Roundup: Cases of corruption, fraud contribute to Cyprus's economic crisis

Cypriot police filed charges against 11 people on Tuesday in a case typical of widespread corruption that was behind the near collapse of Cyprus's banking system and the economic crisis that hit the eastern Mediterranean island in 2013.

The investigator who brought the charges said that two of the suspects, who are professional businessmen, set up a plan to defraud the cooperative credit society at Ayia Phyla, Limassol of southern Cyprus.

They hired cronies to spot people in a bad economic condition and even drug addicts desperate for securing their shots, and paid them small sums of money to underwrite the loan documents as guarantors.

But in fact, with inside help from employees they cheated the men into signing as loan owners. The credit society thus had no other option but to write off these loans.

The 11 accused are facing a total of 212 charges of fraudulently obtaining loans amounting to 12 million euros.

An official from the Cooperative Central Bank Ltd of Cyprus said that at least seven other similar cases are under investigation in the country.

Greedy bankers have also brought major Cypriot banks to the brinks of collapse. Five former high officials of the Bank of Cyprus, the main lender of the country, are currently on trial, accused of preparing misleading balance sheets to cover up their losses resulting from rampant investment in highly risky Greek bonds.

Several investigations have also provided evidence that high officials of both Bank of Cyprus and the second largest lender, the Cyprus Popular Bank, known as Laiki, were chasing high gains by purchasing Greek bonds worth several billion euros at a time when other European banks were unloading them.

When the Greek sovereign debt was written down by about 73 percent in 2012, the two lenders jointly lost a mammoth 4.5 billion euros, one quarter of Cyprus's annual GDP.

The inability of the Cypriot state to support its banking system by replenishing its capital needs forced the government to apply for a bailout in 2012, which came six months after the government poured 1.8 million euros into the bottomless coffer of Laiki in a bid to save the lender.

The bank broke down nevertheless a few months later, leading into desperation thousands of small depositors, many of them pensioners, who were cheated into investing their savings in so-called high yield bonds.

Yet another investigation underway involves a businessman from Greece, who became owner of Laiki. He is alleged to have siphoned several billions of euros in sham loans to associates in Greece, at a time when the bank had drawn almost 11 billion euros in Emergency Liquidity Assistance from the European Central Bank.

Cyprus is set to exit its bailout adjustment program at the end of March thanks to a diligent application for its adjustment program and an amazing recovery of its economy.

But investigations into the scandals which brought about its economic demise are proceeding at an agonizingly slow pace, causing loud outcries from the people for justice. Endit