CySEC official pressed over BoC impartiality

By Angelos Anastasiou
Cyprus Securities and Exchange Commission (CySEC) executive Alkis Pierides was cross-examined by defence lawyer Polis Poliviou on Monday, during the hearing of the trial of five former Bank of Cyprus top officials, as well as the lender itself, on charges of conspiracy to manipulate the market and mislead investors.
Poliviou’s effort was clearly to discredit Pierides – the prosecution’s key witness – by attempting to demonstrate a lack of impartiality.
In previous hearings, Pierides had testified that the Bank of Cyprus’ board had purposely lied in June 2012 that its capital shortfall had been found to be €200 million, when in fact it knew the figure to be much higher.
The allegation forms the basis of the case brought against former BoC board chairmen Theodoros Aristodemou and Andreas Artemis, former CEOs Andreas Eliades and Yiannis Kypris, and former deputy CEO Yiannis Pehlivanides, as well as the bank itself.
Cross-examining Pierides, Poliviou wondered why the witness had not given a statement to the police regarding a meeting he had cited during Friday’s hearing, between CySEC chairwoman Demetra Kalogirou and Kypris, who had been accompanied by his lawyer – Poliviou.
Pierides had claimed that this meeting, in which Kypris had alerted the CySEC of wrongdoing by Aristodemou and Eliades, had kick-started the CySEC probe, the findings of which were used by the Legal Service in building the case against the BoC and its former top brass.
The witness replied that his involvement in the matter had been administrative – as opposed to criminal – and that he could have inferred Kypris’ claims from Eliades’ and Aristodemou’s public remarks.
Poliviou went on to ask Pierides whether he has had any personal feuds with the Bank of Cyprus or its lawyer – himself.
The CySEC man said no, but described an incident from 2013, when Poliviou sent a letter addressed to him and two other CySEC investigators, claiming that what they were doing was “not a probe but persecution”.
The letter, Pierides added, triggered the exchange of correspondence between the CySEC and the BoC, but he was neither involved nor interested in them.
“Did you report me?” Poliviou asked.
“We told Mrs Kalogirou that Poliviou’s behaviour is unacceptable,” Pierides replied.
The BoC’s lawyer asked Pierides whether he had applied for a job with Cisco – the Bank of Cyprus’ investment arm – for which he was turned down, and why he had failed to disclose the fact in court.
Pierides said this had taken place 15 years ago, and that he had not applied, but instead was summoned to discuss, only to be advised that no hiring would be made.
Poliviou then argued that the BoC board’s decision to withhold interest payments on capital securities, at the same board meeting which was followed by the “€200-million” announcement, “does not fit the profile of a board that had conspired to present a false image to the market”.
Pierides said the bank had had a capital shortfall at the time, and announcing no interest payments on securities had obviously been imposed by the Central Bank of Cyprus, but this could in no way be construed as a substitute for the announcement concerning the level of capital needs.
The Bank of Cyprus’ defence lawyer cited correspondence showing that, prior to the announcement of the lender’s results on June 15, a lot of progress had been made on the sale of the group’s insurance companies, the probable revenue from which was not included in the bank’s financials at the time.
“There had been nothing to announce or factor in at the time,” Pierides countered.
Pierides’ cross examination will resume on Friday.