Cyprus Mail
Business Cyprus

A&M probe assigned to police’s economy task force

By George Psyllides

A POLICE task force investigating the collapse of the economy has also been assigned the case of a controversial agreement between the Central Bank (CBC) and a consulting firm, authorities said on Wednesday.

The probe into the CBC agreement with Alvarez and Marsal was launched last week.

It was initially assigned to the CID but it has been decided to hand it over to a task force already investigating the causes of the economic downfall – mainly the bank activities.

“It is simply for better coordination and getting better results since the matters may  be linked,” police spokesman Andreas Angelides said.

CID officers have already questioned various people in connection with the case, including Central Bank Governor Panicos Demetriades.

Announcing the launch of the probe last week, deputy attorney-general Rikkos Erotocritou said it would look into charges by Demetriades that confidential documents had been leaked to the media, but also potential document forgery, and deception of board members.

Reports suggested Demetriades had agreed to pay A&M a success or recapitalisation fee of 0.10 per cent on the amount the banks used to recapitalise, including cash seized from depositors.
A&M was contracted by the CBC to advise on the restructure of the island’s stricken banking system.
CBC documents showed that A&M had even settled on €4.75 million instead of €11 million.
The regulator said A&M was not entitled to a success fee since the recap amount came from seized deposits and not as part of a bailout.
A&M said it did not seek a fee based on the haircut and insisted it was legally entitled to the €4.75 million, which were inside the range proposed by Demetriades.
The governor claimed he signed the agreement under duress – A&M had threatened to leave at a critical junction for the island’s banking system.


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