Cyprus Mail

CBC governor denies misleading parliament

Panicos Demetriades

By George Psyllides

A PROBE into the island’s banking debacle had initially focused on the biggest of the two lenders involved to avoid jeopardising possible court procedures concerning the other one, Central Bank (CBC) Governor Panicos Demetriades told the House Ethics Committee yesterday.

It also focused on Bank of Cyprus (BoC) because Laiki had been already nationalised, and authorities needed to see if the same issues existed that could have caused it a similar fate.

The committee, which convened behind closed doors, is looking into whether Demetriades misled MPs over the mandate of an investigation into the circumstances that forced the island’s two largest banks to seek state assistance.

Demetriades is alleged to have misled parliament or to have withheld information over the terms of reference of audit firm Alvarez & Marsal, which appeared to focus on BoC.
Their findings did not contain much information on Laiki, which had been bailed out by the state to the tune of €1.8 billion and had been granted some €9.0 billion in emergency liquidity from the EU before it was decided to wind it down.

The governor, who appeared before the committee with his lawyer, said he had not misled parliament in any way.

In a letter he submitted to the committee, Demetriades said Laiki had not been left out, but priority had been given to BoC because “being that CPB (Cyprus Popular Bank or Laiki) was under state control with the management having been replaced, an exigency existed to determine if BoC might have issues that could cause it a fate similar to CPB. As such, the investigation prioritised BoC relevant matters.”

Another reason was to avoid jeopardising any court procedures, the committee heard.

The correctness of the decision was confirmed by the recent interim court orders that froze around €3.5 billion worth of assets belonging to former Laiki strongman Andreas Vgenopoulos and two other people in a lawsuit against 12 natural and legal persons in Greece and Cyprus, the letter said.

It added that the probe will continue in relation to Laiki.

Committee chairman Demetris Syllouris said parties will examine the governor’s responses and give their views on the matter next Tuesday.

Ruling DISY MP Andreas Kyprianou described the presence of Demetriades’ lawyer as unusual.

“DISY will examine the facts of today’s session and will table its position on how we will proceed on the matter during the next meeting of the ethics committee,” Kyprianou said.

AKEL MP Aristos Damianou did not wish to disclose the details of what was heard in the committee, reiterating his party’s position that the matter should not have been raised in the first place.

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