Former Attorney General of Cyprus Slams Central Bank

12 April 2016

 Mr Alekos Markides, a former Attorney General of the Republic and now legal advisor of FBME Bank Ltd made two separate interventions on state radio CyBC (12 April) and MEGA Television (9 April) in response to the recent activation of the Depositors Guarantee Scheme. He claimed that the Central Bank has lacked a strategy and is now merely trying to divert attention from its mishandling of the situation. 

Below are excerpts from Mr Markides’ interventions which have been widely reproduced by media in Cyprus:

On CYBC Radio:

  • Mr Markides accused the Central Bank of Cyprus (CBC) of maliciousness; incompetence and arbitrary use of “absolute power” arguing that the Central Bank of Cyprus had decided to “crush” FBME instead of requesting of FinCEN evidence after the latter issued a report in July 2014 which had described it as of primary money laundering concern.


  • Mr Markides challenged the CBC’s actions saying that following its decision to revoke FBME’s license in December 2015, the latter had ceased being a bank or credit institution, and thus, the CBC had no authority to appoint a liquidator. “His appointment is illegal and as a result non-existent,” he said. “It’s a classic case of arbitrary use of power”.


  • Mr Markides asserted that the Central Bank had attempted to have the Tanzanian bank liquidated by requesting a Cypriot court to issue a relevant order, which the bank’s lawyers prevented. He described the move as akin to a Cypriot court seeking to liquidate Barclays PLC.


  • Referring to a group of people at the Central Bank “with absolute power,” he went on to say: “With respect to the banking system, they have more power than the parliament, the finance ministry and the President of the Republic combined, a handful of people accountable to nobody, operating in the absence of transparency…. You see problems emerging which could ravage Cyprus adding “We depend on the abilities of people who proved their inadequacy in the past two or three years”.


  • Mr Markides said what is happening now is the paralysis resulting from the decrees and the whole attitude of the Central Bank over the last two years as Resolution Authority. He reminded that the Central Bank had issued a decree and placed the branch under resolution with the purpose of selling its operations: “From Day 1 we had told them they were not going to be able to find a buyer, there is no-one willing to put out whatever is necessary to buy a branch when there is a legal battle and the owners of the bank are disputing the legality of your actions. They didn’t understand this”.


  • Mr Markides continued, “They have failed, badly. These people are in no position to admit that they have made a mistake. For them ‘I made a mistake’ is inconceivable. So, they retracted the resolution and withdrew the banking license, therefore the bank is no longer a bank. They then went to court and demanded the appointment of a liquidator, not for the branch but for the Bank itself which is in another country.”


  • In response to the activation of the Depositors Guarantee Scheme Mr Markides said: “They are giving them [depositors] 100,000 euros when they themselves had said that it was necessary to issue the decree to protect the deposits and the depositors. So, is this how they are protecting them? As to the next steps, they [the Central Bank] are involved in legal proceedings and they have to wait for the result of those processes. But to come today and say that they will give 100,000 is not a form of bail-in as you said, it is literally a bail-in, and it is in fact a third admission, of the complete failure of the whole plan of the Central Bank since July 2014.”


  • Responding to the allegations of money laundering Mr Markides said: “They [the Central Bank] themselves conducted an investigation and never ascertained that there was money laundering. They don’t say this, because there is a lack of transparency, there is a classic case of abuse of power. This was said by the Americans and we don’t know yet on what evidence FinCEN claimed this. In connection to this there are other processes pending before US courts”.