It’s show-time folks. These should be the first words spoken every time the authorities announce there will be an investigation into something that went badly wrong, so that the guilty will be brought before justice, as the political parties like to say. Almost all these investigations result in reports of hundreds of pages that nobody reads and that rarely find anybody criminally responsible for anything.
This is because the primary purpose of an investigation is to reduce public criticism of politicians by creating the impression they are also angry by what happened and supposedly want those responsible punished. In most cases, the politicians know that it would be impossible to identify criminal responsibility, but that is not the objective. The legislature, for instance, undertook two major investigations, one after the stock market bubble burst in 2000 and another after the 2013 meltdown, but neither found guilty parties nor brought anyone before justice.
There were another two investigations into the banking collapse of five years ago. One ordered by the president and conducted by a retired judge, with limited knowledge of banking and economics, turned out to be more like a show for the public with dozens of people called in to give their testimony that was included in a report that shed little light on what had actually happened. Tens of millions of euro have been spent on the Attorney-general’s criminal investigation which lasted years and resulted in one man being put behind bars while half a dozen other defendants were acquitted.
Former CEO of the Bank of Cyprus Andreas Eliades received a prison sentence for making misleading statements about the bank’s capital needs during an AGM, which was not the cause of the economic collapse. Several Laiki Bank executives and board members are also currently on trial, facing a variety of charges even though everybody knows that it was the decisions of the late Andreas Vgenopoulos that was the main cause for the bank’s collapse.
It was show time again this week after the dissolution of the Cooperative Central Bank and the transfer of its deposits as well as €10.3bn of its assets to Hellenic Bank. All the parties demanded an investigation to establish why the bank was sold off and the how the government managed to squander close to €5bn in its unsuccessful efforts to keep it afloat. The deal between the government and Hellenic also included a guarantee to the buyers from the state for any potential losses that were not expected to exceed €184m in a 12-year period.
The show was more entertaining than usual with politicians publicly bickering over which period of the co-op’s operations should be investigated and who would be doing the investigating. Akel chief Andros Kyprianou wanted the period the CCB was under state ownership investigated so the government would carry the can and wrote to the attorney-general Costas Clerides requesting a probe into the sale agreement to Hellenic Bank as well as the way it was administrated. The government meanwhile wanted an investigation into the causes that led to the collapse of co-ops and their need to be bailed out by the state in 2013. The president, according to government sources, was considering hiring international experts to carry out the investigation to safeguard its objectivity and impartiality.
Does President Anastasiades not trust the impartiality and objectivity of the attorney-general, who had the constitutional authority to carry out an investigation? The suggestion was part of the show, to illustrate the president’s alleged commitment to a thorough investigation. Clerides, after making it clear he knew his job and did not need promptings from anyone about launching an investigation, said he would appoint an investigative committee and deploy the assistance of experts. We can look forward to another long-drawn out and costly investigation that will most probably fail to identify those to blame because the whole party establishment was responsible for the eventual collapse of the CCB.
For the last five decades the co-op credit banks were run – mismanaged would be a more accurate term – by the political parties and their placemen who turned them into agencies for dispensing favours to voters. For decades they issued loans to people that could not repay them, never took action against debt defaulters and routinely overestimated the security provided for loans. This was what our political parties praised as ‘banking with a human face’ and they unanimously rejected suggestions from the EU that the co-ops should be placed under the supervision of the Central Bank. They would lose their human face if that happened so the ‘supervision’ was left to co-op managers who are currently facing charges of corruption and fraud.
The co-ops were agencies of party-sponsored corruption and incompetence, the collapse of which was inevitable even after they were merged into the CCB with an injection of €1.7bn from the taxpayer. It was also extremely naïve to think state ownership could turn it around, given the state’s abysmal record as a business manager; its business decisions are always based on political rather than economic considerations and we saw it again in the case of the CCB.
All our politicians are now clamouring for an investigation in the hope it will deal with technicalities and not highlight the guilt of the parties and successive governments which not only tolerated, but encouraged the endemic corruption in the co-ops that was guaranteed to result in bankruptcy.
28 Comments
Ozay Mehmet
June 24, 2018 at 12:56Proof enough that the South is Cleptocracy…..Zito Hellenism!
Copernicus
June 24, 2018 at 10:33A good summary of what happened but one can add some spice:
1. If the Ci Op was bankrupt in 2013 were the board and management appointed to manage the Co Op with tax payer money fit for purpose? It would appear they were not since political appointees and friends of the Minister held key positions.
2. Why did two experienced bankers quit? They must have found things that were going on within the Co Op top management were likely to lead to further financial distress and they had a reputation risk, if not other risk?
