The big banks of Cyprus

A scandal over alleged perks to politicians, businessmen and trade unionists by the main Cypriot banks has fallen like a bomb in the process of bank restructuring facing the country.

The spokesman of the Government of Nicosia, Jrístos Stylianidis, announced on Friday that the commission in charge of investigating the possible responsibilities of politicians and bankers in the outbreak of the banking crisis, formally constituted this Thursday, will address this issue in depth. Stylianidis reacted with this to information appearing in the Cypriot and Greek press, according to which the three main Cypriot banks condoned many politicians and businessmen part or all of the credits contracted with them, or at least they demanded less guarantees than the rest of customers.

Several newspapers in Cyprus and Greece claim to have a list of people to whom the Banco Popular, the Bank of Cyprus and Banco Heleno would have settled all or part of their credits , sometimes millionaires, in the period between 2006 and 2012 “The commission must investigate the facts and decisions that are related to the elimination of debts or guarantees for loans agreed by the banks of the Republic, both in Cyprus and abroad,” the spokesman said today.

In this scandal, politicians from all Cypriot parties would be involved, with the exception of the Social Democrats EDEK and the Ecologists.

In a list published this Friday by the Ethiopian newspaper Ethnos , a hotel company appears, linked to the AKEL communist party, to which the Bank of Cyprus would have forgiven the totality of a loan of 2.8 million euros. Another example cited is a company owned by the brother of a former centrist party minister DIKO, partner of the current government, who allegedly obtained a loan of 1.6 million euros in the Bank of Cyprus, which only had to return 310,000 euros.

The reactions of the political and judicial authorities seem to point to the fact that the information is true. The Federation of Workers of Cyprus , a syndicate similar to AKEL, to which the Bank of Cyprus would have given a credit of 554,000 euros, of which 193,000 were forgiven. To another company owned by a former minister of the conservative party DISY, currently in the Government, the Bank of Cyprus supposedly granted a loan of 708,000 euros, of which 399,000 euros were eliminated.

Also the Popular Bank (Laiki), now in the process of liquidation, regularly made this type of “gifts” to parliamentarians of almost all political parties. According to information from Ethnos , the aforementioned bank granted a prominent politician the sum of 5.8 million , a loan that was expected to be eliminated in 2014 from bank accounting, if not for the outbreak of the crisis.

Research Commission

After revealing itself in the press, the scandal passed on Tuesday to the Transparency committee of the Parliament, where two former members of the Banco Popular administrative board assured that the bankruptcy of this entity “is a scandal of many billions of euros that came out of Cyprus and they were sent in Greece . ” At the request of the members of the commission to be more explicit, both replied that their lives were in danger if they offered evidence.

The statements of the two bankers provoked the intervention of the President of the Parliament, Yannakis Omiru, and of the General Prosecutor of Cyprus, Petros Kleridis, who assured them that the data they would contribute would be considered “top secret”. The reactions of the political and judicial authorities, added to the fact that these revelations will be part of the mandate of the commission of investigation, seem to indicate that they are true.

The commission constituted by the Government is composed of three outstanding ex-judges, who among the issues that should be investigated also figure the alleged massive capital outflow in the days prior to the first agreement with the Eurogroup, in which a rate was foreseen for all deposits banking.