A Furious Cyprus Begins Investigating Who Breached The Capital Controls

Tyler Durden's picture

On Monday we reported the very disturbing news that despite the ongoing liquidity blockade, capital controls and (somewhat) closed Cyprus banks, one particular group of people - the very same group targeted to prompt this whole ludicrous collapse of the island nation - Russian Oligrachs had found ways to bypass the ringfence and pull their money out quickly and quietly. We said that, if confirmed, "If we were Cypriots at this point we would be angry. Very, very angry." Turns out the Cypriots did become angry, and the questions are finally starting. As Spiegel reports, the Cypriot Parliament, which may or may not last too long once the banks reopen tomorrow and the people realize that in a fractional reserve banking system, those deposits you thought were there... they are gone, poof, has begun investigating the capital flight that may means the destruction of Cyprus has been for nothing. Sadly, it is now too little, too late.

From 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 Central Bank of Cyprus. 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.


Most of all, though, the central bank head has been harshly criticized due to the suspicious capital flight from Laiki and the Bank of Cyprus, the two institutions that have been hit hardest by the Cypriot banking crisis. There are indications that large sums flowed out of the two banks just before the first bailout package was signed in the early morning hours of March 16. At the end of January, some 40 percent of all savings held in Cypriot accounts were on the books of those two banks. Since then, however, much of it has been transferred elsewhere, despite orders from the central bank that accounts at the two institutions be frozen.


'Special Payments'


The central bank now stands accused of not doing enough to control the movement of capital. Transfers for humanitarian aid were permitted which, while certainly an acceptable exception, opened a loophole for abuse. Many are also furious that the bank allowed "special payments," the definition of which was never adequately established.


The Cypriot central bank has defended itself by saying that it was impossible to completely prevent all transactions, despite the account freeze. Much of the money was withdrawn from overseas, where Cyprus had no authority. Branches of Cypriot banks in non-euro-zone countries such as Russia and Britain do not answer to the European Central Bank. Their liquidity is controlled by central banks in those countries.


Such a defense is nothing less than a voluntary admission of impotence. Holders of smaller savings accounts have been unable to access much of their money for almost two weeks, companies have been unable to pay their suppliers and across the country people are concerned that their salaries will not arrive on schedule on the first of the month. Meanwhile, rich businesspeople and those with connections overseas have been able to transfer their money into foreign accounts.

In other words, the Cypriots are, indeed, getting very angry. And soon, they may just have a list of people on whom to take it out:

Lawmakers have demanded that the central bank assemble a list of those customers who withdrew large amounts of money prior to the closure of the country's financial institutions. In particular, parliamentarians want to know if central bank employees or members of the government received early warning and were able to quickly rescue their assets.


According to the Greek television station Mega Channel, the list has already found its way into the hands of Parliament President Yannakis Omirou. No one in parliament or in the central bank could be reached for comment on Tuesday evening. Still, the parliamentary investigation indicates just how great the mistrust is between lawmakers and the government -- and how acute the doubts are as to Panicos Demetriades' competence.

Only now is Panicos' competence being questioned? Well better late then never.

Perhaps, a better question is how much longer will the rule of law remain in Cyprus once full blown class warfare is unleashed, and the 99% are generously handed the list of the 1% who were "informed" enough to pull their money from the flaming sovereign equivalent of Bernie Madoff, while every other uninsured depositor is facing losses of up to 80%, and soon 100%?

And what happens if the realization dawns that despite all the promises even insured investors will eventually get impaired once the money runs out?

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
GetZeeGold's picture



More like who didn't?


There must be 50 ways to leave your lover...


Super Broccoli's picture

be fair, who can say no to Boris waiting in a limo in front of the bank ?

ParkAveFlasher's picture

Something tells me that as furious Cypriots must be, they would never apply jumper cables to your testicles.

Pladizow's picture

WTF is a defunkt Cypriot parliment going to do when the find Ex-KGB at the end of that trail?!?

BaBaBouy's picture

Just Watch The Fireworks When .....


GOLD Cert Holders Try And Redeem At The LME Window ...

Gmpx's picture

In this situation when you think maybe I better move money out of this bank you should act immediately. MAYBE=YES time.

notbot's picture

I'm serious about this...I genuinely DESPISE Paul Krugman.

Europe's "Titanic entitlements" experiment is going down yet PK is determined to steer the U.S. on the exact same course.

Now, if you'll excuse me...I ate Panda Express last night and I have to go take a giant Krugman.

Atlas_shrugging's picture

This is surreal.  Like imagining a tunnel connecting our Fed and J.P.Morgan

Cacete de Ouro's picture

The tunnel is real alright. Whats surreal is that journalists don't ask Dudley and Bernanke about it...

SafelyGraze's picture

this kind of story simply makes no sense

a nation's banking system is established to *help* the people of the host nation

not to bankrupt them

better go back and check your facts, mister durdenz

if that is your real name


Joe Davola's picture

First clue there was something up with the huminitarian transfers - many of the recipients were "The Human Fund"

Thulsa Doom's picture

"The Human Fund. Money for People."

Joe Davola's picture

There's people and then there are People.

Spirit Of Truth's picture



Moscow has thought long and hard about how to bring down the Capitalist system.  This is likely just the beginning:


Joseph Jones's picture

I prefer to call the Capitalist System what it is, the Judaic Usury system. 

macholatte's picture


The Q&A


Senator: So tell us, Mr Corzine, what happened to all that money?

Corzine: I don't know.

Senator: OK. Good answer. You're excused and exonerated as well as all the members of the government.

What's for lunch?

rich_wicks's picture

WHAT capitalist system?

