Cyprus Police to launch criminal investigation into A&M contracts

The Police, following instructions from the Law Office of the Republic of Cyprus, will launch a criminal investigation into an agreement between the Central Bank of Cyprus (CBC) and consultancy firm Alvarez and Marsal (A&M).

According to press reports, members of the CBC board of directors are said to have criticized the CBC Governor Panicos Demetriades that he had agreed to pay A&M a 0.10% success fee on any amount required to recapitalise the Cyprus banks, even when recapitalisation was achieved through converting uninsured deposits to capital.

"Instructions were given today to the Police to launch a criminal investigation into possible criminal offenses in connection with leaking confidential CBC documents, forging documents and deceiving members of the Board, in addition to any other offenses involving the above persons or any other third parties," Rikkos Erotokritou, Deputy Attorney General, told a press conference.

He added that the investigation will cover the board, the governor, and possibly third parties.

Responding to the allegations, the CBC in a statement issued yesterday described the press reports over the contact with A&M as part of "orchestrated efforts being made by certain groups to compel the Governor of the CBC to resign or to promote the interests of Alvarez & Marsal."

The CBC also added that the leaking of CBC confidential documents constitute "a serious criminal offense for which the Attorney General will soon be called upon to intervene."

The CBC maintained that its external legal counsel had advised that the CBC has no obligation to pay any success fee.