After months of prevarication, MPs on Thursday agreed to invite Central Bank Governor Constantinos Herodotou before the House watchdog committee to inform them about a list of non-performing loans (NPLs) held by Politically Exposed Persons – a matter that has been memory-holed since July last year.
After an hour-long meeting behind closed doors, the committee decided to invite Herodotou, essentially granting a request the governor had made twice in letters to House president Demetris Syllouris.
Deputy committee chairperson, Akel MP, Irini Charalambidou said MPs were discussing the obvious for an hour: transparency.
The Akel MP said Herodotou, responding to a request from MPs to be informed about the list, had sent two letters seeking an invitation from the relevant House committee.
On November 27 last year, the governor had sent a second letter to Syllouris – the first letter of similar content was dated July 4 – reminding him that the central bank can provide information regarding politicians’ NPLs on condition that the information has been requested via proper channels – a parliamentary committee – as provided by law.
The document – marked ‘confidential’ – was first delivered to Syllouris by former CBC boss Chrystalla Giorghadji in April of 2019 just before she stepped down.
Days later, Syllouris held a courtesy meeting with her successor, Herodotou. During the meeting, Syllouris surprised the governor by handing him back the list and asking the bank to process data held by commercial banks regarding delinquent loans held by politically exposed person (PEPs) and on possible circumspect debt write-offs.
Herodotou went back to seek legal guidance as to whether such data could be released without violating privacy laws. In July, he wrote to Syllouris informing him that it was possible and that the ball was in parliament’s court.
But nothing was done until now.
Disy MP Annita Demetriou said her party’s position was full transparency in line with parliamentary procedure and privacy laws.
Demetriou said MPs did not see the “infamous list” but stressed that parliament had to respect the laws, not however, at the expense of transparency.
“As politically exposed persons, we must provide an example,” she said.
Observers, however, suggest that parliament was deliberately stalling in a bid to prevent exposure of its own.
In December 2018, Georghadji had told MPs she had stopped looking into bad loans of politically exposed persons because she “got scared” when police seized her computers and questioned her.
Georghadji told the House finance committee that in 2015 she began gathering data on PEPs who had bad loans with Cypriot banks and that later in the same year someone had leaked a list of MPs and their loans at the Bank of Cyprus to the media.
It showed that out of the 37 MPs listed, 19 owed the bank a total of €51.2m and 13 of those had NPLs totalling €35.3m.
At the time, furious MPs spoke of an attempt by the central bank to blackmail lawmakers through leaks to the press with information about their loan arrears.
Following a complaint filed by MP Zacharias Koulias – the current chairman of watchdog committee — that his personal data had been violated, police entered the central bank with warrants to search the premises.
In August 2019, the attorney-general issued a legal opinion saying Kedipes – the successor entity to the since shuttered co-operative bank – is obligated to hand over information as part of a probe into the co-op bank having afforded favourable treatment to PEPs in terms of loan restructuring.
In September it was reported that the co-operative’s internal audit department had found over 700 PEP customers of the bank were behind on their loan repayments.
The internal audit department tracked €134m worth of delinquent loans associated with PEPs, and also €9.8m in debt write-offs. In some PEP accounts, the account holders held sufficient deposits to repay their loan arrears but did not.
The committee has yet to examine another report by the audit office, which found that a little more than half of individuals designated as PEPs had failed to file their tax returns on time.
Of 154 PEPs, 84 filed their paperwork outside the allotted deadline. The auditor-general’s investigation, requested by the House watchdog committee, spanned the period 2008-2015.
The names of the delinquent PEPs have not been published, but are included in a confidential report submitted to the committee.