Limassol criminal court has acquitted all the defendants in one of the criminal trials concerning dodgy loans granted at the former Ayia Fyla cooperative bank.
Two businessmen, an administrator at the bank, and a bank loan officer were facing charges of irregularities, bribery, fraud, and illegal gains.
After hearing a total of 76 witness accounts detailing fraudulent mortgages, keeping false accounts, and money laundering, the three-judge panel found that irregularities had in fact taken place between 2006 and 2009 regarding 11 cases totalling loans worth €12m.
But the court stated that omissions and dereliction of duty at the bank cannot on their own constitute a criminal offence, as the prosecution had failed to also convincingly show intent to defraud on the part of the defendants.
At the same time the judges found that best practices had not been followed and this resulted in individuals finding loopholes and taking advantage of a broken system.
The court did censure the Ayia Fyla lender’s commission – a body similar in function to a board of directors – for granting loans without these being backed by adequate collateral.
It listed a host of irregular practices that somehow passed muster at the bank, like approving loan applications signed by individuals who were used as cutouts by the real beneficiaries. The cutouts included persons with mental handicaps.
During the trial, it emerged that the businessmen – the loan beneficiaries – got people to sign on loan applications without the latter realising what they were signing. In other cases, the individuals signing thought they were doing so as guarantors.
In some instances the ‘guarantors’ were individuals on welfare.
The court heard that businessman Giorgos Ellinas, one of the defendants, paid the ‘guarantors’ anywhere from €200 to €500 for putting their signatures on paper.
As for the bank officials, the court heard that often they would not even read the loan application forms, while on other occasions they approved the applications outside the workplace – like their home or the local café.
The 11 loans in question were granted from 2006 to 2009.
Some €9.15m ended up in the accounts of Ellinas and his female partner as well as 10 companies to which the same businessman was tied. Of this, €1.373m was used to pay off loans held in other co-ops.
In addition, €705,000 went to the second businessman.
A total of 32 persons appeared as the primary debtors on the loan applications; many testified they were unaware they were signing under this capacity.
It was not immediately clear whether the attorney-general’s office would be appealing the decision.