(Adds comment by police spokesman in seventh paragraph)
By Stelios Orphanides
The special administrator of Cyprus Popular Bank Chris Pavlou said that its Russian unit Rosprombank which it acquired eight years ago is implicated with the payment of bribes “via Limassol,” a matter that authorities are investigating.
A day after he told lawmakers on the ethics committee that the Russian mafia effectively ran Rosprombank, which had its licence revoked by Russian authorities in September, Pavlou said in an interview to state-radio CyBC on Thursday that Laiki, as the Cypriot lender was widely known, had “from the very beginning” a problematic partner in its Russian unit.
Laiki acquired a 50.4 per cent stake in Rosprombank, officially known as Rossiysky Promyshlenny Bank, in 2008 for €83m from OAO RPB-Holding, until then owner of 100 per cent of the bank’s shares. Under the terms of the deal, management of the acquired bank remained with Laiki’s partner, owner of the remaining shares of the bank, Pavlou said.
“When I assumed this job, there were some suspicions of mismanagement and I changed the board of directors and the managing director,” Pavlou said. “There was an agreement with our partner in Russia which was unfair and he had absolute power over the bank to the point that people wearing masks with machineguns came. This agreement affected us badly”.
The gunmen, who on two occasions held the bank’s director for hours in his office –the second time days before a deal to sell the bank was signed– “terrorised” the bank’s workers, forcing them to leave the building, Pavlou continued.
“A bank that was purchased this way was not possible to have been acquired for commercial purposes and no more needs to be said,” he said adding that “there are still investigations about bribes which came via Limassol”.
Pavlou, who worked for Barclays Bank, HSBC and the National Bank of Greece before joining Laiki, did not provide details about who paid the bribes and who was the recipient.
Police spokesman Andreas Angelides said that while the demise of Laiki is being investigated as part of the reasons which led to Cyprus’s financial crisis, “this particular part” concerning Rosprombank is not investigated.
Pavlou was appointed administrator of Laiki subsidiaries two years after the bank became insolvent in 2013. He succeeded Andri Antoniades, who quit her job in March 2015 citing disagreements over the handling of legal claims worth over €5bn against Laiki’s former strongman Andreas Vgenopoulos, considered responsible for the lender’s failure, and two of his henchmen.
The Russian central bank revoked the licence of Rosprombank on September 13, citing the violation of anti-money laundering and terrorist financing legislation. “Both management and owners of the credit institution did not take any effective measures to bring its activities back to normal,” the Russian bank supervisor said then. Pavlou reiterated that he had not been informed by the Russian central bank about problems at Rosprombank and the licence revocation came without any warning as he was about to sign a deal for its disposal to an investor.
He said that he had informed the Russian bank supervisor of the interest shown in Rosprombank by two investors and even after the Laiki administrator completed the due diligence process he did not receive any word from the Russian central bank.
“But there was this partner appointed there, to whom we lent a lot of money, who was always trying to avert this deal,” he said. “It is not a coincidence that when we were about to place signatures, people with machine guns came in, detained our director and got this notification (on the licence revocation) from the central bank without a warning whatsoever”.
Pavlou said that he and the Central Bank of Cyprus have asked in writing the Central Bank of Russia for information “without getting any answer”.
The Central Bank of Cyprus declined to comment after being asked by the Cyprus Business Mail and referred to the Resolution Authority. The Russian central bank did not respond to a request for a comment