure as they changed their attitude toward Cartu.

However more than 4 thousand people opened accounts of total amount GEL 400 thousand at Cartu starting past week up to date to express their protest against political crackdown and sympathize  the Bank. Supporters still queue at Cartu branches although majority of them open just symbolic accounts as a token of their moral support.

However the NBG inspectors demanded detailed personal information (full name, personal ID/ account numbers and balance of every person, who expressed their moral support by opening accounts at Cartu.

“Meantime the NBG did not show interest in personal information either of old clients or those who withdrew their accounts,” Javakhishvili said.

“That’s absolutely illegal, the NBG probes Cartu on money laundering as suspect; one need not be a law expert to guess that the probe should cover accounts that were opened before illicit income suspects were raised not afterwards,” the incognito source said.

The NBG does not provide with any comments to explain the point.  The NBG addressed to its legal right to probe financial affairs of Cartu as a consequence of cash seizure accident on October 18, 2011 when Georgian law enforcers caught Cartu encashment group  under  alleged money-laundering attempt when the group executed two standard banknote deals with the Bank of Georgia (BOG), and transferred USD 2 million and EUR 1 million through their partner banks of Deutsche Bank Trust Company Americas, Citibank International and Commerzbank in the US and Germany respectively.

Cartu claimed the cash seizure was a part of political pressure on Ivanishvili as a consequence of his political inactivation early in October as far as the standard banknote transaction implemented through reputable global partners was questioned only by the NBG. Besides BOG, through which Cartu implemented encashment is still not involved in the affair.


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