Cyprus Mail
Business Cyprus

Laiki administrator says mafia ran bank’s Russian unit

Laiki administrator Chris Pavlou

By Stelios Orphanides

Organised crime gangs in Russia controlled Rosprombank, the loss-making Russian unit of defunct Cyprus Popular Bank, and on at least two occasions, gunmen forced their way into its premises, the special administrator of Laiki said on Wednesday.

“Retrospectively, this bank was not purchased for commercial reasons,” Chris Pavlou, appointed as special administrator by the Central Bank of Cyprus at legacy Laiki said following a session of the parliament’s ethics committee in which he briefed lawmakers about the management of Laiki assets.

When asked whether Rosprombank’s acquisition by Laiki in 2008 involved bribes, he said “of course there were.”

He added that he had doubts that officials’ “trips to those Eastern countries” were justified. “To go there to do what?” he asked. “It is known that the mafia in Russia gets involved in everything.”

Pavlou said that on two occasions, the latest just days before the Russian central bank revoked Rosprombank’s licence, gunmen forced their way into the bank’s headquarters and detained its director. “He was confined in his room,” he added.

He said that the Central Bank of Cyprus was informed about the incidents from his reports and the Russian supervisor has launched an investigation which is expected to be completed in a month.

Pavlou’s comments came three weeks after the Central Bank of the Russian Federation revoked the licence of Rosprombank, as Rossiysky Promyshlenny Bank is widely known, citing its failure to comply with the country’s legislation, including money laundering and terrorism financing and the extension of illegal loans.

The licence revocation came without a warning from the Russian supervisor as Pavlou was about to complete negotiations for the sale of the unit to a third party, he said on September 15. Pavlou had not been informed by Russia’s central bank about any wrongdoings at the bank which included also the extension of illegal loans.

According to the Cyprus News Agency, Pavlou told lawmakers earlier during the ethics committee session that expenses for the preparation of studies, legal fees and other procedures have corroded the value of the remaining Laiki assets.

Deals for the sale of Laiki’s operations in Romania and Serbia are awaiting approval by the respective supervisory authorities and he added that he expects that he will be in position to complete a deal involving the Ukrainian operations.

He added that the prospects of Laiki’s Greek unit, the Investment Bank of Greece, is positive and that efforts to dispose of the Maltese unit will be resumed after an appeal will be filed against a ruling of the Maltese supreme court in response to a motion of bailed-in depositors, according to the Cyprus News Agency.

Disy deputy Marios Mavrides who is member of the ethics committee and attended Wednesday’s session said in a telephone interview that before Laiki and later Bank of Cyprus, acquired Russian banks they had to consult reports and indices on transparency, political stability, institutional framework and other metrics. “That is why these indices are there,” he said.

 

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