How Marfin looted Laiki and propelled Cyprus towards economic meltdown

Above is a report by Simon Cox from BBC World Service radio on the economic crash in Cyprus. Cox traces the collapse of Cyprus’ banking sector to 2006 when the second largest bank on the island, Laiki, was taken over by Marfin Investment Group, a Greek investment company run by Andreas Vgenopoulos who, it is alleged, with his cohorts, proceeded to loot the Cypriot bank.

In Cox’s report, Laiki employees describe having their doubts over the intentions and practices of the new regime from Greece assuaged by large, unwarranted bonuses or overridden by fear of being branded dead wood or trouble makers. Employees, it is claimed, were induced, and browbeaten, into buying and holding onto Marfin-Laiki shares as a demonstration of loyalty to the bank.

Cox also reports on the way Marfin siphoned money from Laiki’s Cypriot operations to finance unsecured loans to Vgenopoulos’ business associates, friends and family in Greece. These loans included one of €700m to a Greek shipping company; €500m to a Greek TV station; and €400m to Marfin-Laiki’s Greek directors.