A Greek MP told the House Ethics Committee that the “scandal” as he described the merger, had been discovered in 2010, by a Greek parliamentary committee looking into another scandal where Vatopedi monks had engaged political help to obtain the rights to a nature reserve in northern Greece and then, with more help, to swap it for valuable state-owned real estate across the country. The monks were also major players on the stock market and received €109 million in loans from Marfin Bank. The money was in turn used to buy shares in Marfin Investment Group (MIG), controlled by former Laiki strongman Andreas Vgenopoulos (pictured)

The Greek parliamentary inquiry alleged serious “conflicts of interest” in how bank loans were issued to finance MIG’s wider activities. “The investigation of the Vatopedi scandal led us to a collateral scandal that extended to Cyprus through Laiki Bank,” the chairman of the Greek inquiry Demetris Tsironis said yesterday. Speaking after the closed-door meeting of the committee, chairman Demetris Syllouris said it was a big scandal.
“We estimate that at least €4.0 billion has been lost in this plot,” Syllouris said. Tsironis did not name names but he said there were individuals and companies involved in “this massive scandal.”
“I would dare say that the problem in Cyprus would be limited if it wasn’t for this,” he said. Tsironis said he had warned the Greek authorities about the matter and “I imagine that all these things were known.”

An audit carried out by the Central Bank of Greece and the Central Bank of Cyprus (CBC) in March 2009, found that loans worth €732 million had been given by Marfin Egnatia to individuals and companies so that the could buy MIG shares. That was in July 2007. At the same time Marfin Egnatia had given €1.8 billion in loans to ship magnates and business groups linked with MIG. The loans mainly had MIG shares as collateral.

AKEL MP Irini Charalambidou said that the Greek Central Bank Governor assured at the time there was nothing wrong with the procedures at Marfin Egnatia. Charalambiou sought once more to blame former Central Bank governor for the debacle, suggesting he could have stopped the merger. “He knew exactly what the situation was at Marfin Egnatia when he approved its conversion to a branch (from a subsidiary),” Charalambidou said. The merger meant the Cypriot government had to include the liabilities of the Greek operations when asked to bail out Laiki in the summer of 2012. However, an investigation by forensics and dispute services firm Alvarez and Marsal, found that there was not much Orphanides could do. “The structure of the regulation and legislation is such that under the Mergers Directive the bank did no require any authorisation from the CBC, this resulted in the bank being able to transfer the assets and liabilities to Cyprus without approval from the CBC,” a findings report said.

The CBC was left with one option, the firm said, either to accept the conversion of the Greek subsidiary or force the bank to cease operations in Greece. “Given the desire to maintain the bank’s headquarters in Cyprus and the perceived regulatory benefits, the CBC notified the BOG (Bank of Greece) of the creation of Marfin Popular Bank’s branch in Greece,” A&M said.

Source: Cyprus Mail