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AG hits back at ‘ignorant’ MPs

The Attorney-General has accused the members of the ethics committee of misinforming the public

By Elias Hazou

ATTORNEY-GENERAL Costas Clerides yesterday rejected claims by MPs that authorities were dragging their feet in investigating the circumstances leading up to last year’s collapse of the financial sector, and accused them of ignorance.

In a terse statement, Clerides hit back at certain MPs who a day earlier accused the Attorney-general’s office of taking too long to prosecute.

He was referring to members of the House ethics committee, which is putting together its own inquiry into the financial meltdown of 2013.

“Attempts by some to discredit independent institutions such as the Attorney-general’s office and the justice system are disheartening and unacceptable,” Clerides said.

Evidently alluding to politicians, the top lawman went on to accuse them of misinforming the public. The criminal probe into the economy, he said, only began in August 2013 – not a year ago as some claimed.

Clerides said the task of gathering and analysing actionable information was “daunting both in terms of sheer volume and complexity,” but promised that his office would soon present findings.

The criminal investigation covers the period 2006 through to March 2013.

Taking a dig at MPs, Clerides added: “If some believe, or wish to cause people to believe, that by merely handing to authorities documents related to a certain malfeasance, that this is sufficient to take someone to court, this betrays a complete ignorance of how institutions and procedures work, and serves nothing but to stoke people’s impatience and their already shattered confidence in institutions.”

It’s understood Clerides was referring to a list – drawn up by the House ethics committee – of persons who allegedly transferred funds abroad ahead of the Eurogroup meetings of March 2013.

The members of the committee will today put the final touches to the 500-page report into the collapse of the economy, later forwarding it to the Attorney-general and to the President of the Republic.

The committee is still split on whether to publish some, all or none of the thousands of names of persons and companies who transferred funds abroad in the days and weeks prior to the March 2013 Eurogroup meetings that sealed the fate of the two largest Cypriot lenders, Bank of Cyprus and now-defunct Laiki Bank.

Though promising full disclosure, committee chairman Demetris Syllouris has questioned the value of publishing thousands of names en masse.

Asked yesterday to summarise the report’s key findings, Syllouris said that first and foremost financial institutions (the Central Bank) failed to properly supervise commercial lenders in the lead-up to the financial disaster of March 2013.

Also, he said, banks had practiced poor corporate governance.

“It was like an inverse pyramid, if you will. The banks were stronger, or felt stronger, than the very institutions which controlled them. For example, it took them 20 months to respond to a letter sent to them by the Central Bank, which would be unthinkable elsewhere,” Syllouris told the state broadcaster.

Another focus of the parliamentary inquiry is how and why Laiki accumulated extra emergency liquidity (ELA) to the tune of some €6bn in the space of just 40 days. This took place immediately after May 2012, when the Cypriot state backstopped -with parliament’s consent – the bank with €1.8bn of taxpayer money.

“If €6bn in ELA was needed, that means Laiki was losing liquidity (deposits),”Syllouris said.

He went on to recall that lawmakers were at the time virtually coerced into voting through the €1.8bn bill to prop up Laiki after warnings that otherwise the bank would fail, triggering a wider bank run.

ELA are funds provided by national central banks to stricken but not insolvent lenders. But many commentators believe Laiki was already broke when in May 2012 it got the €1.8bn cash injection. Less than a year later – having already suffered big losses on Greek government bonds – the lender had accumulated over €9bn in ELA, and the European

Central Bank threatened to turn off the spigot. In March 2013 EU finance ministers decided to shut down the bank as part of a broader bailout deal for the island.

The parliamentary report will also reference the fire-sale of the Greek operations of Cypriot banks in the wake of the Eurogroup’s bailout/bail-in decision, and banks’ bookkeeping and the possible inflating of assets.

It will further zoom in on preferential interest loans to individuals and companies, loans given without adequate collateral, as well as debt that was written off. It’s understood that the report attributes the impunity relating to the late 1990s stock exchange scandal as one of the latent causes for the 2013 financial meltdown.

In talking up their inquiry, grandstanding parliamentarians have on their own raised the bar of expectations – yet it remains to be seen how far-reaching or useful their findings are.

Perhaps realising that the report may turn out a dud when it is released, some politicians this week tried to throw a smokescreen. During a discussion of the report on Monday, MPs complained that they should not be doing the legwork for law enforcement authorities, which they accused of taking too long in putting together a criminal case, prompting yesterday’s response from the AG.

The criminal investigation covers the period 2006 through to March 2013.

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