Cyprus Mail
OpinionOur View

Our View: Why is Vgenopoulos being treated with kid gloves?

Andreas Vgenopoulos

THE STUDY into the events that led to collapse of the banking sector, commissioned by the government and reported extensively by the New York Times, led to the inexorable conclusion that the main cause for the economy’s troubles was Laiki Bank. The bank, according to the study, was “insolvent before the haircut of the Greek government bonds” in October 2011, after which “it had little chance to survive.”

The authorities, nevertheless, tried everything they could to keep it afloat, drawing billions in Emergency Liquidity Assistance from the ECB by inflating the value of its assets used as collateral, nationalising it by injecting €1.8 billion the state did not have into it and furnishing the ECB with misleading figures about its future profitability after supposed restructuring. Fears that allowing it to fail would have caused a bank run and even bigger problems for the economy were not unjustified, even though the decision-makers should have given some consideration to the consequences of the reckless, save-it-at-all-costs policy they pursued.

Peculiarly, very little of what was contained in the study was mentioned in the findings of committee which President Anastasiades appointed to establish the causes of the economy’s collapse or in the much-trumpeted bank probe undertaken by the House watchdog committee. Perhaps this was because they did not have access to information such as the correspondence of the Central Bank or the minutes of the Council of Ministers’ meetings relating to the subject. But even without this information, it was pretty clear that criminal mismanagement of Laiki Bank, after it was taken over in 2006 by silver-tongued financier Andreas Vgenopoulos, who promised to build a ‘regional banking Colossus’, lay at the root of the problems that eventually led to the collapse.

Admittedly, Cyprus banks’ were far too big, had engaged in a reckless credit expansion, invested unwisely and were over-exposed in the sinking Greek economy, but it was Laiki that was by far in the biggest trouble. Within five years of taking it over, Vgenopoulos had made it insolvent, according to the study, using it to prop up his failing Greek bank Marfin Egnatia which was a subsidiary of Laiki. In March 2011 he merged the two, turning the struggling Egnatia into a branch of Laiki, thus lumbering the latter with the former’s growing liabilities. In April 2011, after the merger, the liquidity ratio of Laiki (or Marfin Popular as is it was called at the time) was 9.55%, half the minimum threshold of 20%, and by autumn it had fallen to just 4 per cent.

Will Vgenopoulos ever pay for the devastation his decisions visited upon Cyprus? Press reports indicate that the Attorney-General’s investigations, which are aimed at bringing to justice those responsible for the collapse of the economy, have been focusing on the former CEO of the Bank of Cyprus Andreas Eliades. Eliades may have made bad investment decisions and showed scant regard for corporate governance but he did not lead his bank to insolvency as Vgenopoulos had done, destroying businesses and wiping out people’s savings.

At present, it is unclear whether police investigators are trying to build a case against Vgenopoulos. So far, we have heard about the freezing of some of his assets – unclear how much – as a result of the lawsuits filed against him on behalf of the Laiki administrator, but there has still not been a hearing. Criminal charges that would lead to his extradition to Cyprus can be brought only by the Attorney-General, but it is increasingly looking like this is not on the cards. Despite the destruction he wreaked, Vgenopoulos has received an easy ride by the Cyprus authorities.

The former Governor Panicos Demetriades, in his brief to Alvarez and Marsal, for the investigation of the causes of the banking collapse, specifically instructed the company to look into decisions and actions by the Bank of Cyprus, while omitting to ask for similar treatment of Laiki. Now we hear that the Attorney-General’s investigators are focusing all their efforts on getting Eliades, but not the main culprit – Vgenopoulos – of the collapse. But none of our politicians who have been demanding that those responsible be brought before justice, have said anything about the treatment of Vgenopoulos.

Is our political establishment afraid of taking on the main culprit in the collapse and is looking for someone else to carry the can? He donated millions of euro to political parties – DISY and AKEL, as we know, received more than a million in total – which may be the reason our usually loud politicians are keeping quiet. There are also suggestions that the Greece’s ruling New Democracy party, which also benefited from Vgenopoulos’ largesse, had requested that Cypriot authorities to try to spare him.

This would be scandalous if it happens because, the prima facie evidence for a case against him could not be stronger.




Related Posts

EU-Egypt-Israel MoU: Where does it leave Cyprus?

Dr Charles Ellinas

Dyer: Russian paranoia after Sweden and Finland join Nato

Gwynne Dyer

From Crans-Montana to the rocks of division

CM Guest Columnist

Are they all the president’s men?

Christos Panayiotides

G7, Nato summits lay bare deep divide between Russia, China and the west

The Conversation

Our View: An urgent need to scrutinise excess deaths

CM: Our View


Comments are closed.