3. If the loans were so toxic as early as 2013 (since not much lent after 2013) why did the Minister and his board think they could turn it around and what actions were taken to save the bank? Clearly the people appointed played for time and did not understand the banking landscape in the EU had changed. Also the asset quality review, conducted by local audit firm, should have shown these loans were not recoverable. Why is not one talking about the asset quality review and it s integrity? Because the local regulator will be found wanting!
4. Why did the ECB, as regulator of systemic banks in the eurozone final to act earlier? This is the 1 million dollar question and we need to know if there were political actions to thwart earlier action before the elections as the problems of the Co Op were not recent. If the ECB was party to such political skulduggery then there is a big issue of its own credibility?
Will the Attorney General ever have the answers. Not a thousand years!
John Mavro
June 24, 2018 at 10:30Here below are the anticipated findings of this ”investigation” (with due regard to Frustrated below) which will last at least 2025 and cost tens of millions in totally wasted fees and remuneration to the carefully selected ”investigators” which will ensure the desired outcome:
– the brainless alleged ”president” of this confirmed failed basket case and his incompetent ”government” carry no blame for not allowing this hopelessly bankrupt den of corruption and thieving to go the way of Laiki in 2013 and instead threw over EUR 5 billion of taxpayer funds which we clearly cannot afford at this black hole. Obviously so that he could be re-elected and to hell with the consequences for the rest of us
– the sometimes big hope for the sensible among us, the finance minister, who in reality is just another politician in this dysfunctional place, for his rusfeti based appointments of his old school mates, all failed ”bankers” from the failed Laiki in the top positions of this abomination and who had NO clue or knowledge on what to do to turn this titanic around, is also not to blame for his disastrous and failed decisions since he chose, in his mins, the ”best of the best” as promised by his boss.
– the thieves, crooks and fraudsters that posed as the ”top management” (starting from Chlorakiotis and downward) who stole millions in the form of unsecured loans are also not to blame as they were merely doing their ”jobs” of giving ”loans”, no matter how fraudulent their actions were
– the charlatans that make up the ”lawmakers” carry no responsibility for the toothless foreclosure laws passed (effectively putting as many obstacles as they could in effectual bankruptcy proceedings) as they were ”protecting” the primary residences of the poor; even if these are expensive mansions built by mindless villagers on huge loans borrowed with no intention to ever repay
– the scum that is now called ”strategic defaulters” who consciously and willingly refused to service the loans even if they could are not to blame since they has better uses for their money (stash in Switzerland, other expensive assets to be bought etc)
– there was no conflict of interest between ”politicians” and ”lawmakers” on the one hand and loans advanced to them which have not been repaid and even written off
– the regulator with the responsibility of overseeing the co-ops, the so called Central Bank, carries no responsibility for doing absolute NOTHING in taking control of this obviously disastrous situation; after all its ”governor” has far more important issues to worry about such as ensuring that no dirt on the highest echelon of scumbags in this banana land is ever brought into public domain
– the trade unions carry no blame for increasing the operating costs of the co-ops with their excessive pay demands, in addition to ensuring that not one job in this bloated monster was lost; in addition, the ”investigation” will also find that their current demands of compensation of at least 200K for the employees is fully justified as it is ”fair” in this parallel universe.
And here is who are to blame:
– the Troika for not pumping another 10 billion or so into these co-ops in 2013
– Turkey for ”occupying” the north and thus not allowing for further security on worthless land there to be mortgaged for more loans
– the taxpayer for not being more forthcoming with their taxes much earlier and pumping more money into this black hole
– and the biggest culprit of all: the idiots who continued paying their loans as this delayed the the inevitable
The law abiding and sensible among us will now experience absolute hypocrisy and mindlessness over next few years with this ”investigation”, knowing that this is being carried out for just ONE reason:
To absolve the thieves and crooks from any criminal responsibility and prosecution; also to give a platform for the charlatans to continue bombarding us about the loss of a ”peoples conquest” and how the co-ops should have been allowed to continue with the ”banking with a social face”; and of course, to absolve the alleged president and his incompetent cabinet of the very heavy responsibility they carry for this latest catastrophe and destruction of taxpayer funds. With more losses to follow in the near future.
There is no hope for this dysfunctional, basket case that lives in a different universe to the rest of the civilized world. Our second state bankruptcy within a decade (we are now an official bankruptcy ”hub”) is staring at us.
But no worries. As long as the usual scumbags can continue selling passports and overpriced properties to all and sundry, the future (for them) is bright.
For the rest, decent among us, the hell that is the ”system” will continue unabated
Evergreen
June 24, 2018 at 10:34BRAVO!!!
Copernicus
June 24, 2018 at 13:51John you are spot on but what about those who are responsible to endure the financial stability of banks and supervise their activities? Surely you are absolving the gat keeper and blaming the poacher only! On the whole you are right and the famous words of Pangalos come to mind: ta fagame mazi! We ate it all together literal translating meaning we embezzled the money all together.
