Cyprus top court overturns jail conviction on former bank CEO

Cyprus top court overturns jail conviction on former bank CEO
FILE PHOTO: A passenger makes a transaction at a branch of Bank of Cyprus at the departures building of Larnaca Airport in Larnaca, Cyprus April 15, 2016. REUTERS/Yiannis Kourtoglou/File Photo   -  Copyright  Yiannis Kourtoglou(Reuters)
By Reuters

ATHENS (Reuters) – The highest court in Cyprus overturned on Wednesday a jail conviction for a former chief executive of Bank of Cyprus <BOC.CY>, clearing him of charges that he sought to manipulate the share price before the country’s financial meltdown in 2013.

Andreas Eliades, who resigned from the bank in 2012, was sentenced to 2-1/2 years in prison in January on charges that he issued misleading statements about the lender that was hit heavily by its exposure to debt-laden Greece.

Eliades, at the helm of the bank for about eight years, was accused of understating a capital shortfall at the bank.

Cyprus’s criminal court convicted Eliades of telling shareholders at a meeting in June 2012 that the bank had a 200 million euro shortfall, before citing a figure double that in a letter he wrote to the central bank governor a day later.

After reviewing an appeal, the Supreme Court said in a majority ruling that any incorrect comments by Eliades were not intended to manipulate the stock price of the bank but were aimed at placating individuals at the shareholders meeting.

In its ruling, the court said this was not a felony.

“It is clear, under the circumstances, that this was not an attempt to manipulate the market … but an attempt by the appellant to avoid the pressure of the specific circumstance, angry shareholders and their persistent questions,” the ruling said.

The chief prosecutor said he disagreed with this ruling. “It makes proving such cases before a court almost impossible,” Attorney General Costas Clerides said in a written statement.

A combination of fiscal slippage and Cyprus banks heavy exposure to Greek debt, written down in a deal approved by the European Union to make the debt mountain more sustainable in early 2012, snowballed into a crisis for Cyprus.

Cyprus was forced to accept an international bailout in 2013, though creditors refused to help commercial banks.

Bank of Cyprus was forced to bail-in uninsured deposits above 100,000 euros. Less than 50 percent of uninsured deposits were converted into equity to recapitalise the bank.

The bank’s senior management has been changed since then, and its shareholder structure altered.

(Writing by Michele Kambas; Editing by Edmund Blair)

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