Former president blamed for Cyrpus woes

The “reckless” economic policies of Cyprus’ former president were mainly to blame for the financial crisis that brought the country to near bankruptcy, an independent inquiry has found.

The three-member panel of former judges said Dimitris Christofias also ignored warnings over excessive spending and worsened problems by delaying talks on an international bailout.

“He insisted on his views, disregarding advice and pleas by economic experts over the consequences of his actions. He had no limits,” the report said.

Communist-rooted Mr Christofias ran the country between 2008 and February of this year. The government and the banks’ finances worsened during those years and in mid-2012 he sought a bailout for Cyprus.

But he resisted conditions demanded by fellow eurozone countries and the International Monetary Fund, which waited for his mandate as president to expire in February. A deal was struck with the new president, Nicos Anastasiades, in March.

The bailout deal forced huge losses on uninsured depositors in the country’s two biggest banks in exchange for a €10bn loan. That drained trust in the banks and prompted authorities to impose capital controls to prevent a run - a first for a eurozone country.

The inquiry, which did not have an economist among its members, was set up in the aftermath of Cyprus’ rescue deal to apportion blame for the economic meltdown, but had no authority to instigate criminal proceedings.

Among other things, it also faulted Mr Christofias for failing to secure a deal with fellow eurozone governments that would protect Cypriot banks from huge losses they incurred on Greek government bonds when they were cut in value in 2011.

He has argued the inquiry was “illegal” and the report “fraught with untruths and slander” that offered cover to the real culprits, whom he argued were the banks.

He said that to pass judgement on executive decisions “is at the very least unheard of if not something that makes Cyprus an international laughing stock.”

Mr Christofias’ party, AKEL, said the inquiry was part of a government-orchestrated smear campaign against its former leader and the party itself.