Cyprus Mail

Conclusions of investigation into financial collapse

The three person panel from left to right, Andreas Kramvis, Giorgos Pikis, Iliana Nicolaou

By Poly Pantelides

The head of a three-person panel which has recently completed an investigation into how the country came a step away from financial ruin presented on Monday morning a lengthy report summarising the inquiry’s findings.

Former Supreme Court President, Giorgos Pikis was flanked by inquiry members Andreas Kramvis, a former Supreme Court judge, and former Ombudswoman and judge, Iliana Nicolaou.
The inquiry held a press conference at the Filoxenia conference centre the lengthy document spinning the now-familiar yarn of years of top-down failure of governance culminating in desperate efforts to secure an international bailout in March.

Nicolaou has filed an additional statement, which was not read out because it did not represent the opinion of the panel in its entirety, she said. Her statement is due to be released later on Monday via the press and information office. The panel did not take any questions at the end of the reading.

The report, which has already been leaked to the annoyance of Pikis who said that that should not have happened, holds former President Demetris Christofias primarily responsible “for bringing our country’s economy to the brink of bankruptcy”. Christofias was at the helm between March 2008 and February 2013. Although his administration reluctantly asked for an international bailout in June last year, unable to support the country’s major lenders that needed state help, it was the current government that was forced to negotiate bailout under much harsher terms than anticipated.

Cyrus was forced to shut down the island’s second biggest lender, Laiki, and place the biggest, the Bank of Cyprus, under administration. The Bank of Cyprus’ depositors have also had to accept a 47.5 per cent haircut on their uninsured deposits in return for equity in order to recapitalise the lender.

The report holds Christofias responsible for drawing up state policy in a way that ignored economic indicators, as well as technocrats and experts recommending curtailing expenses.

But the report also claims President Nicos Anastasiades and his government were ill prepared for bailout negotiations, although it concedes the president’s position was difficult. The Eurogroup decided to seize a percentage of all deposits in all banks to recapitalise two stricken lenders. Parliament rejected the decision and 10 days later the island was forced to agree to worse terms set by the Eurogroup.

The report also summarises the major lenders’ actions and weighs in on their behaviours. A number of former bank executives as well as the current and former Central Bank chiefs had testified before the committee.

Christofias has dismissed the report’s findings, describing the inquiry as illegal and saying it was unprecedented and humiliating for Cyprus, for judges to judge political decisions of the elected president.
The former president had refused to testify before the committee because, in line with procedure, they had not allowed him to read a lengthy statement. He was asked by the panel to wait until the end of the session to read the text, after which he refused to answer their questions and stormed out.



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