Ayia Fyla co-op staff arrested for €9.5m in dodgy loans (2nd Update)

By Elias Hazou

THREE bank officers formerly employed with the now-defunct Ayia Fyla cooperative savings and the owner of a construction company were arrested on Thursday in connection with granting dodgy loans to clients.

The three are facing 13 charges of fraud, obtaining property by false pretences and circulating fraudulent documents.

They are suspected of giving out loans to non-eligible persons or to persons who did not post sufficient collateral to receive a loan.

All four are expected to appear before the Limassol district court on Friday for their remand hearing.

According to the Cyprus News Agency, the charges relate to 22 cases of loans worth a total of €9.5m granted by the Ayia Fyla co-op without adequate collateral.

The alleged offences took place between 2006 and 2009.

The three bankers are the former treasurer, the head of the loans department and his assistant.

Two more persons – the owner and director of a construction company – were also wanted by police in connection with the same case, when the owner gave himself up to the police late on Thursday.

CNA reported that detectives are also investigating other irregular loans involving more suspects and companies.

Investigations leading up to the arrests took several months, with CID officers combing through thousands of bank documents.

But the original police case file dates back to 2010.

An internal probe conducted in 2010 found that Ayia Fyla bank officers had allegedly conspired with valuators to value homes and businesses for many times their market worth so the bank could arrange for a loan that was considerably high compared to the collateral.

When the debtor failed to service the loan the bank revaluated the immovable property for foreclosure purposes but found that the actual value was far lower than it was originally estimated.

The Ayia Fyla co-op was merged, along with other local co-ops, with the Limassol district co-op in January 2012, where the three arrested are currently employed.

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