Suspicious Transactions: Cypriot Parliament Investigating Capital Flight

[Bosonic]

Source: Spiegel

Banks have been closed and accounts frozen in Cyprus recently. Nevertheless, large amounts were moved out of the country's crippled financial institutions on the eve of the bailout package. Lawmakers are suspicious and are investigating both the government and the Cypriot central bank.

Panicos Demetriades looked dead tired as he opened the press conference on Tuesday afternoon on the fourth floor of the Cypriot central bank. The questions and answers flew back and forth for 90 minutes, with Finance Minister Michalis Sarris doing his best to back up the central bank head. Outside, the mountains slowly receded from view behind into a haze, while inside journalists became increasingly restive. When the session ended, many were left wondering why Demetriades had invited them in the first place. He had virtually nothing new to say.

Many interpreted the press conference as a symbolic exercise. Central bank head Demetriades, they felt, sought to stage a show of strength to counter the pressure that has been heaped on his shoulders in recent days. For one, he announced earlier this week, without consulting the Cypriot government first, that small banks in the country would open their doors again on Tuesday, in contrast to the island-nation's two largest financial institutions Laiki and Bank of Cyprus. The result was a massive protest from the smaller banks and a reversal. The banks stayed closed. For the moment, the opening date is set for Thursday, and many fear that a flood of angry customers could overwhelm the sector.

Then, on Monday, the central bank announced that it was installing financial manager Dinos Christofides as a special consultant to the Bank of Cyprus as it prepares to take on assets from Laiki, which is to be liquidated. The deployment of Christofides is legitimate, but it triggered widespread concerns that the Bank of Cyprus too may soon be broken up. Demetriades was accused of not doing enough to explain the steps he was taking, thus intensifying investor anxiety.

Read more: http://www.spiegel.de/international/europe/cypriot-parliament-investigates-government-after-dubious-transactions-a-891168.html

[dipsydoodle]

1. Lawmakers are suspicious

They have every right to be.

Whilst Cyprus is an official low-tax jurisdiction on the OECD white list it is used a lot for "transfer purposes" - onward routing to Belize, Latvia etc. In other words there are a occasions when its just a stop off point. It may be these funds which were scooted off pronto.

[RussBLib]

2. all the tax cheats had to quickly move their money

...or else they were going to lose a sizeable chunk of their money. The rich can't allow that, now can they?

I didn't realize that Cyprus was a tax-avoidance scheme a la Caymans, Bermuda, etc. until I read Paul Krugman recently. Maybe I live in a cocoon.

[ProgressiveProfessor]

3. It was focused on eastern Europeans mostly

Cyprus is also much less stable complete with part of being occupied by Turkey.

[dipsydoodle]

4. “It ain't what you don't know that gets you into trouble.

It's what you know for sure that just ain't so.”

Cyrus bears no resemblance whatsoever to the Caymans etc. Its on the OECD white list of low-tax jurisdictions. That means some is tax payable there and the rest in the home country - that's with the approval of the US , Russia , et al.

[RussBLib]

5. I see that the Caymans and Bermuda are on the same OECD white list

whatever that means....what? every country on that list is totally above-board? Doubtful.

http://www.sanctionswiki.org/OECD_Lists

[Javaman]

6. of course they were.

the rich tipped off their non-tax paying rich friends.

this is the world we live in.

only the "suckers" who kept their money in the bank and didn't have rich friends in well placed banks, now have to pay for the rich and corporations fleecing of their society.

See how it works? The have mores get even more and the have less have even less.

when the gap between the rich and the poor gets large enough, then we will see just how the have even less reacts. Historically, it's not pretty.

[freshwest]

7. *raises hand* How does 'closing the banks' stop electronic fund transfers?

It seems that would only affect the less wealthy account holder from making a physical 'run' on the banks as in days gone by. Those with accounts in other banks could simply shift their monies outside 'banking hours' any time.

In the interconnected world of global commerce, a good deal of money is made by trading stocks during the night using foreign markets. I've known people who stayed up nights to buy shares in Hong Kong before Wall Street rang its bell the next morning in order to make profit.

A lot of these news reports seem to rely on people showing up at the bank for dramatic news clips. Such as the working class rioting when denied entry at locked doors. But the mass of funds that affect the ability of the bank to pay them, could already be gone.

The reason I mention such a term (probably wrong one) is that banks lend out more than they physically have on hand by their belief that more funds will come in to pay payments to individuals.

TIA if anyone can answer my question above - and if this man standing in front of the cameras really matters. I don't come at this from the 'evil bankster scam' angle, either. I just think these guys have been outwitted.

The term 'the suspicious capital flight' at the link doesn't seem at all suspicious. The money did not belong to the government, and the investors are not always criminal tricksters. They did what current technology allowed them to do, they saved their investments, and I'll bet it was legal.

Looking at the crowd protesting, it seems their anger is mis-directed. How do they create a connection, when Germany with its high tax system was left holding the bag?



The EU seems to have more problems holding together than the USA is having keeping in one Union with so many forces looking to divide us here. The various countries are radically different in their perspectives.