NICOSIA (AP) — An inquiry into the demise of Cyprus’ Co-operative bank on Wednesday faulted senior executives for bad judgment, inaction and ineptitude in dealing with a mountain of bad loans, while blaming the finance minister for failing to take corrective actions.
The inquiry’s 800-page report recommended that police initiate possible criminal probes on some top executives, including the CEO, over ‘suspicious’ loan write-offs and wasteful spending.
“Their (executives) responsibility for erroneous decisions that were taken is massive,” the three-member inquiry said.
It also pointed to Finance Minister Harris Georgiades’ “heavy burden of responsibility” for not firing executives and for the bank’s “mistaken course” in efforts to have it return to private hands.
The inquiry equated Georgiades’ responsibility to those of the “main stakeholder in a private company that becomes insolvent do to that person’s mismanagement.”
Georgiades said he hasn’t yet read the report, but defended his actions saying that the government took “responsible” action to tackle a long standing “toxic situation.”
“The government’s decisions ensured trust and stability and the safeguarding of the Cypriot economy,” Georgiades told reporters.
The Cypriot government became the troubled bank’s majority shareholder with a 1.5 billion-euro bailout in 2013 as part of a multibillion euro rescue deal the country received from international creditors to avoid bankruptcy.
Cyprus-based Hellenic Bank bought out the lender last year. More than half of all the Co-operative bank’s loans were bad by the time a deal was worked out for its sale.
According to the inquiry’s findings, Cyprus President Nicos Anastasiades was partly at fault for keeping Georgiades on at his post despite the mounting problems and for keeping the lender’s problems under wraps in the months leading to a presidential election early last year.
The inquiry said bad management had plagued the bank for decades leading to a host of “irregularities and abuses,” including political party string-pulling to secure loans for supporters.
Two previous chief executives face criminal charges.