Cyprus Mail

AG asks police to take more statements on CBC probe

By George Psyllides

Attorney-general Costas Clerides has asked police to take additional statements as part of a probe into an agreement between the Central Bank (CBC) governor and a consultancy firm to pay them a fee on any amount needed to recapitalise the banks, including when cash was seized from depositors.

The investigation was launched towards the end of October following media reports that Demetriades had agreed to pay Alvarez & Marsal a 0.10 per cent fee on any amount needed to recapitalise the banks, including when cash was seized from depositors.

And the deal was allegedly signed after the Eurogroup decided to seize depositors’ cash to recapitalise banks.

In a statement issued yesterday, police said they had been asked by the attorney-general to take additional statements, without elaborating further.

The instructions came after Clerides studied the investigators’ report, the statement said.

Announcing the probe in October, deputy attorney-general Rikkos Erotocritou said it would 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.

An internal CBC investigation, leaked to the media earlier this month, concluded among others, that Demetriades had withheld information and agreements signed with A&M, misled the CBC board, committed millions that were not budgeted, and without the approval of the board signed an agreement to pay a success fee after the fact, and awarded jobs to one company without a tender procedure.

A key finding of the audit relates to a deal between Demetriades and A&M, whereby the latter would be awarded a “success fee”. The wording was subsequently changed to “recapitalisation fee.”

But A&M were also awarded the contract to negotiate the sale of Cypriot bank branches to Greece’s Piraeus Bank.
According to the CBC’s damning report, the arrangement points to a “huge” conflict of interest: “The lower the sale price, the higher the haircut and the recapitalisation fee claimed by the company.”

Demetriades claimed the CBC audit committee conducted the probe without prior authorisation from the regulator’s board of directors, that he was never informed of the audit, that he was never asked by the auditors for his side of the story, and that therefore the report’s conclusions are “arbitrary and wrong”.

He added that leaking the report was part of a campaign of ‘selective leaks’ aimed at discrediting him. Demetriades said he would report the leak of a confidential CBC document to the deputy attorney-general, “irrespective of whether it was illegally drafted”.

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