ONE THING that became very clear during yesterday’s long-awaited, House debate about the collapse of the banking sector was that it would be extremely difficult to pin criminal responsibilities on more than a couple of people for what happened.
We seem to be looking at a similar scenario to the one that followed the stock market bubble of 1999, when tens of thousands of people lost their life savings and everyone was calling for the prosecution of the culprits. Then, as now, there was a big investigation by a House committee, which also hired experts to assist in the processing of data, but the guilty were not found, let along put behind bars. An investigation by the Attorney-General’s office also failed to come up with the evidence that would have led to prosecutions. Most people were convinced there had been a cover-up, but the reality was that the laws governing the buying and selling of shares were inadequate and did not protect investors.
Things are unlikely to be very different this time because a host of factors contributed to the collapse of the banks. Yesterday’s speeches at the House pointed in every direction. One former Central Bank governor was accused of not ensuring proper supervision of the banks, another former governor was blamed for overestimating the capital needs of the banks, the former president had added €7 billion to the public debt and did not seek EU assistance when the haircut of the Greek bonds was decided, the current president allowed the sale of the Greek operations of the Cyprus banks at very low prices, executives were managing the banks recklessly etc.
There were countless contributory factors. The House ethics committee investigation did not even cover the co-ops which needed €2 billion for their re-capitalisation, with the taxpayer picking up the bill. Were the people running the co-ops blameless? And was the Christofias government which refused to seek assistance, when Cyprus was excluded from the market in May 2011, but allowed the situation to deteriorate not criminally negligent? Perhaps we should also blame all the political parties which were collectively responsible for the huge public sector pay-roll that contributed to the bankruptcy of the state.
So who are the culprits that must be placed behind bars to satisfy the people’s demand for justice? Could someone be criminally liable for incompetence and recklessness in exercising their duties either as a bank executive or a state official? Is it a criminal offence to make very bad investment and expansion decisions? People are usually sacked or made to resign for big errors of judgment or professional incompetence but they are not put in prison, if they have not broken the law.
This is why the Attorney-general’s office is having such big difficulties and taking so long in bringing charges against the bankers. Putting together a case that would stand up in court is obviously not as easy as many people would seem to think.