Cyprus Mail

Inquiry report ‘too simplistic’

Markides argued that someone watching the hearings would know more about it than what is mentioned in the report

By Poly Pantelides 

EXPERTS yesterday criticised a panel’s report on the country’s near financial ruin as ‘simplistic and effectively toothless’, telling the public nothing they did not already know.

Former Attorney-general Alecos Markides slammed the report for failing to say anything new, while academic Stavros Zenios who was an expert consultant for the panel said the report was “very simplistic” in its attribution of responsibility.

Even inquiry member Iliana Nicolaou, though falling short of criticising the report which she co-signed, added her own addendum to the official report relying on Zenios’ work to “illuminate” certain aspects and offer a different approach “based on scientific analysis”.

Head of the committee of inquiry, Giorgos Pikis, read out the report at the Filoxenia conference centre, spinning the now-familiar yarn of years of top-down failure of governance culminating in desperate efforts to secure an international bailout in March.

Pikis, a former Supreme Court President, was flanked by inquiry members Andreas Kramvis, a former Supreme Court judge, and former Ombudswoman and judge, Iliana Nicolaou.

Pikis took no questions even though most of the report, which has been forwarded to authorities, was leaked last week.

The report holds former President Demetris Christofias as chiefly responsible “for bringing our country’s economy to the brink of bankruptcy”.

But pointing out the obvious, Zenios said an “economy cannot collapse solely on the policy of a former President”.

Though Christofias and his ministers bear “a huge responsibility,” many others also made mistakes, Zenios said, in what he described as a “vicious circle” involving a co-dependent relationship between the banks and the state’s fiscal management.

“This report does not help us as a society to have a balanced view on what happened,” Zenios said.

Markides was even more blunt: “[The report] does not say anything dramatically new that wasn’t known beforehand,” he told the public broadcaster CyBC.

“I daresay that someone watching the hearings and taking their own notes would know more about it themselves than what is mentioned in [the report’s] summaries of the testimonies,” Markides added.

Christofias was at the helm between March 2008 and February 2013. The panel’s report focused on testimonies, among them government officials and former ministers, who depicted Christofias as ignoring technocrats and experts when defining the state’s fiscal policy.

Christofias’ administration reluctantly asked for an international bailout in June last year, after the island’s major banks asked for a state bailout. The government was unable to support the lenders following years of steady deterioration of state finances.

When a new government finally negotiated a bailout this March, the terms were much harsher than anticipated.

Eventually, Cyprus was forced to shut down its second biggest lender, Laiki, placing 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.

In its report, the panel also held the then Cabinet partly responsible for failing to take a stand against Christofias’ policy, Christofias’ party AKEL, but also collation parties DIKO and EDEK, which eventually left the government for their own reasons. It has also criticised President Nicos Anastasiades and his government for being unprepared going into the bailout negotiations.

But the inquiry itself decided in its majority to backtrack on its mandate and leave out any investigations that touched on criminal and civil responsibilities. That effectively left the banks’ role out of the investigation, a decision with which Nicolaou disagreed with. In her supplementary report she drew on Zenios’ work to describe the “vicious circle of co-dependency of the banking system and public finances”.

Among those was the massive emergency liquidity assistance that Laiki was given that came to €9.2 billion by the European Central Bank, as well as landing the Bank of Cyprus with most of that amount after Laiki was shut down.

She also referred to a due diligence report by investment consultants PIMCO, whose figures on the banks’ needs contributed to a decision to raid deposits but whose results has been questioned by testimonies and three supplementary reports, she said.

For Markides, who previously questioned the committee’s legal grounding citing errors in how it was set up, one of the main problems with the report is that it could not help criminal investigations.

“Blaming Christofias for his polices is of no use to investigators looking at criminal offences,” he said. Ditto for Cabinet. He said it was parliament that approved the state’s budgets, but the committee failed to point that out. And it relied on the testimonies of people who never admitted making a mistake, blaming others instead, he added.

Meanwhile, new Attorney-general Costas Clerides has said his office would not be penalising Christofias for refusing to cooperate with the committee. The inquiry had referred the matter to the Attorney-general’s office. But Clerides said that it was the job of the legal services to discipline the former president under the law, and that even though the panel was not investigating criminal aspects of the financial debacle, it was still within their power to impose sanctions on Christofias.

Christofias, who had refused to testify because he was not allowed to read a 90-page document and stormed out of the hearing, has dismissed the report’s findings and has described the inquiry as illegal, and “full of untruths”.

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