By Elias Hazou
Lawmakers on Tuesday complained of an ongoing ‘information blackout’ concerning the outflow of deposits in the midst of the 2013 banking meltdown.
Politicians claim that, amid the confusion during the March 2013 haircut, companies and individuals whisked their deposits abroad, thus enabling them to avoid detection by tax authorities here, given bank secrecy laws.
Holding overseas bank accounts is neither illegal, nor indicative of wrongdoing.
From information cited at the House watchdog committee, around €3.5bn in deposits left the island between March 1 and 15, 2013 – just before the first Eurogroup of that year.
MPs criticised the Central Bank of Cyprus (CBC) for refusing to furnish detailed information on deposit outflows. Citing banking secrecy, they complained, the CBC will not identify the account holders or whether they are resident or non-resident.
Quizzed by legislators, tax commissioner Yiannakis Lazarou said that bank secrecy may be waived in certain cases but requires the green light from the Attorney-general.
But it also emerged that it has been over two years since tax authorities last queried the CBC for information on deposit outflows in the period Cypriot banks were closed – during the two Eurogroups when European leaders were deciding what do with insolvent Laiki Bank.
As for the two-week shutdown in March 2013 – imposed to curtail a run on the banks – a CBC rep said that spot checks concerning the closed period did not yield ‘significant breaches’ by commercial banks.
All transactions – except limited cash withdrawals from ATMs – were prohibited during the closed period.
Watchdog committee chairman Nicos Nicolaides said legislators are scrutinising three periods: the period around May 2012 when the state underwrote €1.8bn to float Laiki Bank; the period between March 1 and 15, 2013 prior to the haircut; and the subsequent closed period.
Speaking to reporters later, DIKO MP Marios Garoyian described the whole discussion as “disappointing and depressing.”
“One side was trying to pass the buck to the other. The Central Bank claimed that they provided all the data asked of them. The Tax commissioner said that he asked the Central Bank for the data but did not get what he was seeking.”
The question of deposit outflows was part of a probe into the collapse of the island’s economy which the House watchdog committee compiled more than a year ago.
But with the 2016 legislative elections now on the horizon, politicians have rekindled the issue, particularly after the government recently handed to the House Speaker a copy of the so-called ‘Lagarde List’.
That list includes around 500 names of individuals and companies with deposits at HSBC Switzerland in 2005 and 2006.