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TABLE OF CONTENTS
Latest news ................................................................................................................................................... 2 The slander continues .................................................................................................................................... 2 PIMCO Report............................................................................................................................................ 2 Alvarez and Marshal Report ....................................................................................................................... 3 AKEL (Opposition; previous presidency) ..................................................................................................... 4 CENTRAL BANK .......................................................................................................................................... 4 DISY (ruling Party) ...................................................................................................................................... 4 The Churchs position ................................................................................................................................ 5 Who were the players? .................................................................................................................................. 5 Andreas Artemis Central Bank of Cyprus ................................................................................................ 5 Panicos Demetriades - Central Bank of Cyprus .......................................................................................... 5 Andreas Illiades Bank of Cyprus............................................................................................................... 6 Michael Sarris Laiki Bank of Cyprus.......................................................................................................... 6 Andreas Vgenopoulos ................................................................................................................................ 6 Vassos Shiarly ............................................................................................................................................ 7 Other (unsubstantiated) Rumors of Corruption .............................................................................................. 7 The Issues The Judicial Probe ...................................................................................................................... 7 Side Issue 1: Money taken out of Cyprus prior to March 15th...................................................................... 8 Side Issue 2: Debts forgiven in Laiki ........................................................................................................... 9 Parliamentary probe ...................................................................................................................................... 9 Moving Forward Transparency and Accountability ...................................................................................... 9 Appendix 1 - What the EU wants for the 10bln rescue package .................................................................... 11 Appendix 2 - Findings of A&M report to date ............................................................................................... 12 Appendix 3 - List of 132 Names .................................................................................................................... 14 Appendix 4 - List of Forgiven Debts .............................................................................................................. 18
This reads a bit like a Hollywood movie. I have made no comments since March 25th so I will endeavor to summarize events as they have unfolded over the past fortnight. No doubt everyone is as bewildered by the turn of events as I am. Bear in mind what I state below is simply what has been reported in the news, with some of my own observations.
Latest news
A draft assessment prepared by the European Commission, revealed by Reuters on Wednesday 10th April 2013, now puts Cyprus total financing needs 23bln not 17.5bln as was originally predicted. How? You ask. Good Question. No good accountants out there? People just cant add perhaps? The EU will only loan us the 10bln (see Appendix 1 What the EU wants for the 10bln), so we have to come up with the rest. So now Cyprus has to raise 13bln not 7.5bln to ensure the 10bln from the EU. What does this means in practical terms? The move to separate the banks and the wind-up of Laiki and the haircuts from deposits is expected to raise a total of 10.6bln euros. That still leaves Cyprus with a shortfall of 7bln euros which means that government will need to dig deeper. The excess will probably come from deposits at BoC, who now stand to face up to almost 60% haircut to cover this shortfall. Additional funding will come from increased taxes and there have also been reports that Cyprus may sell a large portion of its gold reserves in order to raise another 400m euro (pittance in comparison to the overall amount). This news has decreased gold prices in the last 24 hours in conjunction with the Goldman gold downgrade and the 17-tonne outflows from the metal's exchange-traded funds. At current prices, 400m euros' worth of gold amounts to 10.36 tons of metal. Cyprus' total bullion reserves stood at 13.9 tons at end-February, according to data from the World Gold Council. If we sell gold reserves what does that mean if we leave the Eurozone? Less assets to cover our own currency hence further devaluations of the new currency, and if the government goes ahead and prints more money, then hyperinflation as the new currency will be worth s**t, well not a lot. On top of all this were hearing about (additional) rescue packages for Cyprus Airways, Cmon people what is wrong with this picture. How many millions (more) must we sink into this Airline? No common sense prevails here.
PIMCO Report
Pacific Investment Management Company, LLC (commonly called PIMCO), is an investment firm headquartered in Newport Beach, California, in the United States. PIMCO was commissioned by the former government to provide a due diligence report on bank bailout requirements, i.e. their mandate was to assess the recapitalisation needs of Cypriot banks. The report was completed in February 2013 but the results were not made public.
