Cyprus Mail
CM Regular Columnist

Who really ran Laiki Bank into the ground?

Former Cyprus president Tassos Papadopoulos

Loucas Charalambous

In response to comments at a parliamentary committee meeting this week, Deputy Attorney-general Rikos Erotokritou has said that his office will look into the role of the Central Bank in regards to the acquisition of Laiki Bank by Andreas Vgenopoulos. The deputy AG was understood to be alluding to the view expressed by the current administrator of Laiki, namely, that things at the bank began to deteriorate as far back as 2006 and that the Central Bank (whose governor at the time was Christodoulos Christodoulou) seems not to have performed the necessary due diligence on the transaction.

But if the role of the Central Bank in Laiki’s destruction is to properly investigated, and in depth, the deputy AG must know that the first individual he will encounter at the very start of this sad story is Tassos Papadopoulos. It is the same Papadopoulos for whose sake Erotokritou abandoned his own party in 2004 in order to join the camp opposed to the UN peace plan. The same goes for Demetris Syllouris, chairman of the House Ethics Committee, which for some time now has been hunting down – supposedly anyway – those guilty for the country’s economic disaster in a bid to shift the public’s attention away from the true culprits, that is to say, the MPs who in collaboration with Demetris Christofias doubled the public debt within the space of five years, leading the state to bankruptcy.

In reality, Laiki’s path to disaster did not begin in 2006, but 14 years earlier, in 1992. That was when Papadopoulos, in cahoots with former Laiki strongman Kikis Lazarides, and with the blessings and cover of then-Central Bank governor Afxentis Afxentiou, who acted as a facilitator, started bringing here millions of dollars out of Yugoslavia, helping Milosevic make weapons purchases, in contravention of relevant UN Security Council resolutions, which our own government had ratified. As is well known, that dark affair tarnished Cyprus’ reputation internationally. Cyprus was seen as aiding and abetting ethnic cleansing in Bosnia and Kosovo, while the Financial Times described Laiki as “the defiant bank that helped finance two wars.”

But the affair had another outcome. HSBC, the major shareholder in Laiki with a 22 per cent stake, packed up and left. Today no one doubts that had HSBC, the banking behemoth with annual profits exceeding Cyprus’ GDP (the bank posted a $5.1bn profit for Q3 2013), stayed in Cyprus, Laiki would still be alive and its depositors would not have lost their money. HSBC would never have allowed Laiki to turn into a “piggy bank”, as the Laiki administrator called it.

Let the truth be told: the key culprits for Laiki’s demise are those people who dragged the bank into the messy “Milosevic scandal”. That is to say, Papadopoulos, Lazarides and Afxentiou. A propos, it never ceases to amaze that Afxentiou was hired as a consultant to the committee of inquiry, that farce of an investigation launched by the government. Although the scope of the inquiry included HSBC’s departure, this was never investigated by the committee. And instead of treating Afxentiou as one of the accused, they appointed him as consultant to the panel!

Only in our sham of a state could such a thing happen. In reality, then, these are the people who drove out HSBC in order to cover up their own disastrous actions during the period 1994 to 1998. Lazarides brought in Vgenopoulos to buy up HSBC’s share so that HSBC would get out of his hair. So why are Syllouris and the House Ethics Committee chasing Vgenopoulos? Why aren’t they hunting down the folks who brought in Vgenopoulos in the first place? Is it because they wish to protect Papadopoulos – even posthumously – the man who began the demolition of Laiki?


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