By George Psyllides
FOUR former executives and the vice-president of the board of the now defunct Laiki Bank were found guilty of market manipulation and submitting false or misleading information by Nicosia criminal court on Friday.
The defendants were managing director Efthimios Bouloutas, deputy managing director Panayiotis Kounnis, the vice-president Neoclis Lysandrou and executive board member Marcos Foros.
They were charged with 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 write-down of €330m for Marfin Popular Bank’s – as Laiki was then known – operations in Greece.
The bank was wound down in March 2013 as part of the island’s bailout agreement.
The court rejected a prosecution request for the four defendants to be placed in custody and released them until October 17 when their lawyers will argue for leniency.
The case was referred to a criminal trial on November 28, 2016, following delays after defendants Bouloutas and Foros, both Greek nationals, refused to appear in person in a Cypriot court.
The court said failure to include the writedown of goodwill in the bank’s financial statements could not be attributed to carelessness or a mistake, or an omission in good faith, but a wholly conscious, deliberate action in which all the defendants took part.
In its 182-page unanimous decision read before a packed courtroom, the three-member criminal court decided that both charges had been proven against all defendants.
“It has become clear that each defendant’s sole pursuit was not to include the writedown in the financial statements and with direct and pointed diligence, to conceal the existence of such loss,” the court said.
The court said the defendants chose to approve the statements without the writedown while knowing the sensitivity of the matter and the disagreement of the external auditors.
“Approval of the financial statements in question … was not a spontaneous and hasty statement but a well-thought and conscious decision on behalf of the defendants who knew all the information and were dealing with the issue for some time.”
The criminal court said their main concern, objective, and desire was to present a good image that would have an impact on the way it was managed by the board, as well as maintain investor interest.
Failure to include the writedown effectively concealed the losses, depriving investors of the information and leading them to think there was no problem.
The decision affected the share price, the court said, a fact that was “without a doubt” known to the defendants.
“Under the circumstances we have no doubt that it was a clearly methodical practice which aimed at preserving the impression of a robust financial image and projecting good management,” the court said.
Attorney-general Costas Clerides reiterated that prosecuting people for the collapse of the economy and the banking sector was difficult.
Cases of such nature, which relate to the state of affairs the economy and the banking sector had fallen in, “can only be limited in number and relate to issues such as the ones for which certain executives and the banks themselves have been charged with and convicted,” he said.
He added however, that no one had assumed responsibility for the collapse despite the findings of probes.
“Political responsibility, supervision responsibility, and others, have been determined and assigned, however, they have not been assumed by anyone,” Clerides said.