Three former senior co-op bank officials and six others, including two companies, pleaded not guilty on Tuesday to fraud in connection with loans worth €3.6m secured in 2007.
The case was adjourned for November 5.
Former Central Co-op Bank boss Erotokritos Chlorakiotis, former Strovolos Co-op boss Demetrakis Stavrou, and former co-op development commissioner Constantinos Lyras face charges relating to conspiracy to defraud, obtaining goods under false pretences, unlawful acquisition of property, and money laundering.
The indictment also includes Maria Chlorakiotou, Carolina Angelopoulou, Maria Chrysanthou, Giorgos Mavreas, Detiero Enterprises, and CHL Enterprises.
According to the charge sheet, between May and July 2007 the defendants conspired to defraud by securing illegal loans worth CYP2.1m (€3.6m) from the Strovolos co-op.
The defendants also failed to disclose the real reason for a €119,602 loan and the beneficiary. They also provided false information, including the values of two properties used as collateral, to secure CYP2m (around €3.4m) from the same bank.
They are also accused of forging the minutes of the bank’s managing committee to show that it had approved a CYP200,000 (€341,720) loan to Detiero Enterprises.
Stavrou is also accused of preparing a loan review report long after the money had been granted: that he forged the report between October 2012 and April 2014 when it should have been done in 2007, before the application for the €3.4m loan was presented to the committee for approval.
Stavrou faces a second charge for a similar offence relating to a €51,258 loan.
Chlorakiotis also faces a single charge of unlawful acquisition of property in relation to the €3.4m loan.
In 2015, a court granted a police request to access Chlorakiotis’ and his wife’s bank accounts as part of a probe into whether due procedure was followed in securing several loans adding up to €15m.
Two years earlier, reports had emerged claiming Chlorakiotis, his wife and daughters, and a company whose sole shareholder was his wife, received €10.9 million in loans from the Strovolos Co-op several years previously, which were not being paid off.
Some of the loans matured in 2037, a period that was far beyond the date of 66-year-old (at the time) Chlorakiotis’ retirement.
Speaking at the co-op’s AGM in September 2013, Chlorakiotis said he had not even received one cent in preferential treatment, in the form of lower interest rates, adding that his loans were fully secured.
He described the allegations against him as mud-slinging, saying that he had always “walked the avenue of honesty and virtue” without getting involved in dubious dealings.
“If all loans in all Cyprus’ banks were as secure as the loans of Chlorakiotis’ family, we would be a global example because credit institutions would not lose a cent,” he said.
One of the collaterals was a 41 decare plot of land bordering the sea, Chloraka’s tourist avenue, and a five-star hotel that will be opening soon, he said in response to reports that his mortgaged property was not worth much.
Chlorakiotis conceded that his loan had been restructured “like those of thousands of people” and wondered whether it should have been exempted because it was his.
It also emerged at the time that former Central Bank governor Athanasios Orphanides had written a letter to Chlorakiotis on March 8, 2010, in which he speaks of significant delays in repaying the loans.
Orphanides suggested there was a conflict of interest since it appeared that the loans kept Chlorakiotis from taking any measures to rectify the large capital deficit the Strovolos Co-op had.
The former CBC governor added that despite the problematic situation, Chlorakiotis and his family managed to restructure their debts, securing a three-year grace period.