Ex-Disy leader: president reneged on promise to compensate 2013 crash losers

The government on Monday sought to slap down criticism that President Nikos Christodoulides went back on his word for a partial restitution for depositors and bondholders who saw their money wiped out in the 2013 bank bail-in.

Christodoulides came under fire after he refused to sign off on and referred directly to the supreme court a law passed by parliament on July 11. The law provides for the majority of the special fee levied on banks’ deposits to be transferred to the Solidarity Fund providing relief to people whose savings went up in smoke in 2013.

The relevant bill had been introduced by Disy MP Averof Neophytou. Essentially it seeks to redistribute the percentages from the special deposit fee on banks, so that a larger share – 75 per cent – of the proceeds go into the Solidarity Fund, with the rest ending up with the state treasury.

In referring the law to the supreme court, the president argues it is unconstitutional on several grounds – primarily in that it increases government expenditures, whereas no act of parliament may do so. The first hearing of the case in court is scheduled for September 4.

Reacting to the president’s move, Neophytou on Monday said the president “has committed three political errors”.

First, according to the MP, in vetoing the law Christodoulides reneged on a promise he had made to bank employees while on the campaign trail for the 2023 presidential elections. At that meeting, said Neophytou, Christodoulides had “completely agreed with my proposal”.

Secondly, the president “exhibits contempt for the political message conveyed by parliament” when it passed the law in July.

Third, Christodoulides is challenging a law that would “partly restore the great injustice suffered from the haircut and which victimised depositors, bondholders, bank shareholders and employees who lost their provident funds”.

Averof urged the president to have second thoughts on the matter and withdraw the referral to the supreme court.

Earlier, the Disy MP argued that the president’s decision made no sense. He pointed out that the previous government – of which Christodoulides was a member as a minister – had not deemed unconstitutional a law which imposed a 0.4 per cent levy on the sales of immovable property, where the proceeds go to a fund to support refugees.

Now, Neophytou said, Christodoulides opposes a law that does not even introduce a new tax, merely shuffles around the share of the proceeds so that the majority does not end up with the state treasury.

Hitting back, the government spokesman reiterated that the constitution bars the House from passing any law that leads to an increase in government spending – that power is vested solely in the executive.

Constantinos Letymbiotis went on to “remind” Neophytou that during the 10 years of the Nicos Anastasiades administration nothing was done to substantively help the ‘haircut’ depositors and bondholders.

He also urged the Disy MP “not to engage in populism…simply for the sake of sensationalism”. In addition, Letymbiotis stated that it is the current administration that activated the Solidarity Fund and doubled the contribution to it from €25 million to €50 million annually.

Answering the spokesman later in the day, Neophytou sardonically commented that the government must not have read his bill, as it does not lead to increased government expenditure.

“Let us now wait for the ruling of the supreme constitutional court, as the president is insisting on his referral.”

The events of March 2013 saw the loss of €7.7bn in deposits (amounts over €100,000). In addition, anywhere from €1.2bn to €1.5bn in contingent securities were converted into equity (bank shares) of practically zero worth.