Central Bank scandal hits Cyprus. President Anastasiades moves to fire Central Bank Governor

Never a boring day in the Cyprus banking and financial sector.

The latest corruption/cronyism scandal to now hit the EU member state revolves around the Central Bank Governor, Chrystalla Georghadji, and her marital ties with the now defunct Laiki Bank (the very bank Brussels shut down a few years back).

Turns out Georghadji may be in breach of her contract because her husband’s law firm represents the former head Laiki Bank, Andreas Vgenopoulos, who’s embroiled in a legal battle with the Central Bank.

On top of what is an obvious conflict of interest, claims are also surfacing that Georghadji was blackmailing Cyprus MPs with information on their bank loans. God only know what Cyprus Parliament members are hiding in their financial accounts.

Cypriots tend to forget that President Anastasiades was “lucky” enough to have have his daughter move over 28 million euros to London two weeks before Laiki was shut down, in the now infamous Cyprus depositor haircut debacle.

Yahoo News reports…

State Broadcaster CyBC reported that the Central Bank governor’s husband, Andreas Georghadjis, said his law office would stop representing Vgenopoulos and accused individuals he didn’t name of using “hypocritical tactics” to undermine the Central Bank and his wife. Georghadjis said the Cypriot president knew that Vgenopoulos was his client two years before appointing his wife.

The matter dates back to October when Anastasiades publicly criticized Georghadji for not disclosing that her daughter worked for her estranged husband’s law office, prompting a revision of her contract and assurances that the matter would be resolved.

But things boiled over again during a tumultuous parliamentary ethics committee meeting last week when a Central Bank executive board member alleged that Georghadji had obtained a list with the names of lawmakers with overdue loans at the Bank of Cyprus.

The board member, Stelios Kiliaris, suggested that Georghadji could use the information as leverage against detractors and get them to back off from conflict of interest accusations.

Kiliaris, who has since resigned, went as far as to say that Georghadji had a vested interest having her estranged husband’s law firm win the case against Vgenopoulos because she and her family would stand to gain millions.

Georghadji denied the allegations, insisting that she only sought the list as part of her supervisory duties and that she had no intention of holding the information over anyone.

Cyprus Mail reports…

President Nicos Anastasiades will ask the Attorney-general to look into how the Constitution can allow for the dismissal of Central Bank (CBC) governor Chrystalla Georghadji, the government spokesman said late on Sunday night.

“The President of the Republic regrets to note that the institution of the Central Bank, as well as the trust in it, has been severely compromised,” Nicos Christodoulides told reporters at the Presidential Palace.

“The main reason for this was unfortunately the issue of conflict of interest concerning Chrystalla Georghadji, which had she brought to the President’s attention he would not have appointed her governor of the Central Bank.”

“It is a conflict of interest which, according to Mrs. Georghadji’s revised contract, is strictly prohibited, and arises from the fact that Mrs. Georghadji’s husband was and remains the lawyer representing Andreas Vgenopoulos.”

“With this,” the spokesman added, “the President has no choice but to ask the Attorney-general to examine the evidence and activate those clauses of the Constitution in order to remove Mrs. Georghadji from her post.”

The President had already briefed European Central Bank President Mario Draghi of his intentions, the spokesman said.

Christodoulides’ comments came shortly after Georghadji, walking out of her meeting with the President, told the press that she had no intention of stepping down.

“There are laws we have to respect,” she told reporters. ”These laws protect the independence of the governor. For me the issue is closed”.

But asked also whether the matter was closed for the President as well, Georghadji said: “You should ask the President.”


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