Eleven questions about the case of Mamuka Khazaradze and TBC Bank - საერთაშორისო გამჭვირვალობა - საქართველო

Eleven questions about the case of Mamuka Khazaradze and TBC Bank

22 March, 2019


The events that have been unfolding around TBC Bank and Mamuka Khazaradze remain topical. Khazaradze talked, including from the parliamentary rostrum, about an orchestrated attack, the Prosecutor’s Office and the National Bank responded to his speech with public statements. Despite this, the case related to Khazaradze remains vague, and the public has not yet received answers to important questions, including from the investigation.

Specifically, it is unclear:

1. Why the Financial Monitoring Service expressed interest in TBC Bank’s April 2008 transaction and started looking into it only 10 years later, in May 2018? It is unknown whether the Financial Monitoring Service checked this particular banking operation among numerous transactions carried out between TBC Bank and its clients 10 years ago based on the random selection principle or there was some information concerning this specific transaction. Was this information deliberately concealed in order to use it when needed? Despite intense public interest in this issue, the agency has not yet offered any explanation.

2. How did the information about the beginning of monitoring get leaked to the media in June 2018?

The financial sector is particularly sensitive towards such issues, correspondingly, it is important that the agencies carrying out the examination ensure confidentiality of the information about the progress of such examination. As a rule, information about such checks is not made public, there are corresponding legal acts establishing a confidentiality obligation. In case of TBC Bank, this information, in a suspicious way, was made public, naturally causing legitimate suspicions among the public that the information was disseminated on purpose.

3. Why did media reports about an investigation started against TBC Bank precede the official statement made by the Prosecutor’s Office? According to Khazaradze, making this information public impeded and virtually thwarted the signing of an agreement aimed at raising funds for the construction of Anaklia Port; the shareholders of TBC Bank have also incurred great losses. It should also be noted that the Prosecutor’s Office confirmed for the first time that the investigation was started only on 9 January 2019, after one of the online media outlets provided an exclusive coverage of the case details the day before.

4. What was the purpose of the public statement made by the ruling party, Georgian Dream, after the briefing held by the Prosecutor’s Office? By making statements of identical content after the briefing concerning this case was held by the Prosecutor’s Office, and also by holding a briefing, Georgian Dream effectively tried to provide additional justification for the actions of the Prosecutor’s Office.

5. Are the sanctions used by the National Bank, such as fining TBC Bank twice in a row and removing the chair and deputy chair of its Supervisory Board, Khazaradze/Japaridze, from the bank management, a proportionate responsibility, and could other, milder measures be used in this case?

6. Why did the Prosecutor’s Office fail to show any interest in the statement which Mamuka Khazaradze made in Parliament when he accused the National Bank president and his deputy of alleged pressure? After this statement which contained indicators of a specific crime, the Prosecutor’s Office was under an obligation to institute criminal proceedings and take actions envisaged by the law.

7. Could a dubious transaction be indicative of money laundering? There is a suspicion that such classification of an alleged crime could be linked to the 30-year statute of limitation for investigating it.

8. Why was no investigation launched when Khazaradze, in the course the investigation, provided the Prosecutor’s Office with information that was linked to the minister of internal affairs threatening him, as he himself said. Why were the minister of internal affairs and other people involved in this case not questioned? Given the fact that Khazaradze, questioned in front of a judge magister, talked about a letter with threats received from the minister of internal affairs, it is unclear why the Prosecutor’s Office failed to launch the proceedings envisaged by the criminal law. Later, the Prosecutor’s Office made the said letter public.

9. Why investigate in a timely manner the cyberattack carried out against TBC Bank? According to Khazaradze, the staff of TBC Bank have established the IP address from which the cyberattack was carried out as well as the probable identity of the alleged perpetrators. In addition, TBC Bank addressed the Ministry of Internal Affairs with a written request to launch an investigation as early in July 2018, providing it with all the materials. According to the statement made by the deputy minister of internal affairs on 21 March, computers were seized from an office located at 12, Rustaveli Avenue, from which the cyberattack on TBC Bank was carried out. Despite the fact that most of the actions to establish the circumstances of the cyberattack had already been implemented by TBC Bank, the deputy minister of internal affairs said that the investigation has not been protracted and complex investigative measures need to be carried out.cannot/would not the Prosecutor’s Office

10. Why did the Prosecutor’s Office not launch an investigation concerning the statement made by Khazaradze in Parliament about alleged pressure with regard to TBC Bank’s participation in the programme of writing off debts in the Khazaradze said that, in order to fulfil the promise “write off debts” made by Georgian Dream before the elections, transferring (conceding) GEL 120m worth of debts to Cartu Fund for GEL 3m did not happen voluntarily but as a result of certain pressure. It is noteworthy that, also according to Khazaradze, the negotiations with banks were led by representatives of the Ministry of Finance while, officially, the Ministry of Finance was not involved in this process.run up to the elections?

11. Why has an investigative commission not been established in Parliament? When talking about an “orchestrated” attack against TBC Bank and himself, Khazaradze pointed out alleged threats made by the National Bank president and his deputy as well as the minister of internal affairs, an attempt to carry out a cyberattack against the bank, forced participation in the programme of “writing off debts” and obstacles to the development of the Anaklia Port project. Given all of the above, it is even more difficult to understand the refusal to set up a commission since its role would be precisely the investigation of the wrongdoings committed by the state agencies and officials.

For more details about the story of an investigation against the founders of TBC Bank, see the study prepared by Transparency International Georgia.