Cyprus Mail

Report lambasts Georghadji and government over contract debacle

CBC governor Chrystalla Georghadji

By Angelos Anastasiou

A draft report by the House ethics committee on the issue of Central Bank governor Chrystalla Georghadji’s contract, which was found to have been altered by Georghadji herself before being signed by President Nicos Anastasiades, lambasts both the governor and the government for their handling of the issue, but has left political parties clamouring for tougher language.

The report was the result of a probe launched by the committee after the altered terms of the governor’s contract – reflecting a salary bump and a less stringent conflict-of-interest restrictions – were revealed last November in a session that convened to discuss the issue of Georghadji’s daughter working for her father’s law firm.

The firm represented ex-Laiki Bank strongman Andreas Vgenopoulos in a lawsuit by the CBC-appointed administrator of former Laiki over his role in the collapse of the failed lender.

Subsequent revelations indicated that Georghadji had altered the two template contracts sent to her by the Presidential Palace at the time of her appointment after consulting with the CBC’s legal consultants in order to accommodate the pertinent provisions of the law on the operation of the Central Bank, meaning the contract’s legality could not be challenged.

But a harsh statement issued by Anastasiades suggesting he had been unaware of the changes found in the contract, left all fingers pointed squarely at Georghadji, who claimed that she had attached notes to the contract, informing the President of both amendments. The Presidential Palace said the notes were never found.

The draft report expresses the committee’s “enormous concern” regarding rumours of Laiki administrator’s intention to withdraw its lawsuit against individuals thought chiefly responsible for the lender’s collapse, arguing that this was suggested by Georghadji’s remarks before the committee.

In the draft, the committee raised the risks posed by a possible withdrawal of the lawsuit, which “could lead to further painful measures at the expense of the Cypriot public”.

A further risk, the report said, relates to the legality of any decisions made by the Resolution Authority – comprising the CBC’s top brass – since Georghadji took over at the CBC. That is because, acknowledging her possible conflict of interest arising from her daughter’s employment, Georghadji has been exempting herself from Resolution Authority sessions dealing with former Laiki issues.

Committee members also recorded their scepticism at the veracity of the explanations offered by both Georghadji and government officials in response to the contract fiasco.

“The committee expresses strong reservations regarding the relations and degree of trust between the Governor and the President, following everything that has surfaced during investigation of the issue,” the report read.

Despite noting that no legal issues have arisen as a result of the probe, the committee’s report insisted that ethical and conduct considerations have cropped up.

But despite the report not pulling any punches, the committee’s acting chairman Demetris Syllouris had to issue a denial after reports that parties strongly objected to what they perceived as a “pat on the back for all involved”.

“Parties have not yet expressed any reservations or objections,” he said. “Not necessarily because they agree with the draft conclusions, but because they only received the report during the last committee session and hadn’t had a chance to read it yet.”


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