The Supreme Court has overturned a jail conviction for former Bank of Cyprus boss Andreas Eliades, clearing him of charges that he sought to manipulate the share price before the financial meltdown in 2013.
Eliades, who resigned from the bank in 2012, was jailed for 2-1/2 years in January on charges that he issued misleading statements about the lender that was hit heavily by its exposure to debt-laden Greece.
At the helm of the bank for about eight years, Eliades was accused of understating a capital shortfall at the bank.
Cyprus's criminal court convicted Eliades of telling shareholders at a meeting in June 2012 that the bank had a €200 million shortfall, before citing a figure double that in a letter he wrote to the central bank governor a day later.
His conviction was part of the government’s determination to apportion blame to those responsible for the collapse of the economy that ushered in a bailout and a period of high unemployment and a harsh austerity measures.
Many blame irresponsible and risk-taking banks for the financial crisis that nearly bankrupted the country.
After reviewing an appeal, the Supreme Court said in a majority ruling that any incorrect comments by Eliades were not intended to manipulate the stock price of the bank but were aimed at placating individuals at the shareholders meeting.
In its ruling, the court said this did not constitute a crime offence as judges agreed it was done under pressure of the moment and there was no calculated scheme to hoodwink investors.
"It is clear, under the circumstances, that this was not an attempt to manipulate the market … but an attempt by the appellant to avoid the pressure of the specific circumstance, angry shareholders and their persistent questions," the ruling said.
In a written statement Attorney General Costas Clerides said he disagreed with the decision: "It makes proving such cases before a court near impossible."
He added: “We express our disagreement with this majority ruling, both on its legal aspect and the
logic which has been put forward.”
A combination of fiscal slippage and heavy exposure to Greek debt by local banks, written down in a deal approved by the European Union to make the debt mountain more sustainable in early 2012, snowballed into a banking crisis for Cyprus.
Cyprus was forced to accept an international bailout in 2013, though creditors refused to help commercial banks.
Bank of Cyprus was forced to bail-in uninsured deposits above €100,000. Less than 50% of uninsured deposits were converted into equity to recapitalise the bank.
The bank's senior management composition has undergone a complete overhaul since then, and its shareholder structure altered.