Four of the five former members of the Bank of Cyprus top brass who were facing criminal charges for market manipulation, concealing the capital requirements of the bank at an AGM and of misleading shareholders at the same AGM, were cleared on Thursday. The court found the bank’s former CEO Andreas Eliades as well as the bank guilty of one of the charges – misinforming the shareholders at the AGM of the bank’s capital needs.
This was the first case brought as part of the politicians’ pledge to punish the people responsible for the collapse of the economy. There are two more cases currently in the courts – in one Laiki Bank officials face charges regarding market manipulation while the other relates to the Bank of Cyprus. How much longer they would last is unknown because these are complex cases involving many defendants, each with his own attorney. The first trial, which still has not heard the pleas for mitigation, had 105 days of hearings, stretching over three years and involving 30 prosecution witnesses; the court ruling was 236 pages.
After Thursday’s ruling, there will not be many people expecting that the politicians’ promise would be kept. Newspapers, which had campaigned as vigorously as the politicians for the punishment of ‘guilty parties’, expressed their disappointment in their reports about the ruling. “The notorious administration of justice regarding the responsibilities for the economic catastrophe is becoming remoter,” reported Politis and added: “Four whole years later, the announced and costly investigation for the prosecution of the guilty is yielding no results.” Phileleftheros wrote: “The conclusion of the first big trial regarding the collapse of the economy does not respond to the inordinate expectations created.”
These inordinate expectations, it has to be said, were created by the politicians and the newspapers and the reason the costly investigations were yielding no results was because it is an impossible task to pin the collapse of an economy on five, 10 or 20 individuals and prove criminal responsibility. Aware of the impossibility of the task, attorney-general Costas Clerides decided to focus on a specific issue in the belief there were adequate grounds for the successful prosecution of a group of bankers. Nobody could claim that the misleading of the Bank of Cyprus AGM in June 2012 had anything to do with the collapse of the economy. It certainly did not cause it.
In May of that year the legislature had voted for a cash injection of €1.8 billion into Laiki which was insolvent, while in June the Christofias government, which lost access to the markets in 2011, had asked for economic assistance from the EU. The economy was heading for collapse long before the bankers misled the AGM about the bank’s capital needs, but Clerides, under pressure from the government, had to satisfy society’s demand to punish some who could be linked to the collapse. Millions were spent on the investigations that have been in progress for four years and a few individuals might eventually be put behind bars for specific crimes, but not for the collapse of the economy.
The truth is that far too many people contributed to the collapse. That the bankers showed recklessly poor judgment in their business decisions there is no doubt. They allowed the banks to become too big for the size of the economy by piling up deposits and lent money indiscriminately causing a huge property bubble that was certain to burst. They also invested billions in Greek bonds at a time when no prudent banker would have taken such a suicidal gamble. These were colossally poor business decisions but were they criminal offences? The late Andreas Vgenopoulos may have driven Laiki to bankruptcy but while he was doing this he was receiving lavishly positive write-ups in the press which now want to punish those responsible for the collapse. And what was the Governor of the Central Bank, the supervisory authority, doing while the bankers were mismanaging the banks and taking massive risks with their depositors’ money? He performed his duties appallingly – he even allowed the Bank of Cyprus to expand in Russia – but had he committed a crime?
And what was the role of the politicians in the collapse? The then president Demetris Christofias bankrupted the state with his profligate welfare spending that none of the parties opposed until it was too late. He borrowed €2.5 billion from Russia in 2011 to avoid taking the tough decisions that were desperately needed to save the economy and was applauded by the rest of the parties; his incompetence also led to the blowing up of the main power station, costing the state a billion. In 2012 he requested assistance but for six months refused to sign an assistance programme, allowing the situation to get worse. And the politicians that pandered to the bankers that funded their parties that stood by and watched Christofias throw away the taxpayer’s money without a word of protest had no responsibility for the collapse? And the media with their big bank advertising budgets?
Punishing those responsible for the collapse of the economy would be welcome but it is fantasy, which the politicians promote to deflect attention away from their own responsibilities. They have succeeded in this regard as they have imposed the view that only the bankers were to blame but the court decision spoiled the narrative.