April 02, 2013

One hundred and thirty-two companies reportedly had inside knowledge of Cyprus’ impending levy tax as they withdrew deposits worth US$916 million in the run-up to the bailout deal.

The companies withdrew their savings in the two week period (between March 1 to March 15) leading up to the rescue deal that enforced heavy losses on wealthy depositors in Cypriot banks, according to Greek newspaper Proto Thema.

Shortly after this the EU ministers and the IMF hammered out a 10-billion-euro (US$13 billion) bailout agreement with Cyprus, which included a one-time tax on deposits held in Cypriot banks.

In the meantime all banks in Cyprus temporarily froze the amounts required to pay the tax on their clients’ deposits and stopped all transactions while the government negotiated the details of the agreement.

The companies on the list withdrew their deposits in euro, USD, GBP and Russian rubles and later transferred to banks outside of Cyprus. The total amount withdrawn comes to US$916 million.

The list consists of shipping and energy companies, legal practices and state-run companies, Der Spiegel reported. The published list was not yet verified.

It includes A Loutsios & Sons Ltd, reportedly co-owned by John Loutsios, the husband of Nikos Anastasiadis’ daughter Elsa. The company said to have transferred 21 million euro (US$27 million) from Laiki Bank in the week running up to the bailout. The money was then deposited in a London bank, Haravgi newspaper reported.

A Loutsios & Sons Ltd denied that it had withdrawn any money from its Cyprus bank account.

Anastasiades also denied the charges and called the reports an "attempt to defame companies or people linked to my family … [This] is nothing but an attempt to distract people from the liability of those who led the country to a state of bankruptcy."

Earlier Haravgi newspaper reported that Cypriot Finance Minister Michalis Sarris has confirmed that the government knew in advance that the Eurogroup planned to impose a tax on bank deposits of more than 100,000 euro.

The list raises suspicion that certain companies had inside knowledge of the decision adopted by the eurozone’s 16 countries to finance Cyprus’ deficit.

Just last week the troika of international lenders along with Cyprus agreed on a 10 billion euro ($13 billion) bailout plan, according to which the depositors with more than 100,000 euro ($128,000) in the Bank of Cyprus would lose 37.5 per cent of their savings in exchange for bank shares.

These big depositors may further lose up to 22.5 per cent more if the experts consider bank’s balance insufficient.

This means that those with big deposits in Cyprus’ largest bank could lose could lose up to 60 per cent of their savings in the harsh new EU and IMF bailout deal. Those with deposits less than 100,000 euro will be protected under the Cyprus deposit guarantee.

Financial journalist Clem Chambers believes other eurozone countries will follow the sad example of Cyprus.
“The system is not addressing the underlying problem of all of this, which is deficits - state deficits, trade deficits. Europe and America are bleeding to death and they are not doing anything about it,” he told RT.

“Unless they turn that round – and there is no sign they are going to – then the dominos must fall."

Below is the list, provided by the Greek newspaper Proto Thema, of the 132 companies that allegedly made substantial withdrawals prior to the levy’s announcement.

http://rt.com/news/cyprus-companies-withdraw-money-218/