Cyprus Mail

Ex-Laiki exec says he was not in charge of goodwill valuation

Defunct Laiki bank

A former Laiki Bank executive on trial for the lender’s collapse in 2013 said on Monday he was not responsible for issues relating to the value of the bank’s goodwill.

Panayiotis Kounnis, the bank’s deputy managing director at the time, rejected the proposition that he ought to have weighed in on the matter of the goodwill.

He was being grilled by the state prosecutor, who presented as evidence a number of emails Kounnis received from Annita Philippidou, then the bank’s financial director, concerning ongoing discussions within the bank about the value of the lender’s goodwill in its Greece operations.

Kounnis said he used to get between 200 and 300 emails in his inbox every day, of which at least 100 were cc’d to him.

“There was a policy at the bank, not to pay attention to cc’d emails. This was a cancer festering inside the bank. Whenever someone wanted to shirk responsibility, they would cc others.”

The defendant went on to claim that issues relating to goodwill were not his area of expertise.

In any case, he added, he was not a member of the bank’s audit committee which was handling the matter. Nor did the committee ask for his opinion.

He went on to ask why Philippidou herself did not bring the matter up with the board.

Kounnis said it appeared Philippidou at the time agreed with the handling of the goodwill issue, otherwise she would have expressed her disagreement and had it recorded into the minutes of meetings.

He moreover stated that Philippidou, as financial director, was the officer responsible for the bank’s financial statements, which at the time in question had failed to factor in a goodwill writedown.

The defendant also accused state prosecutors of drumming up charges against him simply to get a conviction.

“The end justifies the means,” he said.

Kounnis, managing director Efthimios Bouloutas, non-executive vice-president Neoclis Lysandrou and executive board member Marcos Foros face charges of market manipulation and submitting false or misleading information with regard to publishing an interim consolidated financial statement 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.

Legacy Laiki officials are claiming that in November 2011 the bank did not yet have a clear picture of the situation created after the EU decided the second writedown on Greek debt in October 2011, inflicting huge losses on Laiki and Bank of Cyprus of around €4.5bn.

Their position is that without the practical implementation of the programme they were not able to make the correct accounting calculation.

The prosecution argues that the bank, having omitted the goodwill writedown from its financial statements, was presenting itself to investors as being more robust than it really was.

The trial continues.


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