Kevin Ingham
June 24, 2018 at 10:28As was pointed out earlier this week the Co op bank under government ownership has continued on it’s downward slide, has cost the tax payer at least Euro 5 billion and if had not been for the ECB obviously permitting illegal “assistance” it would have collapsed and taken the entire Cypriot banking system with it !!!!!
That is how close Cyprus came to an economic calamity. This has been brought about by inadequate financial supervision by the Cypriot authorities and failure of the governmnet to tackle the NPL problem with the necessary legislation and banking procedures. The EU has failed too, but ultimately it is the government’s failure to implement the reforms advocated by the Troika that have brought us to this point
All this time they have lied about the health of the Co op and the health of the Cypriot economy and they have been exposed as the bunch of inadequate charlatans they are.
The NPL’s will still take this country down unless they do something serious to tackle the problem, that will entail hardship for families and businesses but the alternative doesn’t bear thinking about for the future of Cyprus
Neroli
June 24, 2018 at 09:58Even if it had have been under the supervision of the Central Bank it wouldn’t have been any different!
Evergreen
June 24, 2018 at 10:32Haha, very true.
Evergreen
June 24, 2018 at 09:27I am in consensus with the contents in this editorial.A resolute analysis.
Frustrated
June 24, 2018 at 09:08The finger of blame will be pointed at any number of candidates. Choose from the following:
British.
Americans.
Turks.
EU.
Those who ARE to blame are the following:
Successive presidents.
Corrupt bank executives.
Incompetent Central Bank executives.
Corrupt politicians in the pocket of bank executives.
The electorate for going along with the system.
Evergreen
June 24, 2018 at 09:28The country is sinking in her own NPLs and doing nothing. This is shameful.
xenonx
June 24, 2018 at 09:33In the short term they are enticing non desirables to invest millions to become citizens. It is a five minute remedy, but a relatively long term view for a Cypriot politician.
Mr. Grumpy
June 24, 2018 at 10:04They ared already blaming the EU for … ” holding them at gunpoint”.
Ozay Mehmet
June 24, 2018 at 14:54Turks by far the greatest to blame, including ‘occupation’ forces!
Terryw45
June 24, 2018 at 09:06Why is it that everything the Govt. runs turns to ‘mouse droppings’?
Costas Apacket
June 24, 2018 at 08:55Flying lemming 2 as predicted.
Future predictions include the EAC & Cyta.
Evergreen
June 24, 2018 at 10:39CYTA will probably the next one. We see latest mobile phone sets and tablets, with everyone and even with the teen ages. All are bought on very easy installments which technically means that full payment s not made and unpaid amount is a “debt”.A very vast majority is thriving on this personal debt even in their personal equipment what to talk about house-loans and car loans.
Neroli
June 24, 2018 at 10:43My mobile is with MTN for family reasons I was in UK for a while and missed paying a months bill, my phone was switched off!!
Evergreen
June 24, 2018 at 10:51I always buy a phone set with one time purchase. Not through CYTA:(( This may be the only way now to avoid the outcome of CYTA fall .As it is going to be a very hard blow for at least 90% people here who are enjoying ‘debt” through blessings of CYTA:(
Another bliss which will lead many people eventually to another self inflicted hell.
Neroli
June 24, 2018 at 10:55Mine was bought outright the monthly bills are for calls only!
Evergreen
June 24, 2018 at 10:59so we are safe when CYTA goes down eventually.
divadi bear
June 24, 2018 at 12:18Evergreen: Not necessarily……The lines (mostly all) we use are owned by CYTA ! Lines used by other providers rent them from CYTA except MTN but their service is very limited to within the cities.
divadi bear
June 24, 2018 at 12:08Neroli: Mine too. I was brought up to learn “if you don’t have the money, then do without until you save the price up”.
Costas Apacket
June 24, 2018 at 11:20I think it also has much to do with the bloated, overpaid and underworked workforce who think that they are entitled to their cushy non jobs being subsidised by the taxpayer and overcharged customers because of their nationality.
Evergreen
June 24, 2018 at 11:28I agree. these exorbitant salaries to unnecessary staff played/playing a pivotal role in this constantly going on down fall of the national economy. A tough downsizing is the need of the time.It is a small country and this force of parasites ,sitting in offices is just a symbol of unspoken nepotism and a success of “connections”. This is leading this country on the road of final bankruptcy as Greece has already faced .
EU is providing oxygen funds to Greece constantly and then Cyprus is already in loan from EU.Till when?
divadi bear
June 24, 2018 at 12:04Evergreen: Don’t forget the “small” loan Cyprus got from Russia !
Samting
June 24, 2018 at 08:38Fair play, they had a good run for our money while the show lasted.
xenonx
June 24, 2018 at 09:26Especially the 100 year olds who took out mortgages.