Abstract
My first six weeks in office coincided with unprecedented political turmoil in Greece , which unleashed a huge wave of financial contagion in Cyprus .
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Notes
- 1.
The irony was that in April 2011, Marfin Egnatia—a Greek lender—was converted from a subsidiary of Laiki into a branch, thereby transferring the responsibility of recapitalising that bank to the Cypriot taxpayer .
- 2.
A commentary by Andreas Paraschos , chief editor of Kathimerini Cyprus , reproduced in an Appendix to this chapter, is indicative of the extent of media capture by the banks. Kathimerini Cyprus is a weekly newspaper partly owned by the prestigious Greek daily newspaper Kathimerini.
- 3.
It is worth adding that both Aristodemou and Eliades, alongside other senior bankers, are now facing criminal charges over the purchases of Greek Government Bonds and, in particular, about the methods used to conceal the risk in the bank’s accounts.
- 4.
Stavrakis (2012) names the law firm of Nicos Anastasiades , the current president of Cyprus , as one of the first to enter the Russian market.
- 5.
Deakin (2016) analyses the weakness of the Russian legal system, which explains why Cyprus law often acts as a substitute because of its common law characteristics and fair courts.
- 6.
- 7.
Charilaos Stavrakis was a senior banker in Bank of Cyprus who became the first finance minister in the government of Demetris Christofias. His book provides anecdotal evidence of cronyism and corruption on the island. He was quoted by Cyprus Property News (20 February 2012) as saying that ‘some people who entered politics poor have subsequently become very rich’. See: http://www.news.cyprus-property-buyers.com/2012/02/20/corruption-in-cyprus-at-all-levels-says-former-minister/id=0010765.
- 8.
Testimony was given in a recent court case by Michael Olympios , Chairman of the Cypriot Investor’s Association, whose column in the newspaper Politis was cancelled because it was critical of Bank of Cyprus . The bank threatened the newspaper with reduced advertising expenditure. The case involves criminal charges against the Bank of Cyprus concerning market manipulation.
- 9.
For greater analysis of how the risks were ignored, see Lascelles (2013).
Bibliography
Deakin, Simon. 2016. The Role of Law in Economic Development: The Case of Russia. Mimeo: University of Cambridge.
Lascelles, David. 2013. Independent Commission on the Future of the Cyprus Banking Sector, Final Report, 31 October 2013. http://www.centralbank.gov.cy/media/pdf/LSE_ICFCBS_Final_Report_10_13.pdf.
Minsky, Hyman P. 1992. The Financial Instability Hypothesis. Working Paper No. 74 (May), Levy Economics Institute of Bard College.
Stavrakis, Charilaos. 2012. Economy in Politics and Politics in the Economy (in Greek). Nicosia [n.p.].
Stephanou, Costas. 2011b. The Banking System in Cyprus: Time to Rethink the Business Model? Cyprus Economic Policy Review 5 (2): 123–130.
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Appendix: A Commentary in Kathimerini Cyprus
Appendix: A Commentary in Kathimerini Cyprus
«Όταν μια επιχείρηση ΜΜΕ , ξεκινά την κάθε νέα χρονιά, έχοντας διασφαλισμένο διαφημιστικό κονδύλι πέραν του ενός εκατομμυρίου από μία μόνο τράπεζα και τα ανάλογα από τις άλλες, τότε ο καθείς αντιλαμβάνεται ποιός υπαγορεύει τους όρους του παιχνιδιού. Όταν παράλληλα, ΜΜΕ λάμβαναν δάνεια εκατομμυρίων και μεγάλα παρατραβήγματα με «ευκολίες πληρωμής», τότε ποιός δημοσιογράφος μπορούσε να τα βάλει με τις τράπεζες, χωρίς να χάσει τη δουλειά του; Υπάρχουν κι άλλα, όπως οδηγίες τραπεζιτών για πιέσεις, π.χ. προς την εποπτική αρχή ή για προστασία της εποπτικής αρχής. Τα είδαμε και στο πολύ πρόσφατο παρελθόν να συμβαίνουν σε σύμπραξη τραπεζιτών, πολιτικών και ΜΜΕ.»
Η «δουλειά» από ποιούς γινόταν, αν όχι από δημοσιογράφους, αυλικούς του συστήματος ή και αιχμάλωτούς του;…
Έχουμε ευθύνη και οι δημοσιογράφοι για την κατάσταση στην πατρίδα μας; Έχουμε.»
Α. Παράσχος, Διευθυντής, Καθημερινή Κύπρου
9 Δεκεμβρίου 2012
Translation
‘When a media enterprise starts each year having already secured an advertising budget over one million euros from just one bank and analogous amounts from others, then everyone understands who dictates the rules of the game. When in addition to this, media enterprises received loans amounting to millions and large overdrafts with “convenient repayment terms”, then how could any journalist take issue with the banks without losing their job?
There is much more, like instructions by bankers for exerting pressure, e.g. on the supervisory authority [the CBC ]. We have also seen in the very recent past collusion between bankers, politicians and the media.
Who did this job, if not the journalists, loyal servants of the system or its prisoners?
Do we have responsibility, us journalists, for the condition of our country? We do’.
Andreas Paraschos , Editor, Kathimerini Cyprus
9 December 2012
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Demetriades, P. (2017). “Two” Big to Fail. In: A Diary of the Euro Crisis in Cyprus. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-62223-1_5
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