BPA's Majority Shareholders Sue Andorran Authorities for 364.6 Million Euros In Damages

Ciercos Claim Andorra's Actions Inflicted Irreparable Damage to Banca Privada d'Andorra.

ANDORRA LA VELLA, Andorra, June 13, 2016 /PRNewswire/ -- The Cierco family, the majority shareholders of Banca Privada d'Andorra (BPA), have filed suit against the Andorran Government and the Andorran National Institute of Finance (INAF) for the damages caused to BPA as a result of what they call "reckless negligent and arbitrary actions of the bank's administration" after it was seized by the Andorran authorities on March 10, 2015. 

The 125 page lawsuit, which was filed this week in Andorra's Administrative Court, states, "the repeated breach of the duties and obligations of the Andorran government and INAF, which took place before and after the issuance of the FinCEN notice on March 10, 2015, constitute a failure of the Andorran Government to meet its constitutional duty."

Based on two independent valuations that are included in the complaint, the Ciercos are seeking €364.6 million in damages, which is representative of their 75.5% stake in the bank. The Ciercos claim the damage the Andorran authorities inflicted on BPA is approximately the same value as Andorra's annual GDP.  The Cierco's lawsuit claims that Andorran authorities faced numerous warnings and requests that if acted on could have mitigated the destruction of their asset.

"Fifteen months ago BPA was a healthy, compliant and robust business with a great opportunity for growth. The bank is now destroyed and the Cierco family was never afforded the right to defend itself," said Eric Lewis, the Ciercos' Lead Global Coordinator.

In the aftermath of the U.S. Treasury's Financial Crimes Enforcement Network's (FinCEN) March 2015 Notice of Finding and Notice of Proposed Rulemaking, the Andorran authorities had the opportunity to take constructive steps consistent with preserving the value of the bank, the jobs of Andorran citizens and the safety and soundness of the Andorran economy.  Mr. Lewis said, "Instead both the U.S. and Andorran governments have acted exclusively behind closed doors without any transparency whatsoever."

Anton Smith, the Economic Attache at the US Embassy to Spain stated in May 2015 that the U.S. government was forced to drop the "hammer" on BPA because of a lack of cooperation from Andorran authorities.  The Ciercos' complaint outlines Andorra's inadequate response to U.S. requests in 2014 regarding money laundering precautions that served as a catalyst for FinCEN's actions against BPA.

FinCEN's action against BPA relied primarily on three cases that BPA self-reported to INAF in 2014. It is still unclear whether INAF shared this information with FinCEN. The Ciercos' assert that the intervention of the Prime Minister on March 10, 2015 generated alarm and caused other financial authorities to act against BPA, including the Spanish authorities with Banco Madrid, thus inflicting more damage to the value of BPA.

The Ciercos' complaint amends their complaint filed on October 14, 2015 incorporating new facts as a result of the evolution of this case. The complaint includes two separate economic reports that value the BPA Group between 482.8 million and 496.4 million euros and asserts damages at 364.6 million euros, which is equivalent to the Ciercos' 75.5% stake in the bank. 

In the claim, the Ciercos reject the conclusions of INAF that found BPA was no longer a viable institution. The Ciercos further assert that this entire situation has been handled without any respect for the rule of law and the Ciercos' due process rights.