NICOSIA: Two former chairmen and three other one-time top executives of the Bank of Cyprus are being charged in connection with the economic meltdown that forced Nicosia to seek a painful international bailout.
Attorney General Costas Clerides told the Cyprus News Agency a case was filed Friday before the Nicosia district court in what could lead to the first prosecution since the March 2013 banking crisis that almost bankrupted the country.
Former BoC chairmen Theodoros Aristodemou and Andreas Artemis, ex-CEOs Andreas Eliades and Yiannis Kypri and former executive Yiannis Pehlivanidis are set for a hearing on January 30, when the case is expected to be referred to the criminal court.
Clerides said a police investigation had shown that "criminal offences had been committed."
The charges relate to manipulation of the share price and to misleading statements on the capital adequacy of the bank, the island's largest lender.
If convicted, the five face up to 10 years in jail as well as the possibility of hefty fines.
Last year, in return for a 10-billion-euro ($12.3-billion) bailout by the European Union and International Monetary Fund, they demanded that Cyprus's second-largest lender, Laiki Bank, be wound up and its healthy assets folded in to BoC.
At the same time, an unprecedented "haircut" was imposed on deposits in BoC of more than 100,000 euros.
For fear of a run on the banking system, the government closed all the country's banks for nearly two weeks and impose draconian capital controls when they reopened. Some restrictions still remain.
A police investigation began in July 2013 into the causes behind the financial crisis which crippled the banking sector.
It is focusing on possible offences committed between 2006 and 2013.
These includes the transfer of funds from now-defunct Laiki Bank to Greece, loan write-offs, miss-selling of bank bonds to the public, the purchase of toxic Greek bonds by Laiki and Bank of Cyprus and the expansion of both banks abroad.
It was the banking sector's exposure to Greek bonds that triggered the island's euro crisis.
An independent report published last year said the banking sector crashed because there was no coherent policy to restrain the booming industry.
It said a policy of complacency, weak bank governance and foot-dragging on reforms was partly to blame for the downfall of the sector, coupled with its heavy exposure to debt-crippled Greece.
Critics say Laiki overreached itself when it merged with Greece's Marfin Egnatia bank in 2006, triggering an over-ambitious expansion project in Greece, Russia and the Balkans.
The Bank of Cyprus has also been criticised for overplaying its hand in Greece and Russia, and a public enquiry heard that its buying of Greek bonds was not approved by the entire board.
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