With the witnesses appearing before the judicial panel investigating the demise of the Cyprus economy nearing an end, former centralbanker Athanasios Orphanides said on Friday that the present situation is worse than in 1974, when Turkey invaded and occupied the north of the island, destroying the economy.
The former Central Bank of Cyprus Governor said that he had been trying to warn former President Demetris Christofias from as far back as in 2009 when he had contacted the presidential adviser Titos Christofides.
He said that he faced stern resistance from Finance Ministry officials as regards preventive austerity measures that were being taken by other eurozone member states.
Orphanides said that several months later he met with Christofias at his summer residence who was unconvincing as regards taking precautionary measures.
He added that the explosion at Mari in July 2011, that decimated the nearby Vasiliko power station and plunged the economy into darkness, would send Cyprus deeper into recession.
As regards the island’s biggest lender, Bank of Cyprus, taking a risky investment with the buyout of Uniastrum Bank in Russia, a deal that eventually crippled the Cypriot bank, Orphanides said that at the time it seemed like a good deal as it would open greater opportunities and that some of the problem at the subsidiary were discovered in time and remedies were in place.
Asked by president judge George Pikis about political interventions, Orphanides said that former Finance Minister Charilaos Stavrakis had pursued a more relaxed bank supervision, that he was told the central bank should avoid making comments about the economy and that the previous administration wanted to sell the gold reserves.
He said that Stavrakis’ interventions were to help a Russian bank based in Cyprus and to serve the interests of Marfin Investment Group CEO Andreas Vgenopoulos in his efforts to control Marfin Laiki Bank.
He concluded that was against banks buying Greek government bonds and that Cyprus should have applied to the European Stability Mechanism a long time ago.
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