FBME liquidation process to continue despite Arbitral Tribunal's ruling on shareholders' access rights

The process for the liquidation of the Federal Bank of Middle East, a Tanzanian based lender operating in Cyprus, on the grounds of "money laundering and of financing terrorism", will continue as planned despite a decision by an international tribunal granting to its shareholders a right to access its premises, the Central Bank of Cyprus (CBC) said on Saturday.

In a statement posted on its web-site, CBC said that the Paris-based Arbitral Tribunal of the International Chamber of Commerce had actually turned down an application by the shareholders "for an order stopping actions of the CBC in relation to the liquidation" of FBME until a final court liquidation order is issued.

The lender was placed in administration in July, 2014, on the basis or a report by the Financial Crime Enforcement Network of the U.S. Treasury that FBME was "of primary money-laundering concern" and also had links with Hezbollah.

CBC revoked FBME's banking license in December, 2015 and ordered its liquidation, banning access to the bank's premises in Nicosia both to its shareholders and employees.

It also fined FBME 1.2 million euros (about 1.33 million U.S. dollars), citing the bank's failure to comply with anti-money laundering legislation and preventing the "financing of terrorism".

The Bank was founded in Cyprus in 1982 as a subsidiary of the Federal Bank of Lebanon SAL, as the property of Lebanese brothers Ayoub-Farid Saab and Fadi Saab. It later moved to the Cayman Islands before establishing its head office in Tanzania.

The Arbitral Tribunal granted the owners request for access to the premises of the bank "in the presence of their counsel and subject to practical arrangements to be agreed to by the lawyers for the parties in the ICC arbitration."

"As yet no agreement has been reached on those arrangements," the CBC statement said.

It also asserted that "the decision of the Arbitration Tribunal does not invalidate the decision of the Special Administrator to terminate, after the withdrawal of the banking license of FBME, the employment of Messrs Farid and Fadi Saab or give them any right to direct or intervene in the operations and management of the branch."

A source of the Special Administrator of the bank told a local newspaper that the issue is not whether the owners are allowed physical entry to the building but rather whether it would be permanent and unfettered, giving them the opportunity to interfere with or manipulate the liquidation process. Endit