30 October 2014

 There is a belief amongst some people that if you ask the same question often enough you will eventually get the answer you want. Children sometimes do this: “Can I? Can I? Can I?” in the hope that the parent will finally give in. But we don’t really expect this from senior government officials do we?

Regular readers of this website will probably guess to what we are alluding. Yes, the auditors from the Central Bank of Cyprus have come back in to FBME’s Cyprus branch this week, seeing the same documentation and asking the same questions of the same people. Let’s count the times: in June and July a report was commissioned from PwC which took several weeks. Prior to the Resolution Decree, FBME executives had been told verbally that this gave the Bank the all-clear. Nothing was published though. That’s one time.

Following the announcement of the FinCEN Notices, the Central Bank sent PwC back in with some of their own officials and once more they started to delve through the files. That is the second occasion. FBME was not told anything either good or bad, but given that the auditors were looking for malfeasance, hearing nothing presumably was again good news. Then in September, they turned up once more and yet another survey was made in mid-October. Again, no result, no comment and, frankly, no thanks either. And now for the fifth time in as many months, the Central Bank and its highly-paid sleuths have again ploughed their furrow from Kennedy Avenue to Archbishop Makarios III Avenue.

How much evidence – or absence of evidence in this case – is enough for the Special Resolution Committee of the Central Bank? The phrase ‘Witch Hunt’ springs to mind to explain this persecution. The Central Bank is increasingly desperate to justify its imposition of Resolution measures against the Cyprus branch of FBME. These measures have tarnished the reputation of Cyprus, ruined the confidence of depositors and probably caused severe disquiet in the corridors of power in Europe and the US.

Yet an exhaustive independent forensic investigation, taking the best part of 60 days by teams of experts from Ernst and Young’s USA and Europe offices, has already reported to FinCEN, and a public comment from international law firm Hogan Lovells has been written to accompany this. The public comment is available on this web site; all the Central Bank of Cyprus had to do was ask us for a copy. It would have saved them all that time and reckless use of taxpayers’ money.

Perhaps while they are about it, they could publish their own independent report produced in July by PwC or any of the results of later surveys.

On 21 July the Central Bank of Cyprus dug a hole for itself with the Resolution Decree and the appointment of its Administrator. They have continued to dig ever since, finding themselves getting deeper and deeper. Senior officials are said to regret this entire episode. Surely it has occurred to them by now that the first thing to do if you want to get out of a hole is to stop digging!