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Cyprus

AG says MPs were ‘sloppy’ in passing bills on Thursday (Updated)

Attorney-general Costas Clerides said that a large number of bills passed by the parliament on Thursday are likely to be referred to the Supreme Court or be cancelled adding that the House acted “sloppily”.

Clerides, who was commenting on state-television CyBC on Friday, said that the parliament passed a large number of bills yesterday, including amendments, which include a bill offsetting loans with bonds issued by banks -which were wiped out in the 2013 banking crisis-, without consideration which will cause the law office “a nightmarish headache”.

A parliament cannot complete its legislative term in such an “inglorious” way, which is an example to be avoided, the attorney-general said. He added that his office is in contact with that of President Nicos Anastasiades who is expected to refer the bill offsetting loans with bonds to the Supreme Court.

Earlier, deputy government spokesman Victor Papadopoulos said that Anastasiades was intending to ask Clerides’s advice on the said bill.

“There is concern that the law results in unequal treatment and the president will ask the attorney general for advice,” Papadopoulos said on Friday in an interview to state-radio CyBC. “If in his opinion the law is unconstitutional, and given that the parliament is dissolved, it is likely that this law will be referred to the Supreme Court. But let’s wait until the attorney general (Costas Clerides) gives his opinion”.

In reference to two other bills passed on Thursday – granting representatives of bailed-in depositors two seats on the boards of affected banks and freezing privatisations until the end of 2017 – Papadopoulos said “the government will evaluate the situation and its options aiming at safeguarding the country’s credibility and the positive prospects,” boosted by the completion of the adjustment programme. The government “will act accordingly,” he said.

Finance minister Harris Georgiades expressed strong reservations about provisions of the bill offsetting loans granted to bondholders with the bonds they acquired prior to 2013 crisis as collateral. The minister said that the bill violated the constitution as it treated one class of citizens – bondholders – more favourably than others such as depositors whose uninsured deposits were seized but were not entitled to offset these against loans.

Buyers of bonds, which had been issued by Bank of Cyprus and failed lender Laiki, in an attempt to raise capital to withstand the Greek crisis, said they fell victims of a plot. They demand compensation from Bank of Cyprus, which absorbed the operations of Laiki, as the value of their bonds was wiped out. Also under the terms of the bailout, 47.5 per cent of uninsured deposits at Bank of Cyprus was turned into equity while Laiki depositors lost all their deposits in excess of €100,000.

Papadopolos said that while the government was working on Cyprus regaining its investment grade rating lost in June 2012, parliament’s decision jeopardised these efforts.

“A country’s credibility is determined in many stages by decisions we take (and) we overturn,” he said.

He warned that Cyprus should not return to practices which led to the collapse of the economy and the banking sector adding that the government will deal with problems facing bondholders and bailed-in depositors “when the time comes”.

The Cyprus Business Mail understands that the implementation of the law offsetting loans with bonds could cost Bank of Cyprus as much as €180m.



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