THE CYPRUS Development Bank (CDB) suffered losses of £20 million in 2003 as a result of bad management and dubious debtors, the House Watchdog Committee heard yesterday. Bank executives rewarded themselves with unacceptably large sums of money, charged Committee Chairman Christos Pourgourides.
Meeting behind closed doors, the Committee discussed in detail “the possible squandering of public money by the Development Bank” as tabled by AKEL deputies Andros Kyprianou and Stavros Evagorou, with the current bank chairman, Andreas Mouskos.
Kyprianou told reporters after the meeting that at first instance, the evidence presented confirmed their suspicions.
Pourgourides said the bank had clocked up huge losses as a result of loans and investments made “using rushed and inadequate procedures”.
Mouskos acknowledged that the losses were mainly as a result of precarious debtors and bad management, adding that the CDB had appointed external auditors to report on the period in question.
The evidence submitted “shows that unfortunately the Bank, using rushed and inadequate procedures, made investments or gave out loans in many cases with the result of creating huge losses, which in 2003 reached £20 million,” said Pourgourides.
The CDB has failed to see the money back on many of the loans, he said.
Discussing the retirement package which saw off the previous Bank Chairman (reported at £400,000) and the benefits paid to a number of officials, Pourgourides said: “At first sight, they are considered excessive.”
The retirement package cost the bank “many hundreds of thousands of pounds,” noted the Committee Chairman, adding: “They patted their backs in a way which could be described as unacceptable.”
Asked if he had faith in the internal audit service of the bank, Pourgourides expressed regret that the service had only been up and running since 2003, despite the fact that the Watchdog Committee highlighted the need for it five years ago.
“It seems those in charge at the Bank had so much confidence in their abilities they felt that the internal audit service was not necessary,” he said.
Mouskos told reporters that the bank’s leadership had no intention of covering up anyone or any case, referring to the independent inquiry under way.
The cases under review involve the £20 million losses, which was a result of precarious debtors, old loans issued in 2000, the collapse of the stock exchange and bad management.
“The issue is to look forward,” said Mouskos, adding that the bank had prepared a strategic plan to solve its problems.
