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CYPRUS: First crooked banker arrests by year-end

02 September, 2014

 * Directors investigated for 2009-2011 dealings *

President Nicos Anastasiades has set an ambitious target to make the first arrests of crooked bankers that led to the economy’s collapse by the end of the year.
Lax supervision by state and Central Bank officials, senior bankers, as well as board members resulted in Cypriot banks buying billions of euros worth toxic Greek government bonds, decimating their capital reserves that were written down by common decision of EU leaders, including then President Demetris Christofias.
As a result, Laiki Popular Bank and Bank of Cyprus, reported losses of more than a billion euros each, with the first bank forced to shut down and taken over by the latter, whose depositors were subjected to a bail-in and became the bank’s new shareholders.
Further incompetence by managers and directors saw uncontrolled flight of cash, as well as dishing out loans by the bucket load, with mortgages now worth more than the properties and the banking system burdened with non-performing loans (NPLs) reaching nearly 50% of their loanbooks.
The final blow to the Cypriot banks was when the central bankers of Cyprus and Greece colluded to take over the Greek operations of Laiki, Bank of Cyprus and Hellenic Bank and sold to Piraeus Bank for a fraction of their worth.
President Anastasiades took part at the meeting of the Financial Crime Investigation Bureau (FCIB), housed at the Filoxenia conference centre in Nicosia, where he was briefed in detail by the Attorney General and the Head Investigator for the course of investigations so far.
In statements after the meeting, Anastasiades said that he was briefed on the various offenses that seem to have been perpetrated by various banking officials.
“I have been briefed over the state of investigations so far, concerning specific crimes,” he said, adding that there will be a regular briefing every month on the progress made.
The President said that the state will show “zero tolerance” towards every attempt to cover up anyone involved in any crime.
A thorough investigation and the punishment of those responsible for the demise of Cyprus’ financial system are a wider social demand as well as the state’s objective, the President added.
Moreover, he dismissed criticism over delays or cover-up attempts, noting that the amount of time required to put forward the evidence is due to Cyprus’ austere legal system.
He said he was satisfied with the course of investigations and noted that progress will become evident in the next few weeks with the results to be produced by the investigators.
Reports suggest that within “the next few weeks” two dossiers of prosecution files will be concluded, that will contain six or seven cases each that refer to the actions of bank board members from 2009 to 2011.
At the same time, prosecutors are headed to Athens to coordinate their investigations with the Greek authorities so as there is no legal overlap or loophole in any of the cases.
On the other hand, the super server that was supposed to have been purchased to store the immense volume of data and to be able to process them at a fast pace has not been delivered yet as the authorities have yet to finalise the supply contract and the hiring of specialist from a UK-based advisory firm to run the programmes.
The FCIB has already hired two local banking experts, two accountants who had previously assisted with the audits at the Cooperative Central bank, and an expert who had been hired by the House Watchdog Committee to investigate the banking sector’s and the economy’s collapse.