Akel has said that a commission of inquiry into the banking sector is not enough and that a criminal investigation should have been launched instead. The communist party says that several issues are raised about the terms of reference and the real intentions of the Government. Akel deputy Aristos Damianou said the position of the party was that full transparency should reveal the truth and responsibilities should be assigned, not excluding criminal responsibility. He added that the government’s decision “is not, unfortunately, a response to the demands of society and the times.” Damianos said the mandate was “too broad and vague.” Edek party, however, said it backed the inquiry. Thursday, the government issued a far-reaching and wide-ranging mandate for the three-member committee to probe into possible civil, criminal or political liabilities concerning developments in Cyprus’ banking sector. Giorgos Pikis, former President of Cyprus Supreme Court and Panagiois Kallis and Yiannakis Constantinides both former Supreme Court members, will investigate issues ranging from the withdrawal of HSBC bank from Cyprus Popular Bank back in 2006, the purchase of Greek bonds by Cypriot banks, the period before the decision of an EU Summit for the restructuring of the Greek public debt, the commissioning of US investment consultancy firm, Pimco, to carry out a due diligence review in the Cypriot banking sector, as well as the conditions under which the Central Bank of Cyprus agreed to the provision of Emergency Liquidity Assistance by the European Central Bank to the Cypriot banks. The mandate extends all the way to the salaries and bonuses of the Banking executives and Board members, the internal audit process and the risk assessment committees. Excluded from the international markets, Cyprus applied for financial assistance last June after its two largest banks sought state aid following massive write downs of their Greek debt holdings amounting to €4.5 billion, or 25% of the island`s GDP, as a result of the Greek sovereign debt haircut. The investigating committee is called to look into all acts, omissions, events, conditions, or a combination thereof, which led to the current state of the economy, the banking system as a whole and of each individual bank, as well as the events and decisions made on the basis of which specific actions or omissions led to the current state of the economy. The Committee, inter alia, will probe into the decisions concerning the acquisition and sale of foreign bonds by Cypriot banks, giving special emphasis to the period during which Cypriot banks were purchasing Greek bonds sold by large international banking corporations, the facts and circumstances under which Cypriot banks expanded in Greece and other countries, as well as the decisions with regard the financial results of the Cypriot banks. Furthermore, the probe will examine whether the directives of the Central Bank of Cyprus concerning corporate governance, risk assessment and reporting were followed and the facts and decisions with regard to the crucial Eurogroup and European Summit decision for the restructuring of the Greek sovereign debt. Moreover, the Committee will also investigate the negotiations for the banking sector regulation in the context of the discussions for a fiscal adjustment programme with the Troika of the European Commission, the European Central Bank and the International Monetary Fund, the conditions for the write-down of banking loans, as well as facts and decisions with regard the loan acquired by the Central Bank of Cyprus via the ECB`s Emergency Liquidity Assistance programme and the provision of this loan to Cypriot commercial banks.

Cyprus Weekly