By Hermes Solomon
DON’T ASK me what you can do for your country; just tell me what the hell you’ve done to your country!
Between 2004 and 2011, over fifty members of various boards of Laiki Bank borrowed up to 1.8 billion euros from the bank’s coffers. It is claimed that the majority of these loans were for short term real estate ventures which turned sour in a non-performing market, but on closer examination, most of the loans seem to have evaporated into pockets of thin air.
In 2011 alone, credit facilities of more than a billion euros were granted to board members by the two largest banks, exceeding the limits set by the law, which prohibit banks from lending more than 20 per cent of their funds to board directors.
Central Bank ‘confidential data’ gives details of credit facilities granted by the two major banks to directors and related parties to ‘off-set’ capital losses suffered after the haircut on Greek bonds; data does not indicate what collateral banks took in lieu of securing these facilities.
Unlike the Bank of Cyprus, Laiki exceeded the limit of loans that may be granted to related parties sans collateral; the threshold of 2 per cent of bank equity reaching 8.66 per cent. Following the resignations of directors in 2011 and 2012, total loans declined significantly.
The names of ‘beneficiaries’ are available on http://cyprusdebt.com/what-you-didnt-know-about-laiki-bank/ most of whom are already multi-millionaires in their own right yet prefer to form limited companies on borrowed money that they, as directors, bankrupt at no personal cost to themselves.
The total amount of loans made to Laiki/BoC board members during the past eight years exceeds 4.5 billion euros, which would more than have sufficed to save the BoC from bankruptcy!
You must be asking yourself why board directors needed such huge loans. Was there any due diligence carried out prior to approving these loans? Why didn’t borrowers pay off these debts? Why were the directors allowed to borrow from their own banks in denial of ‘conflict of interests’ laws? And just why did the Central Bank, under the helm of Athanasios Orphanides, remain silent/complicit throughout?
Board directors milking the Laiki/BoC cash cows with impunity has driven savers, who lost millions through haircuts, to seek recourse to justice – now seen as a sick joke in Cyprus. And should savers ‘eventually’ win district court actions brought against banks, where is the money coming from to reimburse them?
Why should you or I be expected to cough up for the ‘pet Ponzi schemes’ of a select few, whether former board members, directors or Vatopedi Monastery monks?
But I am Batman and these Jokers must be made to answer for bringing our two major banks into criminal disrepute, causing countrywide financial chaos, the eventual closure of innumerable branches and the loss of thousands of bank employee jobs.
It is high time these Jokers were properly investigated, stripped of their assets and sent to jail. All fifty plus must confess to ruining and robbing the country blind! Their ill-deeds brought about capital controls which turned Cyprus into a ‘concentration camp’ of the destitute policed by Brussels! They laughed their way out of the banks, forcing compatriots to close down their businesses, lose jobs and default on loans.
It is time for action! I’m sick of watching them get away with grand larceny Scot free. ‘Shoot the bastards’ has become the phrase in common usage.
Calme-toi mon vieux, pour l’amour du ciel! Just tell us what went wrong.
The cause for the decline and fall of the Cyprus economy are plain to see in Dr Alan Waring’s recently published book, Corporate Risk Management and Governance: Necessary Virtues.
At a talk next week the good Dr Waring will address corporate risk management and governance requirements affecting large organisations in all industry sectors and countries, wherein he strongly advocates implementation of Corporate Governance Codes and Standards.
He challenges many hallowed beliefs, attitudes and practices that continue to hamper the delivery of effective Enterprise Risk Management (ERM) and thereby good governance. He will demonstrate how boardroom and corporate cultures that are complacent about risk exposures and management encourage ‘chancers’ and a ‘what can we get away with’ attitude. He defines what is required to embed a culture of responsible risk-taking.
Separate cases from around the world (including a number in Cyprus – our banks, Cyprus Airways, etc) provide graphic examples and lessons to be learned. His book is designed to encourage better informed risk-decision making; a comprehensive view of enterprise risk exposures, control and mitigation issues, and an awareness of boardroom and corporate culture issues and their impact on effective ERM.
Waring has 35 years’ experience in risk management consultancy. Typically working with board risk committees, individual directors and senior executives in Europe, the Middle East and Asia, his briefs have included governance-related corporate risk reviews for large organisations as well as a wide range of strategic and operational risk issues. He has contributed to the Risk Watch column in the Cyprus Financial Mirror since 2004, when the Cyprus economy first began to blatantly overspend more than it earned.
His previous books include Managing Risk (1998), co-authored with Prof Ian Glendon, and Practical Systems Thinking (1996). He is a Fellow of the Institute of Risk Management.
The event is sponsored by the Bank of Cyprus (seeking redemption) Misco Cyprus, EKO (Hellenic Petroleum Cyprus Ltd), and me and Robin of course. But we won’t be wearing our familiar ‘commedia dell’arte’ costumes on the night lest Jokers present panic then disappear.
Entrance is free. Be there!
Dr Alan Waring is speaking on June 27 at 7.00 pm at the auditorium of the Bank of Cyprus HQ, Ayia Pareskevi, Nicosia