Confusion Reigns, Governor Dithers, Knives are Sharpened

17 June 2015

 Clearly, the various investigations into the behaviour of the Governor of the Central Bank of Cyprus and her minions have caused the CBC to appear rudderless (as we noted before) and also de-masted, holed and run aground. This is not, it goes without saying, a good place for such an august and potentially influential governmental institution to be in.


There is also the beginning of a possible mutiny rumoured from within, as leading figures in the CBC jostle for position should the ship lose its captain and other senior officers. Non-executive directors are busy in the CBC like never before and the one remaining executive director, the economist George Syrichas, has spread his influence to every corner.

 The woes of the CBC are legion: the Governor is under Parliamentary investigation for conflict of interest linked to litigation against the former Chairman of Laiki Bank. In another development, the police raided the CBC last month and took away the computers for study of the Governor, her chief-of-staff and the Public Relations Officer in a search for who had leaked confidential bank account details to the media.

 An acrimonious split between the Attorney General of Cyprus and his Deputy has been sparked by actions involving the Governor of the Central Bank.

 Following several critical investigations into the actions of the CBC during the meltdown of the Cyprus banking sector in 2012-2013, calls have gone out for a review of the institution and the competence of its staff. Stavros Zenios, a non-executive director of the CBC who jumped ship in March 2015, claimed in his resignation note that senior and middle level management had hoped to stifle all demands for reform.

 Now, the Central Bank has taken the lead itself by commissioning an investigation by the German consultancy Roland Berger. Details of the scope and intention of this investigation have not been made public – typical of CBC’s aversion to transparency – but the fact that it is happening at all must be music to the ears of people in Cyprus. All should look forward to the public disclosure of its findings and recommendations.

 At such a time, with inexperienced people at the helm whose thoughts are at best distracted by controversy, the CBC should not have embarked on its crazy adventure of commandeering the Cyprus branch of FBME Bank. Perhaps of all of it present woes, this could become the most expensive, if not for the CBC itself, then for the taxpayers of the Republic. It was an unnecessary and irresponsible act, made without recourse to the superior authority, the home supervisor of FBME in Tanzania or the owners of FBME. And it has heaped damage on the CBC, the banking sector and the Republic, while imperilling the livelihoods of many individuals and the health of corporations.