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Cyprus

AG’s office handed BoC probes

THE ATTORNEY-general’s office was yesterday handed two previously withdrawn probes drafted by the Securities and Exchange Commission (SEC) relating to Bank of Cyprus.
The SEC had recalled its findings regarding the two inquiries following a court ruling earlier this year.
That court decision came after an appeal lodged by the bank’s legal advisor, who argued that the inquiries had begun before the official publication of the appointment of one of the members of the SEC’s board, rendering void any subsequent decisions taken by the SEC.
On the advice of its lawyers the SEC withdrew the probes due to the court ruling, but then launched fresh investigations.
One of the SEC probes, initiated in July of last year, concerned the decision by Bank of Cyprus (BoC) to seek state aid of €500m, instead of €200m as it had initially announced. The second inquiry concerned the conditions under which the bank bought Greek government bonds and whether the lender had made the necessary announcements to investors.
In June of last year BoC said it needed €500m to reach its €1.56bn recapitalisation target without which it would fail European Central Bank (ECB) stress tests at the end of that month.
That announcement came 48 hours after the government had asked EU for a bailout of its own.
In December 2012 the SEC had found that BoC had acted in breach of the law regarding its request for state support to the tune of €500 million, because it had originally said it would need €200m.
Deputy attorney-general Ricos Erotokritou said yesterday that the actions of the legal advisors of either the bank or the SEC, or both, could potentially constitute a cover-up.
The potential cover-up would pertain to actions prior to the recalling of the SEC’s findings, he added.
The SEC’s initial findings should have been made public regardless, Erotocritou said.
Countering, Polis Polyviou, of the Chrysafinis and Polyviou law firm – legal advisors to the bank – denied any malfeasance.
The law firm had merely taken recourse with the courts, Polyviou said, adding that this was a right enshrined in the constitution.

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