Arrest warrant issued against former Cyprus bank chief
(NICOSIA) - An arrest warrant was issued Friday after the former head of Cyprus's central bank failed to appear before a district court for a hearing, the Cyprus News Agency reported.
Athanasios Orphanides, who is currently in the United States, had been due to attend the hearing in the southern town of Limassol in connection with a private lawsuit filed by a resident who had purchased Laiki Bank bonds worth 400,000 euros ($540,000).
Orphanides, now a professor at the Massachusetts Institute of Technology, served as central bank governor from May 2007 to May 2012, when the country was plunged into crisis after Greece's meltdown left several major banks insolvent.
The crisis and subsequent EU bailout forced a number of big depositors to accept reductions in the value of their bank accounts.
"Laiki through its employees acquired 400,000 euros from my client in a fraudulent manner, in collusion with Mr Orphanides," CNA quoted the client's lawyer Costas Melas as saying.
He said neither Orphanides nor his lawyer were present at Friday's hearing. The court was to reconvene November 14 to ascertain the status of the warrant against him.
Demonstrators outside the Limassol courtroom protested against Orphanides, whom they blame for the sale of high-risk products by the banks that eventually caused ordinary investors to lose millions.
Cyprus's two largest banks, Bank of Cyprus and Laiki, issued bonds worth some 1.4 billion euros in 2011 and 2012 that were rendered worthless after the banks suffered huge losses connected to the Greek debt crisis.
In March Nicosia clinched a 10 billion-euro bailout through the International Monetary Fund, which required that it restructure banks, with Laiki wound up and its healthy assets shifted over to the Bank of Cyprus.
But the deal also required that depositors take an unprecedented hit on unsecured deposits above 100,000 euros. Depositors in defunct Laiki lost their savings while those at the Bank of Cyprus took a 47.5 percent haircut.