Cartu Bank under Double Pressure
19 January, 2012
Cartu Bank under Double Pressure

Cartu Bank JSC, owned by Georgian billionaire Bidzina Ivanishvili, once a sponsor of Georgian government, who became a political opponent starting October of 2011, faces double pressure on the part of Central Bank and the National Bureau of Enforcement.
Auctioning of the Cartu Bank” JSC clientele’s pledged property seized by National Bureau of Enforcement (NGE) that started by the end of the past December continues unabatedly and has deprived the Bank of up to GEL 130 million already. According to

Cartu management, the change in the tax code initiated and approved by the government in December of 2011 ascertains the tax lien priority right with the state [tax service] on expense of banks that means that in case of double-lien imposed by the Revenue Service of Georgia and any of commercial banks the tax service can seize the property even if bank’s collateral preceded tax service. The change covers the entire banking sector however has been exercising toward Cartu Bank as of yet that inclines Nodar Javakhishvili, Director General of Cartu Bank, to think this is a part of political pressures on the Bank.
More than 46 collateral-based units were seized and sold through the auction starting past December up today for half-prices, Cartu Management assures, however the strange thing is that the sole bidder for the property is economic ministry of Georgia. Past week the enforcement bureau seized GEL 5.2 million worth property of two  more business groups, Cartu clients,  and put GEL 19 million worth 26 units on auction for half-price again. However not a single of the auctioned objects has been sold as yet. Cartu management supposes that most probably economic ministry will acquire the questioned property again and will return it to property owners through a special scheme.

This way of auctioning makes Cartu management doubtful that GEL 160 million that was disbursed to the economics ministry from the state budget by end of 2011 [GEL 66 million out of the sum is earmarked to pay off the deal with Israeli businessmen detached by Georgian government past year under alleged corruption deal and released by end of 2011 through ministration of Israeli government] was targeted at purchase of Cartu clients’ auctioned property.

“The remained GEL 94 million hangs over Cartu Bank like a sword of Damocles and the sum most probably will be consumed by end of this year through politically motivated terror, the already mentioned schemes and manipulation of budgetary resources, against the backdrop of criminal silence of Georgian banking sector,” Cartu Bank’s management elaborates. 
Another argument that makes Cartu Bank think it is a political pressure is that to raise tax liabilities from tax payers Revenue Service usually implements encashment of due liabilities through banking accounts that is the fastest and most flexible tool rather than to seize the property and put them on the auction that demands much longer time.

Cartu Bank management believes that authority is interested not in tax liabilities collection but in seizure of the property that is under Cartu Bank mortgage.  
Javakhishvili believes the tax lien change that laid legal ground to Cartu clients’ property seizure is a follow up of political crackdown on Ivanishvili’s business that started as soon as Ivanishvili made political announcements early in October of 2011 challenging Georgian incumbent authority. By mid-October 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. As a consequence the National Bank of Georgia (NBG) addressed to its legal right to probe financial affairs of Cartu for two months.

Javakhishvili perceived the cash seizure as a part of political pressure 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. His doubts aggravated as the NBG did not introduce any inspection program based on which financial inspections are exercised usually, and the inspection team monitors only everyday preliminary operations instead of the transacted old deals implemented before the illicit income allegations were aroused.

Javakhishvili sent a letter to the NBG on December 30, 2011 and required explanation of legal grounds of the probe, and asked to put it in legal frameworks. The NBG did not answer although the seized money was returned to Cartu Bank. Nevertheless the NBG prolonged the probe term by another two months-round under the pretext that the probe was not connected with the money return.
Javakhishvili believes the probe will last till the upcoming parliamentary elections 2012 if international financial institutions like the World Bank and the International Monetary Fund do not interfere in the process and promises to claim on the NBG probe [that continues through similar infringements] at court.
“We will file a lawsuit on the (NBG) probe form at the moment. However there is a scrap of hope that the council of the NBG will set the underway situation in line with the legislation,” he said.

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