Officials look to shore up central bank following governor’s arrest

Prosecutors arrested BoA Governor Ardian Fullani and the bank’s senior auditor, Elivar Golemi, on Sept. 5, charging them with abuse of office for alleged mismanagement in connection with the large theft from the bank’s reserves that was discovered in July.
TIRANA, Sept. 10 – Following last week’s arrest of the central bank governor, Ardian Fullani, and his dismissal by the bank’s board, authorities are looking to shore up operations at the key financial institution by finding a replacement for Fullani and others bank officials who have been either sacked or resigned as a result of an investigation into the theft of nearly $7 million at the Bank of Albania.
Prosecutors arrested Fullani and the bank’s senior auditor, Elivar Golemi, on Sept. 5, charging them with abuse of office for alleged mismanagement in connection with a the large theft from the bank’s reserves that was discovered in July.
Fullani, who had served as central bank governor for a decade and formerly worked as a banker in the private sector, was arrested over the theft of Lek 713 million by a central bank employee.
Albi Serani, spokesman for the Prosecutor General’s Office, said the Bank of Albania chief was taken into police custody following the issuing of a court order late last Friday.
The money was allegedly stolen over the past four years, and Albanian authorities have already arrested 16 central bank employees in the case.
A relative of one of the bank’s staff has also been put under arrest, taking the total number to 19, including Fullani and Golemi.
A statement released by prosecutors said the two senior officials were facing charges because “due to their non-action, have created the conditions” for security violations, and Fullani allegedly failed to competently execute his responsibilities.
Prospectors said Fullani had failed to plug gaps in oversight at the treasury due to a lack of personnel and regulations, all of which had made the theft possible.
The arrests come five weeks after a worker at the central bank admitted to stealing money over the course of four years, taking new bank notes printed in Switzerland when they arrived at his workplace and replacing them with old books.
Prosecutors said Fullani had not proposed a deputy governor for several years, creating a vacuum in the hierarchy meant to supervise the use of banknotes in the vault. They said that as chairman of the bank’s supervisory board Fullani had failed to win approval for rules on the functioning of the treasury, which also made the theft possible.
Prosecutors are still trying to determine what happened to the stolen cash. One of the 16 previously-arrested employees, Ardian Bitraj, had confessed after stealing the cash over four years. He told prosecutors he had done so to feed his gambling addiction, betting large sums on the soccer World Cup.
Fullani, 59, was appointed governor in 2004, and is serving his second seven-year term.
If the charges are proved, the officials face a maximum 7-year prison sentence.
The Tirana court ruled on Sunday that he should await trial in jail, despite his protests and those from his lawyer. The same decision was also taken for Golemi, as both officials were denied bail.
Fullani said considered himself innocent and added that he should not be kept under arrest when charged only with abuse of office.
Two days after the arrest, Albania’s central bank board proposed to parliament that Governor Fullani be sacked after his arrest, saying that he had “violated ethical rules and heavily damaged the interests of the Bank of Albania.”
Elisabeta Gjoni, the first deputy governor, was nominated as the acting governor.
The six-member board, with Fullani as chairman, ruled against his sacking by five to one soon after the theft was discovered in late July.
Defending his record at that time, Fullani said the bank itself had denounced the theft.
Both President Bujar Nishani and Prime Minister Edi Rama have backed Gjoni, Fullani’s deputy whom the board chose as acting governor.
Country’s stability ‘completely intact’
Prime Minister Rama said in a press conference following the arrests that financial stability in the country is completely intact despite the investigation into the theft and the resulting arrests.
“Everything that has happened this week brought to public attention an internal problem of the bank, regarding the management. The stalemate of the bank has to do with a problem of internal administration and it isn’t related to the financial system. Fortunately, the financial stability is completely intact and guaranteed,” Rama said Monday.
It was a sentiment echoed by the bank’s supervisory council, which nonetheless asked the country’s officials in charge of finding a replacement for Fullani and Golemi to act quickly to fill the void left behind particularly for the auditor’s position and the deputy governor has now stepped as acting governor.
Officials looking for new governor
Prime Minister Edi Rama has started to hold daily meetings on finding ways and a compromise for a new candidate for Fullani’s post.
On Sunday, he met with his coalition partner, Ilir Meta, Parliament Speaker and leader of the Socialist Movement for Integration party and then continued with President Bujar Nishani.
Rama said that with the president they had agreed to work to strengthen the bank’s independence while guaranteeing higher standards of professionalism there, Rama’s office said.
Rama also said he was working with international partners, the International Monetary Fund and other international experts.
The premier expressed his support to the work of the bank to “overcome the situation with a full and professional authority” and also assured them of the respect for its independence.
Albania’s 1998 constitution enshrines the independence of the central bank and backing from the International Monetary Fund and the World Bank have helped the central bank to pursue a monetary policy largely independent of government pressure.
In cooperation with the parliament, he said they would undertake with high moral and legal responsibility all the necessary steps so that the Bank of Albania comes out stronger morally, institutionally and more transparent administratively and, no doubt, fully independent, from such a situation that should be never repeated in the future.”
Rama also visited bank offices where he met with Acting Governor Elisabeta Gjoni and the bank’s staff to assure of their support.
Rama said on Monday that Albania’s new central bank governor will not be a politician, signaling that parliament intends to approve a proposal from the central bank’s board to sack Fullani after his arrest.
Rama said his ruling Socialist Party would not vote for a replacement from among “politicians or former politicians … who would not help foster the Bank of Albania’s reputation.”
He added “we surely want to give the Bank of Albania a governor who will be hailed internationally as an incontestable professional and moral candidate. The new governor must be an expert of the banking system and must come only from banking,” Rama told reporters, also ruling out any former finance ministers as possible contenders.
Three vacancies need filling in the nine-member board, and Rama said his party and its allies would act “speedily and decisively” while respecting the bank’s independence.
Media commentators and several former officials have put forward the idea of having a foreign banker take as central bank governor, a move that is not without precedent outside Albania, however one that is likely to prove controversial.
President Bujar Nishani, who constitutionally gets to nominate a new bank governor, has remained silent on the bank scandal.
He made no statement until he met with Prime Minister Edi Rama and later with main opposition Democratic Party leader Lulzim Basha.
Basha said he had expressed the opposition’s support for the bank’s independence and for stability in monetary policy.
Basha, whose Democrats gave Fullani a second seven-year mandate when in power three years ago, has voiced concern about the ruling parties wanting to “take control” of the central bank.
Council urges parliament to fill vacant posts
Adrian Civici, one of the board members, resigned from the post, sending a letter of resignation to the parliament. He said his resignation would make possible the restructuring of the board and the bank itself. He said he had wanted to resign as soon as the theft was discovered but has chosen to stay on to keep the council stable.
The supervisory council, the BoA’s board, now itself risks a quorum as out of its original nine members, only six are left – in addition to the resignation, two seats have been vacant for several months.
In a statement, the council noted that “although legal provisions are adequate for the work of the Bank of Albania to be normal in the current situation, there is a need to quickly fill the vacant seats in the management of the institution.”
The central bank’s supervisory said that the scandal at the central bank had in no way affected the financial markets in Albania and the performance level of deposits, and Albania had a stable situation in its banking operations.
Earlier, the association of banks operating in Albania had issued a statement along the same lines.
“The stability of commercial banks in the country is not affected. The banking system remains liquid, well capitalized, with a steady growth and a consistent performance,” the association said following the developments at the central bank.