Cyprus Mail

‘They were serving the interests of AKEL’

By Poly Pantelides

A FORMER Bank of Cyprus (BoC) senior manager who was forced to step down last year told an inquiry yesterday that he had been wrongfully blamed by people who were serving the interests of former ruling party AKEL.

Nicolas Karydas, former group general manager of risk management and markets, said Central Bank Governor Panicos Demetriades wanted to kick him out, “condemning [him] before any investigation was launched.”

The motive seemed to be political because of Karydas’ “objective stance” when examining loan requests from people or companies affiliated with ruling party AKEL, Karydas claimed.

He was testifying at an ongoing committee of inquiry looking into the near collapse of the country’s economy and banking sector.

Karydas had been forced to step down in July last year a few weeks after the resignation of BoC CEO Andreas Eliades.

BoC had just requested state assistance, having incurred huge losses following the Greek debt write-down in 2011. At the time, BoC’s Greek debt holdings were worth more than €2 billion.

By late August last year, Karydas was forced to leave permanently, becoming a scapegoat, he said.

He added that his former peers became free to “impose their own views” on global firm Alvarez & Marsal, which carried out a probe into BoC’s acquisition of Greek debt.

Karydas, who suggested the probe was ultimately guided by Demetriades, said by leaving BoC he lost access to documentation that would have strengthened his defence.

Alvarez & Marsal said in their report there was a dominance of senior executives, namely Karydas and Eliades, “resulting in a culture whereby senior management decisions were not challenged.” Karydas was a member of the executive decision-making committees and risk committees.

The independent probe said Karydas’ dual role as general manager of risk and markets “did not constitute best practice and posed potential conflict of interest”.

The former executive told the inquiry that contrary to Alvarez & Marsal’s report, the bank’s executive board had decided by March 2010 to reduce investment amounts in Greek bonds but said the opinion prevailed at the time that Greece was not at risk of defaulting.

He also dismissed claims that Eliades and himself would issue instructions to buy Greek bonds verbally rather than in writing. Karydas said BoC executives had approved the lender’s expansion to Greece that entailed 75 new branches and expanding credit by 37 per cent between 2009 and 2012. No one referred to any risk stemming from Greece, he said.
But responsibilities are collective and not solely his own, he added.

Karydas said that BoC chief executive Yiannis Kypri – who had asked him to step down – was friendlier towards AKEL and had arranged for the wife of AKEL general secretary Andros Kyprianou to get a job at the bank’s Cultural Foundation in violation of existing policy and austerity measures.

The former executive said Kypri arranged this with Vassos Shiarly who later resigned from BoC to become finance minister in the AKEL government. Karydas alleged that in May and June last year, former president Demetris Christofias and Kyprianou would call Eliades and former BoC chairman Theodoros Aristodemou to ask for loan extensions worth millions of euros for Miltiades Neophytou, the former chairman of AKEL-affiliated Nicosia football club Omonia, whose accounts financed the club, Karydas said.

Earlier this year, Neophytou confirmed rumours that the club had millions in debt, facing sanctions by UEFA for going into excessive debt.

Karydas claimed that irregular goings-on in Neophytou’s accounts were allowed to continue by Shiarly, despite the internal regulations.

After Shiarly left, Karydas said, he became “an obstacle” because he had previously “refused to serve the interests of one party”.

Kyprianou later yesterday issued a written announcement expressing his sorrow over Karydas testimony, which “attempted to blame others in his effort to shake off any of his own possible responsibilities”. Kyprianou lamented that politics was being reduced to gossip and said he would refuse to engage.

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