Cyprus Mail

AG becomes new CBC chief

CB Governor Chrystalla Georghadji

By George Psyllides

PRESIDENT Nicos Anastasiades yesterday rejected suggestions of a trade-off to get the outgoing Central Bank (CBC) governor to resign, as he appointed the island’s auditor-general to replace him.

Chrystalla Georghadji, whose hard-hitting annual reports on lapses in public administration have been the bane of several governments, takes up her post on April 11, after Panicos Demetriades works out his notice.

As governor Georghadji, 58, will represent Cyprus on the Governing Council of the European Central Bank.

A refugee, she studied economics in Greece, Britain and the United States and has been auditor-general since 1998.

An official statement said ECB Chairman Mario Draghi was informed of Georghadji’s appointment on Tuesday.

“She has a well-established track record for being independent and autonomous, which should dispel any notion this is a political appointment,” one source told Reuters.

Demetriades resigned on Monday “mainly for personal and family reasons” although sources have said he had also cited difficulty in working with the board of directors – most of whom were appointed by the present government.

Anastasiades and the attorney-general tried to convince public opinion on Tuesday there had not been any quid pro quo.

“I just want to say one thing: let us respect people and personalities even if we disagree,” the president said. “There was no trade-off.”

“He just (resigned) for personal and family reasons, and because of the prevailing climate,” the president said, without elaborating.

He added that the resignation was the result of an understanding between people who realised that difficult decisions were necessary when the good of the country should prevail.

Demetriades will be receiving a payoff of around €250,000. He was appointed for a five-year term.

Speculation about a trade-off had intensified on Monday after Attorney-general Costas Clerides said he would not pursue a case against Demetriades concerning his dealings with consultants Alvares & Marsal.

The CBC board of directors had accused Demetriades of keeping them in the dark on major issues including a clause in A&M’s contract allowing it to claim a percentage of money required for the bailout of Cypriot banks.

That contract, and allegations it was backdated, were under investigation by the authorities.

Clerides rejected any connection between the resignation and the decision not to prosecute the outgoing governor.

“After reviewing every relevant clue and weighing each essential factor, but mainly after taking into consideration the view of the investigators regarding certain serious risks in proving a case of such nature, it was judged that it would not be in the public interest to let its outcome be decided in court,” a written statement said.

Demetriades has never publicly addressed the essence of the allegations, contained in a November report by the board’s audit committee.

The incumbent CBC chief had a record of animosity with the current government. Anastasiades had on several occasions accused Demetriades of mishandling the bailout, in which Laiki bank closed and big savers were obliged to contribute some of their bank deposits.

“He endured unprecedented polemic, blackmail and threats from the government aimed at forcing him to resign,” said a spokesman for AKEL, which appointed Demetriades when it was in power in May 2012.

Demetriades has frequently said he assumed a poorly-regulated banking system which took excessive risks.

AKEL described the resignation as a defeat of the institutions, democracy, and Cypriot society itself.

The party disputed the explanations given by the president and the attorney-general, but it also called on Demetriades to say exactly what happened to make him change his position “that he would not resign despite the intense pressure he was under”.

AKEL went a step further, linking his departure with a possible attempt to provide cover to those who took money out of the country before the haircut and saddle the people with the burden of the “bank robbery”.

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