By Angelos Anastasiou
The case of irregular loans granted by the now-defunct Ayia Fyla Cooperative Savings bank is one of the most serious under investigation and may involve loans up to €25 million, police spokesman Andreas Angelides said on Friday.
Four individuals – three co-op employees and the owner of a construction company, 54 – have been arrested thus far in connection with the case, in which loans were approved by the co-op against inadequate collateral. The construction company’s director, 42, is also wanted by police in connection with the case.
The three bankers are the former treasurer, the head of the loans department, and his assistant.
They are suspected, among other things, of having conspired with valuators to inflate the going market price of properties so that commensurately inflated loans could be approved.
On Friday, the four men were remanded by the Limassol District court for seven days.
Speaking on state radio, Angelides said that the suspected irregularities were reported to police in March 2015, after the findings of an internal audit at the co-op were forwarded to the Legal Service.
Police investigations, he added, revealed 110 loans given in violation of due procedure, for a total of €25 million.
At this stage, Angelides said, investigators are focusing on alleged offences committed from 2006 to 2009, relating to 22 loans adding up to €9.5 million.
The individuals thought to be involved in these cases could face up to 13 charges, including fraud and circulating fraudulent documents.
According to the police spokesman, other irregularities identified include clients who had been asked to guarantee loans finding themselves as primary debtors without their knowledge, as well as property overvaluations, and loans approved without documentation.
Co-operative Central Bank head Nicolas Hadjiyiannis said that the case was initiated following a written report by the Limassol district co-op – into which several Limassol co-ops, including Ayia Fyla, were merged following the 2013 consolidation of the co-operative sector – in October 2014 to the attorney-general.
He added that there is “depth” to this case.
According to Hadjiyiannis, the monitoring authorities responsible for overseeing the co-ops should be required to answer why they failed to look into the matter closely for so many years.
Separate cases regarding the Nicosia district co-op are ongoing, he added.