The attorney-general has instructed the chief of police to launch a criminal probe into certain issues highlighted by an inquiry into the collapse of the co-op bank before and after the lender was nationalised, in 2013.
A statement on Friday said Attorney-general Costas Clerides has written to the chief of police asking him to immediately launch an inquiry that must be completed as soon as possible.
The police probe will cover certain matters highlighted by a report into the collapse of the co-op that was published in March.
It mainly blamed Finance Minister Harris Georgiades for the collapse of the lender and its subsequent sale to Hellenic Bank. It also recommended further investigation into whether former CEO Nicolas Hadjiyiannis and other executives had committed any other offences.
“A thorough study of the report on the collapse of the co-op compiled by the investigative committee has led to the conclusion that launching a criminal inquiry into the possibility of commission of criminal offences is justified,” the statement said.
The Legal Service said investigators must look into whether certain actions by individuals in 28 co-op banks – Strovolos, Ledra, Paralimni, Vassilikos Pentashinos, Makrasykas, Konteas, Ayia Napa, Erimi, Polemidhia, Ayia Fyla, Nicosia, Solia, Lakatamia Deftera, Trahoni, Acrotiri, Polis Chrysochous, Troodos, Ahna, Athienou, Latsia, Krasohoria, Limassol, Dhali, Polemi, Solidarity, Stroumpi, Women’s Initiative – constituted criminal offences.
“These objectionable behaviours concern previous years and allegedly led progressively to the need for recapitalising the co-op in 2013 with the state paying €1.5bn,” the Legal Service said.
The statement lists seven areas that will be investigated relating to the period after nationalisation.
They are, the conditions in which €63m in non-performing loans – 19 cases — were written off; the conditions in which credit facilities had been granted in 16 cases including, interest rates, collateral, repayment delays, fulfilling the terms of the agreements, collection procedures; high interest rates; expense allowances including the use of corporate credit cards; advertising budgets.
The probe will also examine the contract granted to Spanish asset management company Altamira and the role played by certain individuals, as well as the acquisition of services worth €37m.
The AG’s instructions do not limit the scope of the investigation and any new evidence pointing to the possibility of other offences will be investigated, the statement said.
The co-op was compelled to sell its operations to Hellenic Bank in June 2018 after its failure to reduce its non-performing loan stock fast enough, wiped out its equity.
The state-owned lender was jointly supervised by the Central Bank of Cyprus and the European Central Bank’s (ECB) Single Supervisory Mechanism (SSM).