WHATS BEEN HAPPENING 25/3-12/4/13 The Central Bank of Cyprus said in a statement that the results of the report will be made public when the Memorandum of Understanding is signed between the Republic of Cyprus and the international creditors. Since the former President Christofias had stated that he will not sign the Memorandum, the public would have to wait until after the new president was elected. The report will be examined by the Steering Committee, who would then take into account the mitigating circumstances that have been put forward by the banks. Nothing has been released as far as I could find out. PIMCOS final figure was 8-10bln. Of course the government and the Central Bank of Cyprus had strong disagreements with this company too relating to the methodology used. They were blamed for inflating the amount needed by banks. PIMCO came up with a worst-case scenario of some 10 billion needed by banks because they estimated the reduction in property values to be 25 per cent higher than what was agreed in the steering committee. As we seen now in hindsight, they werent wrong. In its assessment PIMCO predicted that bank recapitalisation needs were between 8 and 10 billion. Their baseline scenario was 5.98 billion while the worst case scenario was to 8.86 billion. Their reports suggested Bank of Cyprus would have needed between 2.8 and 3.9 billion, and Popular Bank 2.7-3.8 billion. Under the adverse scenario Hellenic would have needed 333 million, while Greeces Alpha bank would have needed 149 million. The cooperative banks would have needed between 364 and 589 million. The macroeconomic scenarios were given to PIMCO by a steering committee, made up of representatives from the Central Bank, the finance ministry, the cooperative bank supervisory service, the IMF, European Commission, European Central Bank, European Stability Mechanism, European Banking Authority, and the European Central Bank. Five of the ten members of the steering committee were Cypriots.
WHATS BEEN HAPPENING 25/3-12/4/13 Christakis Patsalides, had wiping software loaded, which is not part of the standard software installations at the BoC, as reported Cyprus mail April 15th 2013. The essence though is that report raises more questions than it answers and fails to explain both banks' excessive exposure to Greek government bonds, nor is there any evidence presented as to whether the investments were illegal, or just bad investment given the wider problem caused by Greece's own economic collapse. Incidentally we paid them 250,000 for their services. Hmmm I wonder if we paid by cheque issued from Laiki.
CENTRAL BANK
I just want to know what the watchdog the central bank and what were they doing to regulating our banking system. So many laws have been passed in Europe relating to liquidity of financial institutions, the Basel Accord comes to mind. It wasnt just pretty legislation that was nice to have on the face of it, it actually needed to be implemented you incompetent sods.
WHATS BEEN HAPPENING 25/3-12/4/13 3. On the issue of knowing that a haircut was possible well this is a funny one, if you categorically state that you dont accept one, then for you to consider and dismiss it, it must have been in a list of possibilities that the Troika would have asked for something along those lines, otherwise why would you even have thought of it so as to deny you will accept it.
WHATS BEEN HAPPENING 25/3-12/4/13 He refuses to give up his position and reminds the president in his letter, of the independence of EU central banks, noting that governors can only be dismissed on grounds specified by EU law, which established only two clear grounds for dismissal, namely if the Governor no longer fulfils the conditions required for the performance of his duties or if he has been guilty of serious misconduct. I say use the latter. However he is soon to undergo questioning by Parliament who are investigating him on charges of misconduct and misrepresentation of banking data (April 12 2013).
Andreas Vgenopoulos
Chairman of Marfin Investment Group. Major shareholder of Panathinaikos FC. Owner of 1% of Marfin Popular Bank and 1,5% of the Marfin Investment Group. F
Vassos Shiarly
Former finance minister during Christofias Administration In March 2013 he stated to CyBC his insight for how we got here. 1. The excessive zeal to show solidarity beyond our capabilities to another eurozone country. We should have put some conditions down, and examined how much our pockets could take. 2. The other (mistake) is that for consecutive years now we have created excessive public deficits, that have accumulated and reached the point where we can no longer take them Well done Mr. Shiarly my 15 year old could have told you the same thing.
God bless the granddaddies Having done a quick search on the Supreme Court of Cyprus website http://www.supremecourt.gov.cy/Judicial/SC.nsf/DMLSCJudges_en/DMLSCJudges_en?OpenDocument I find no mention of the above three judges neither under Current Supreme Judges nor under Former Judges. Further to the main issue I consider two important side issues that must further be addressed) and people punished if found guilty. The first is who took money out of Cyprus prior to the agreement with Troika and the second is the debts forgiven by Laiki Bank for no reason.
Parliamentary probe
Set up (April 2nd 2013) to will investigate a list of several million euros of alleged loans to politicians and others said to have been written off by the two banks BoC and Laiki, and made up Cypriot MPs. After a few weeks from the start of the "investigation" into who pulled their cash out of Cyprus the parliamentary committee has suspended its probe on, due to the Central Bank not providing the data that was asked of it. The Committee asked for Data dating back one year from the March 15. The Head of the Ethics Committee has stated his disappointment on discovering that the Central Bank had only provided them with data for the 15 days prior to March 15, even though they had asked for a years worth of transfers. Apparently the reason the central bank limited the list to only those who transferred funds in the two weeks prior to the Cypriot bank default, is that it would have resulted in a "huge volume of information" something the central bank believed the parliamentary committee would never be able to handle. Was it suspended to cover their own backsides I wonder?? Something smells fishy here.
