Cyprus Mail

Former Laiki official says he did not know about writedown

The former deputy CEO of Laiki bank, shuttered in 2013 amid a banking crisis, told a court on Wednesday that the board should have been informed before the end of 2011 of the external auditors’ view that a writedown of the lender’s operations in Greece was certain.

Questioned by the state prosecutor, Christos Stylianides said the board should have been informed by the CEO because it was important that the auditors had asked for a goodwill audit every three months.

The defendants in the trial are Laiki’s then CEO Efthimios Bouloutas, his deputy Panayiotis Kounnis, non-executive vice-president Neoclis Lysandrou, and executive board member Marcos Foros.

They are facing charges of market manipulation and submitting false or misleading information with regard to publishing an interim financial report in November 2011, in which they omitted to include a goodwill writedown of €330m for Marfin Popular Bank’s – as Laiki was then known – operations in Greece.

Stylianides said he was informed for the first time about the matter on November 18, 2011, through an email from the group’s CFO Annita Philippidou.

Philippidou had forwarded an email from PwC CEO Evgenios Evgeniou who informed them that the goodwill writedown of its operations in Greece was €1.2bn at the end of September 2011.

According to Stylianides, Philippidou had told him that Bouloutas was against a writedown at the end of September while the auditors insisted there should be one.

Philippidou had proposed a €250m writedown but Bouloutas rejected it, the court said.

Prosecutors showed the witness an email from PwC saying €250m was not sufficient and another showing that the writedown had been removed from a draft of the accounts on November 22, 2011.

An email sent to him on November 25, 2011, included Bouloutas refusal to include a writedown of the bank’s Greek government bond holdings and to goodwill.

“It was the first time I saw it in writing,” Stylianides said.

Of the board meeting on November 29, 2011 that approved the first nine months results, Bouloutas said a goodwill impairment test should be conducted at the end of the year and some kind of goodwill impairment should be included, possibly around €400m.

Stylianides said the board heard nothing of the auditors’ disagreement, suggesting that the matter had been settled.


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