Laiki Bank case: Vgenopoulos rubbishes claim of Laiki ignorance of loan exchange
Embattled former Laiki Bank boss Andreas Vgenopoulos insisted on Wednesday that a loan exchange worth $217 million must have been approved by Laiki’s board of directors, especially when such a decision required approval from the Central Bank of Cyprus.
He was commenting on claims that Laiki Bank’s board of directors was not asked to approve turning a $217-million loan given out to Focus Maritime Corporation, owned by Greek shipowner Michalis Zolotas, into a majority-ownership stake in Newlead Holding Ltd, Zolotas’ flagship business, in May 2012.
The claim was made by former board chairman Michalis Sarris and Legacy Laiki’s administrator on Wednesday, in response to a report carried by Simerini newspaper on Tuesday.
Citing a US Securities and Exchange Commission (SEC) report, Simerini reported that Laiki acquired an 85-per-cent majority stake in Newlead – a shipping company trading on the US stock exchange – in exchange for writing off a $217-million loan taken out by Focus earlier.
But, the SEC document added, Laiki failed to take any action thereafter, allowing Zolotas to wipe out its newly-acquired stake by holding continuous capital increases.
According to Simerini, Newlead has since been delisted from the US stock exchange for violating its regulations, and its stock now trades at less than $0.01.
Sarris and Pavlou were asked by the paper to explain why Laiki had not only taken no action after exchanging the Focus loan with a stake in Newlead, but it had not even conducted a “due diligence” probe to establish the expected return on the transaction.
The board had not been made aware of the transaction, let alone asked to approve it, the two men said, with Pavlou going as far as surmising that the Focus loan included a mandatory-exchange clause that was triggered when the loan wasn’t serviced.
But Vgenopoulos called them on their response in a statement on Wednesday, in which he deemed the claims “outrageous”.
“Through communication I have had with former Laiki officials, I was assured that there was no obligation to turn the loan into Newlead stock, as Mr Pavlou implied in a bid to once again pin responsibility on previous management,” Vgenopoulos said.
“According to Laiki’s operating regime at the time, a decision like this required approval not only by the board of directors, but the Central Bank of Cyprus, too. It is inconceivable to claim that such a decision, for amounts this large, no one knew anything! It is also outrageous to render Laiki the largest shareholder in a listed company, and then sit around doing nothing while its stake was being wiped out through repeated capital increases.”
Vgenopoulos had revealed the incident with the Focus loan, which was turned into a stake in Newlead and then reduced to almost nothing, in an interview he gave in May 2014.
In the same interview, he had claimed that Takis Clerides, who was appointed finance minister when DISY was in power, and former board chairman of Cyprus Airways Stavros Stavrou, who was appointed when AKEL was in power – both ship-owners – were partners with Zolotas in at least one business venture.
The Greek ship-owner has become synonymous with corruption in Cyprus, following revelations concerning Focus Maritime Corporation, which he owns. He has also been variously described as a “close friend and associate” of Vgenopoulos, which the Greek financier denies vehemently.
Apart for running up hundreds of millions of euros’ worth of non-performing loans from Laiki Bank, Focus has also been used to make dubious payments to former Central Bank governor Christodoulos Christodoulou in 2007, and Cyprus’ two biggest political parties, DISY and AKEL, in 2008.
“So who was it who served Zolotas’ interests, and why?” Vgenopoulos asked.
Source: CyprusMail – Laiki Bank case: Vgenopoulos rubbishes claim of Laiki ignorance of loan exchange
