Cyprus Attorney-General Petros Clerides announced today he will launch a criminal investigation into the circumstances the Bank of Cyprus has acquired the Russian Uniastrum Bank.
Clerides announced the launch of the probe during a hearing of the three-member investigation committee, appointed by Cyprus President to investigate the circumstances under which Cyprus resorted to the EU bailout mechanism.
On Tuesday, President Nicos Anastasiades gave instructions to Clerides to investigate the circumstances of the acquisition of 80% of Uniastrum for €371 million in 2008. Anastasiades` instructions came after a request by Democratic Party President Marios Garoyian who met with Clerides requesting criminal investigation into the circumstances of the acquisition.
Alvarez and Marsal, a global financial forensic experts firm, appointed by the Central Bank of Cyprus to investigate the circumstances under which Cyprus` two largest banks had to request state support, ascertained that Bank of Cyprus went ahead with the purchase despite reservations expressed by a due diligence report. In its report, A&M also said that Bank of Cyprus considered but did not act upon the advice they received from their legal advisors, White & Case LLP law firm, advising the Cypriot bank to either renegotiate the purchase price or withdraw from the acquisition.
Noting that no criminal offences arise from A&M report, Clerides said Garoyian`s letter implies specific significant criminal offences which are up to him to be investigated.
"I could not shake off this burden," Clerides said.
Clerides said it would be appropriate for the Committee to be left to complete its investigation, noting that parallel probes are not helpful to the investigation of any case.
"If criminal offences arose from the Committee, the Attorney-General would be obliged to proceed with investigating these offences," he said.
On his part the Committee Chairman, former President of the Cyprus Supreme Court, Giorgos Pikis said the Committee, which intended to investigate the operation of the banks, as well as their regulator, the Central Bank, will issue an interim decision on the next steps following this development.
Pikis wondered whether the appearance of persons who will be involved in the criminal investigation would affect civil or penal proceedings before a Court.
Clerides responded that it is up to the Committee to invite persons to be considered as defendants in a criminal or civil case, advising however that the Committee should proceed and investigate the issue.
He also made clear the investigation committee is not a court, noting that only a court ruling could determine whether one is guilty or not. "The Court is the ultimate judge," he said.
Excluded from international capital markets since April 2011, Cyprus applied for financial assistance from the EU bailout mechanism, in a bid to rescue its two largest banks that sought state support after writing down Greek bonds amounting to 4.5 billion following the Greek sovereign debt haircut.