WHATS BEEN HAPPENING 25/3-12/4/13 need to hold them accountable for their actions so we, the people, of this nation need to be more proactive, and to demand explanations from our leaders. We begin with our media. We need them to report factual events not news coloured by political agendas. We need to ensure this time that people are prosecuted and made to pay. So I encourage the media to keep the public updated. The report/findings from both the judicial committee and the parliamentary committee need to be made public not to be put in a government drawer and forgotten as with the stock exchange fiasco, and we need to be updated along the way on the progress of these two committees. We can no longer afford to sit idly by and let the next person worry about what is happening here or to think that it will right itself. We cannot be spectators to the events that are going on here and to not react. Commenting on news events in Social media (as I am doing here) is not enough. We need to get organized. If you think you cant make a difference think again. Remember CyprusAid? How wonderful was that. Everyday people getting together for the benefit of each other, without political agendas with only one common objective: Helping each other.
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In return they will . Provide liquidity to the BoC through Emergency liquidity Assistance (ELA), and lets not forget that in the last year alone Laiki used up 9bln of ELA funds with absolutely no watchdog on where and how this money was being used safeguard all deposits below EUR 100.000, (interesting to note that the safeguarding of deposits below 100,000 are protected by a European guarantee scheme anyway) support us to restore the viability of the financial sector (not sure in what way, shape or form) support us to restoring sustainable growth and sound public finances (not sure in what way, shape or form)
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WHATS BEEN HAPPENING 25/3-12/4/13 The inherent conflicts arising from senior executives participation in all major strategic and risk management bodies, at both executive and board level, possibly prevented these committees from sufficiently questioning the investment in GGBs and the subsequent decision to maintain the portfolio despite the deteriorating GGB market, the firm said. Regarding the lenders risk management processes, the firm said with the benefit of hindsight, there was clearly an inability to adequately consider the risk associated with the purchase of GGBs, and in particular there was limited recognition that a default could actually take place. Alvarez and Marsal said the CBC supervision department was potentially under-resourced, both in terms of numbers and experience of staff members. In addition, the frequency and timeliness of sovereign bond holding reports, prepared by BoC and submitted to CBC, meant that the CBC would not have been aware that BoC significantly increased its GGB holdings between December 2009 and March 2010, until after the event. Despite requesting details of the banks sovereign bond holdings, the CBC did not have any formal asset concentration monitoring in place, the findings said. As such, BoCs high concentration of GGBs was not in breach of any regulatory limits. The CBC formally requested information regarding BoCs holdings of GGBs in March 2010, but did not receive any written response. The CBC did not follow up on this on a timely basis; the reason for which is unclear, the report said.
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4th April 2013 http://www.zerohedge.com/news/2013-04-01/list-released-132-names-who-pulledcyprus-deposits-ahead-confiscation-day The first column are names of companies and individuals, the second column shows the amounts withdrawn, the third column shows the amount withdrawn in the same currency as per the fourth column and the fifth column refers to the date of transfer
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http://www.24h.com.cy/webtvnews24h.html March
The write-offs include: Written-off loans of specific groups of individuals (Board of Directors members, Senior Executive Management and Politically Exposed Persons). Bank of Cyprus . . . . . . . . . . Hotel Company T.H.E., controlled by the Progressive Party of Working People (AKEL)-PEO. The total loan of 2.813.000 was written off on May 2012. The Pancyprian Labor Federation (PEO) was forgiven 193.000 out of a 554.000 loan on May. Company: From 1.83m loan, 111,000 forgiven A company that belongs to the brother of a former minister of the Democratic Party (DIKO). The loan written off was up to 1.285 million euros ($1.595million) Former MP of the Democratic Rally (DISY), S.H. From 58,000 euro loan, 26,000 forgiven Former mayor of a large town: From 105,000 loan, 17,000 forgiven Company linked with the daughter-in-law of a DIKO MP: From 625,000 loan, 330,000 written off Company of person related to a member of board of directors of Bank of Cyprus: From 839,000 loan, 237,000 forgiven Company apparently linked to a former minister: From 708,000 loan, 399,000 written off Former minister and official of DISY, T.H. -loan up to 399.000 was written off in 2007 and 2008.
Hellenic Bank . Company owned by a MP from a smaller party: From 1.65m loan, 543,000 written off.
Cyprus Popular Bank (Laiki): . . . . . . . A.G., former MP of AKEL-loan up to 39.000 in 2012. Former AKEL MP: 39,000 loan written off Former DISY MP: 71,000 loan written off in 2011 Former DISY MP: 54,000 loan written off Company 51% owned by Cypriot politician, appears to have had $5.8m of debt written off Former spouse of leading ministry official: 18,500 loan written off Company owned by ambassador: 14,000 euro loan written off
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