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Central Bank Executive Director Stelios Kiliaris resigned from the board on Thursday saying that Governor Chrystalla Georgadji had a list of 29 MPs who have portfolios of non-performing loans and alleging that Assistant Attorney General Rikos Erotokritou was “on the take” from a senior partner of the law firm, Andreas Neocleous & Co. LLC.
This prompted Erotokritou to call on Georgadji to prove her allegations within 24 hours or resign as Governor, a post she has controversially held since April last year when her predecessor unceremoniously quit after the island’s economy collapsed on his watch.
The House Ethics Committee chairman, Demetris Syllouris, as well as opposition parties AKEL and DIKO, have also demanded the resignation of the entire Central Bank board, including the Governor, two Executive members and five non-executives. Kiliaris is a senior member of DIKO and former Trade Minister.
Georgadji, formerly the Auditor General of the Republic with a reputation of being above reproach and ruthless with corruption and wrongdoings in the public service, has also been blamed for changing her employment contract for exempting first-degree family members from the clause on ‘conflict of interest.’
It later appeared that her daughter was employed at Georgadjis’ estranged husband’s law firm that was hired to represent former Laiki Popular Bank strongman Andreas Vgenopoulos in legal disputes with the resolution authority, the Central Bank.
The matter got worse last week when defunct-Laiki Special Administrator Andri Antoniades also quit claiming that the Neocleous law firm defending legacy Laiki was replaced by the resolution authority (Central Bank) by the rival firm of Chrysses Demetriades & Co. LLC.
Kiliaris had alleged during the parliamentary hearing that prior to being replaced, Neocleous served subpoenas to Vgenopoulos, ex-CEO Efthymios Bouloutas and board member Kyriacos Magiras, all blamed for bankrupting the lender and claimed that Georgadji had said during a Central Bank board meeting that Erotokritou had been bribed by Neocleous.
Georgadji denies all allegations, but her days as Governor could be numbered, as she has sparked the ire of all politicians, including President Nicos Anastasiades who appointed her.
However ECB President Mario Draghi has made it clear that as the Central Bank is now an independent authority and falls under the direct regulation of Frankfurt, local politicians have no say in demanding the resignation of their local Governors.
The same happened when Anastasiades could not sack Panicos Demetriades, who had been appointed by the previous communist administration, as he was widely blamed as being aware that Laiki was bankrupt and said nothing, on the behest of former President Demetris Christofias, for fear of losing the elections in March 2013.
A week after Anastasiades won, he was faced with the dilemma of allowing Laiki to collapse and take the economy down with it, with the only solution being a 10 bln euro bailout by the Troika of international lenders (ECB, EU, IMF) and biggest lender Bank of Cyprus saddled with the Laiki debt of around 9 bln euros. As a result, Bank of Cyprus was forced to seek a bail-in of depositors and confiscated all unsecured deposits above 100,000 euros in exchange for equity, while a second capital increase in August 2014 diminished these shareholders to less than 1% of their holdings.
Bond holders and depositors at Laiki lost all their savings which was supposed to be represented by the 18% stake ‘Legacy Laiki’ held in Bank of Cyprus after the first bail-in.
Andri Antoniades was put in charge of administrating that 18% stake that has now been reduced to below 8%, by trying to recover as much of the banks assets, including those of Vgenopoulos and his team at the Marfin Group in Greece.
