Cyprus Mail

Total fraudulent loans paid out in co-op sector as much as €50 million

In addition to eight cases of fraudulently acquired loans already forwarded to the authorities, four more are being examined by the Co-operative Central Bank and will soon be filed with the police, bringing the sum total of loans paid out under false pretences to about €50 million, Communications Director Yiannos Stavrinides said.

Speaking on talk radio, Stavrinides said the co-operative group is “trying to employ a self-healing method”, and “no one will go unscrutinised”.

In all these cases, he explained, proper banking practices have not been followed.

“Loans were approved without following the rules, exposing the co-operative group,” Stavrinides said.

“Senior management officials are directly involved in these cases, in which loans were given without collateral, but I can’t say there was political influence. Whether there was or not is something that will come up in court.”

Regarding the group’s present financial state, Stavrinides noted that, in its recent report approving the injection of fresh capital, the European Commission praised its corporate governance.

After being bailed out in 2014 with €1.5 billion of taxpayer money, the co-operative group was restructured and downsized. In December, it was found in need of additional capital by the European Central Bank, which identified a “provisioning shortfall”, and a further €175 million of taxpayer-funded capital boost was approved, with the European Commission attaching “additional restructuring measures” to the transaction.

“The European Commission considers the group viable until 2018, which is why it has approved the new €175 million recapitalisation,” Stavrinides said.

“The co-operative group is now the financial institution under the most oversight in Cyprus, since it is monitored by the European Central Bank, the European Commission, the Central Bank of Cyprus, while the minutes of its board sessions are distributed to the European Commission and the European Central Bank.”

According to Stavrinides, the state’s involvement in the co-operative group will have ended in 2020, by when it plans to have sold its 99 per cent stake.

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