Tuesday

18th Sep 2018

Scandal brews round Cyprus central bank chief

  • ECB board, with Georghadji in bottom row, their from left (Photo: ECB)

Cyprus president Nicos Anastasiades called Sunday (15 March) for the removal of the country’s central bank governor, Chrystalla Georghadji, amid suspicion of conflict of interest and blackmail of MPs.

Anastasiades asked the country’s attorney general "to examine the evidence and activate specific clauses of the constitution in order to remove Georghadji from her post", the president’s spokesman said.

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Georghadji has faced pressure after revelations that her estranged husband is a lawyer for Andreas Vgenopoulos, the former chairman of Laiki Bank.

Also known as Cyprus Popular Bank, Laiki was dismantled in the wake of Cyprus financial crisis in 2013 and split between a bad bank and a good bank sold to the Bank of Cyprus.

The bank’s collapse triggered a €10 billion bailout from the EU and International Monetary Fund, which is still being implemented.

Cyprus authorities filed a case against Vgenopoulos and a special administrator was appointed to recover assets for creditors.

As central bank governor, Georghadji takes part in meetings of the Resolution authority dealing with Vgenopoulos’ legal case against legacy Laiki.

It was also disclosed last October that Georghadji’s daughter was working with her father’s law firm defending Vgenopoulos.

Controversy flared again in early March when Laiki special administrator Andri Antoniades resigned and accused the Resolution authority, mainly the central bank, of complacency towards Vgenopoulos.


According to Antoniades, the resolution authority chose a law firm that benefited from a loan from Laiki in 2008 to handle the state’s case against the bank’s former boss (Vgenopoulos).

Also last week, during a parliamentary ethics committee, a central bank executive board member said that Georghadji is in possession of the names of MPs with overdue loans at the Bank of Cyprus and that she is in a position to blackmail them.

Last Friday, a newspaper published a list of indebted lawmakers. Georghadji is considered to be behind the leak in an attempt to put pressure on them not to investigate her relations with Vgenopoulos any further.

"The president of the republic regrets to note that the institution of the Central Bank, as well as the trust in it, has been severely compromised", the presidential spokesman noted on Sunday.

The Cyprus Central bank is an independent body and its governor cannot be dismissed by the government.

Speaking to the press after her meeting with Anastasiades, Georghadji rejected the idea of stepping down.

"There are laws we have to respect. These laws protect the independence of the governor. For me the issue is closed", she said.

Georghadji is also a member of the European Central Bank’s governing council. The president of the ECB Mario Draghi has been briefed on the situation by the Cypriot president.

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