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Blame game

Jannis Papadimitriou / cdApril 2, 2013

Corruption, last-minute withdrawals and illegal write-downs? Cyprus' President Nikos Anastasiades has promised to investigate those "responsible" for the crisis. But will he, too, be engulfed by the accusations?

(Photo: REUTERS/Yorgos Karahalis)
Image: Reuters

The list was originally posted at a portal for Cypriot journalists, 24h.com.cy, before it was passed along to Cyprus' attorney general. It includes the names of bank clients accused of receiving seven-figure loans through personal connections at Cypriot banks. The loans, whether in part or in full, could not be repaid.

On Tuesday (2.4.2013), a committee of legal experts appointed by Attorney General Petros Kliridis will investigate those accusations, invite witnesses to speak with the committee and, within three months, will deliver its own version of events.

Many of the accused have rejected the accusations. Some are now threatening with lawsuits They claim that the inclusion of their names is a "distortion of reality" - or even outright libel.

In a television interview with an Athens-based television channel, Cyprus' attorney general tried to play down concerns.

"Right now, the first thing we have to do is look into the accusations," Kliridis said. "Perhaps those implicated have an explanation for the apparent writing off of a portion of their debts."

(Photo: REUTERS/Sebastien Pirlet)
Michalis Sarris had faced strong criticism in Cyprus for his handling of the financial crisisImage: Reuters

At the very least, the attorney general believes that the accused should appear before the legal committee to register their version of events as part of a question-and-answer session. It is not out of the question, Kliridis said, that names of other individuals will come to light throughout this process.

Dubious activities

The publishing of the names marks the beginning of a far broader inquiry. After the collapse of Cyprus' banking system, conservative President Nicos Anastasiades promised his citizens that he would bring those "responsible" to justice. Michalis Sarris, who announced his resignation as Cyprus' finance minister on Tuesday (02.04.2013), even believes that he knows one of the individuals "responsible" for the recent collapse: Athens-based financial investor Andreas Vgenopoulos.

As recently as 2010, Vgenopoulos headed up Laiki Bank - at the time called Marfin bank - the second-largest on the island. The Greek business magnate directed billions in Greek bond purchases. The bank was then ruined, Sarris said on public television (26.3.13), as a result of the 2011 write-down on Greek bond debts.

The man on the receiving end of Sarris' words has parried them right back - and in unusually sharp terms. The accusations are "a joke," said Vgenopoulos on Greek television, and the [former] finance minister has "no idea." Vgenopoulos views himself as a victim of the "Cypriot establishment" and sees Cyprus' recent ex-president, Communist Dimitris Christofias, as bearing the blame for Laiki Bank's collapse.

At the time of the Greek "haircut," Laiki Bank and the Bank of Cyprus held more than five billion euros ($6.4 billion) in Greek bonds, Vgenopoulos said. He believes Christofias agreed to the debt write-down without having the slightest clue that doing so would ruin his country.

(Photo: Vladimir Astapkovich/RIA)
Capital controls are still in place on Cypriot banksImage: picture-alliance/dpa

As for the former head of the Bank of Cyprus, Andreas Iliadis, who headed Cyprus' largest bank for eight years, he has yet to name names. In his farewell letter to the company in summer 2012, he instead lamented a "lack of commitment inside and outside the bank" in trying to "meet the challenges of the times."

Enterprising communists

Thus does the search for guilty Cypriots appear to be spreading not just across the small Mediterranean island but well beyond it.

On Sunday (30.03.2013) the newspaper of the communist AKEL party claimed indirect relations of Cypriot President Nicos Anastasiades shifted millions in savings from Laiki Bank outside the country just three days before the EU decided on a compulsory levy on bank deposits in Cyprus.

The deputy leader of the communist AKEL party, Stabros Evagorou, has asked the appointed legal committee for clarification. "Our finance minister has admitted that a bank levy had been in discussion for quite some time," the leftist politician said. "In that sense, it's urgent that the committee follow up on this accusation - and on the accusations that come after it. We're talking about information, for example, that includes a minister who transferred money outside of the country before the imposition of the bank levy."

That minister was never named. The relatives of Anastasiades, however, have come out publicly to deny claims that they were on the receiving end of bribes. Their own financial transactions were made for business purposes only, they say, with the large majority of their holdings remaining in Cyprus.

Merciless investigation

(Photo: REUTERS/Bogdan Cristel)
Voted in to save Cyprus, Anastasiades has much work ahead of him to fulfil that promiseImage: Reuters

Even President Anastasiades is now combating accusations that he misused insider information.

"It wouldn't have been possible to fight my battles until early Saturday morning in Brussels and simultaneously forward privileged information," the newly-elected president said.

Above all else, however, Anastasiades would like to emphasize that the committee investigating the bank crisis, which begins its work on Tuesday (2.4.2013), was tasked by him to mercilessly investigate all accusations - even if those accusations were to include the president personally or those related to him.

According to many pundits, such an investigation is the only chance Anastasiades stands at surviving the financial and political crisis that has engulfed his country since his term began three weeks ago.

On one end, the communist AKEL party has announced plans to resist any further austerity measures and has called for a popular referendum on Cyprus remaining in the eurozone.

On the other end is Giorgos Lilikas, a former foreign minister and conservative populist hoping to found his own political party and sweep up the votes of the country's middle class. Lilikas, who lost the first round of the presidential election as an independent candidate, would also like a referendum on whether the island republic should remain in the eurozone.