By Poly Pantelides
THE SECURITIES and Exchange Commission (SEC) will be investigating potential law violations in relation to loan agreements between the former Laiki Bank and Marfin Investment Group (MIG) that were secured with MIG shares as collateral.
SEC officials have been instructed to investigate potentially misleading statements or information in financial statements and leaflets in relation to the loans handed out by Laiki to MIG, SEC chairwoman Demetra Kalogirou told the Cyprus News Agency.
She said new data had arisen meriting an investigation, adding that they would be working alongside the state’s legal services. Police have been ordered to launch a criminal probe into what caused Cyprus’ economic meltdown to span the years 2006 to 2013. This will include the transfer of capital from Laiki Bank to Greece. Because of the technical nature of the investigation, SEC will be assisting police.
In June, the Nicosia district court issued an interim court order freezing assets worth about €5.3 billion belonging to former Laiki Bank strongman Andreas Vgenopoulos and two others, former Laiki CEO Efthimios Bouloutas and former board member Kyriacos Magiras. The orders, which have a global reach, were secured by the administrator overseeing the resolution of Laiki. The court also banned Vgenopoulos’ MIG Holdings SA from making any transfers or payments to the benefit of the three men.
Vgenopoulos responded by announcing he was suing the administrator, claiming she defrauded the court and committed perjury when seeking the injunction to freeze his assets.
The SEC is currently examining a statement by Bouloutas in relation to prior statements he made claiming Laiki was healthy, solvent, and had no capitalisation needs.
The SEC is also investigating Laiki’s heavy investment in Greek debt and potentially misleading statements in relation to the investment, and has asked former executives to explain why they did not publicise a decision to buy back Greek bonds. A Greek debt write-down in 2011 severely impacted Laiki.
Cyprus has been forced to shut down Laiki and impose huge losses on Bank of Cyprus depositors in order to keep it afloat and secure a €10 billion bailout loan from international lenders. The Bank of Cyprus got landed with over €9.0 billion that Laiki had amassed in emergency liquidity assistance.
Vgenopoulos resigned from Laiki’s board in November 2011, followed by Bouloutas in December that year, and by the summer of 2012, the government was forced to bail out the lender to the tune of €1.8 billion, acquiring 84 per cent of its share capital. The bank had failed to attract capital investors. By March this year, Laiki only had €125 million in funds, according to the Cyprus Central Bank.