You believe the government borrowing money using tax payers as collateral to give to private firms is capitalism?  The same firms that if allowed to go bankrupt would decrease the price of housing and would severely impair the wealth of very very wealthy people with huge sums of cash?

The US government killed capitalism, sometime in the 1990s.  This isn't capitalism, this is corporatism.

If Moscow wants to bring down the capitalism system, they need to start in Russia, where it still exists.

Bill D. Cat's picture

Post more . ^ that was pure .

redpill's picture

Every time I think I've seen it all, these folks manage to outdo themselves. I previously had no idea that such extreme levels of clusterfuckedness could exist.

booboo's picture

Well you just wait till the trapez artist falls though the net and gets impaled on the feathered thingy that is on the head of the horse that the monkey is riding around on. They don't call it The Greatest Show on Earth for nuttin.

Three Ring Circus Bitchez

Ms. Erable's picture

+1 for 'clusterfuckedness'.

Rathmullan's picture

Easy solution. Bring Russia into the zone. I'm sure LaGarde is working up that proposal as we speak.

DeadFred's picture

I suspect Russia is planning on the change of zones going in the other direction. LaGarde is viewed less favorably in Moscow than in Brussels. Many in the Russian government remember Brussels as a minor waypoint for the Red Army on the planned path to Paris and old views have a way of persisting.

redpill's picture

How does one say "go fuck yourself" in Russian?

tiwimon's picture

"????????? ?? ??????? ?????? ????"


well copy and paste does now work, puts all ?'s so go here 


deKevelioc's picture

In Russian? Whatever it is also comes with some very bad stuff.

SilverRhino's picture

"Yub tvaya mat" (Go fuck your mother) - works well enough to convey the warm sentiment 

"Ti takaya suka" (You are such a bitch)  - Turns a russian woman into even more of a screaming bitch that she was just before you called her that. (Russian has two words for bitches "Sterva - demanding woman", "Suka - female dog and a mortal insult to them"  


Joe moneybags's picture

I prefer to wait for Boris Alotovcrap's translation.  The rest of you are just messing with us.

Catflappo's picture

great - thanks ....    "Yub tvaya Bernanke"!!!

booboo's picture

The Russians would just whack Legarde but they still don't know if it gets the female or male dose of polonium 210, it mght back fire and create a 6'-0" diameter money sucking Mangina.

DirtyHowi's picture

phonetically since i lack a cyrrilic keyboard posho nohoy

El Oregonian's picture

Or that the tunnel is apparently a one-way tunnel.

Whoa Dammit's picture

I think any money found will have somehow wound up with JPM. Since it will be for legitimate margin calls, reimbursement of their Cyprus Entertainment expenses, and other such fictions, it will all be good and JPM can keep the money.

mickeyman's picture

Did you see his speech where he told the Cypriots to "prepare for deep pain"?

Sounds like something his future cellmate will say to him!

Antifaschistische's picture

Surreal indeed!!!

I am SHOCKED!!!   SHOCKED I tell you, that the 1% was actually taken care of ahead of the 99%!!! 

Who would have thought this would happen in todays world!!!

The Phu's picture

Great question?  Who tried to steal from whom?  So it's ok for Cyprus to FUBAR the Russkies, but when the Russkies "go all guerilla war on their asses" and withdraw the funds before they can be stolen, now it's a crime against the people? 


Let me get this straight.... It sounds like the Cypriot citizens feel, dare I say, "entitled" to levy/steal that Russian (or more broadly, the elites') money?  WTF is wrong with this picture.


I congratulate our Russian friends for not being Corzined.  Boris, he's a 100gm shot of vodka for you buddy.  Can you do this to JP Morgan next?  Pretty Please????  Pozhalsta??? 

GetZeeGold's picture



Just don't push it and make them double dog furious.

unrulian's picture

Sweet Jesus...not double dog furious...

Silver Bully's picture

He's Triple Dog Furious!

(Oh no! Triple Dog Furious!)

PathForward's picture

Anybody know if the contents of safe deposit boxes located in Cyprus are also scheduled for a haircut? That would probably add significantly to the fury factor.

TPTB_r_TBTF's picture

The Russians looted the safe deposit boxes on their way out.

Debugas's picture

safety deposit boxes should be (even in case of a bankruptcy of the bank) but authorities may ask you to prove the content was legitimately aquired (bought/inherited etc) and you had enough income to buy it

Antifaschistische's picture

So, if you have 100k worth of gold in your safety deposit box.....and you don't have all the corresponding receipts......it may be subject to confiscation? 

This is only in the EU right?


DblAjent's picture

they would never apply jumper cables to your testicles

The Cyps who would are probably among those who were able to withdraw or otherwise transfer their assets elsewhere.

Those with money have power. Those with power have money.

The rest of us are held accountable. I hope they fight the good fight but, really, what's the use?

Going Loco's picture

I was doing a search to find details of the brutal tactics used by EOKA (and, to be fair, probably by us Brits) and this popped up on my screen:

Buy Massacres at Amazon

Low Prices on Massacres. Free UK Delivery on Amazon Orders


Buy now while stocks last.

I love the interweb.

Umh's picture

Target.com is real good at trying to sell me things like mayhem and floods.


I miss the early years on the Internet when most of my search results were not attempts to sell me stuff I don't want.

cherry picker's picture

The CIA is everywhere and I wouldn't be surprised if they use jumper cables on testicles in Cyprus.

Just like Iraq, now Cyprus has gas reserves, they crush the country.


DoChenRollingBearing's picture

@ ParkAveFlasher

Yeah!  Cyprus: "we are vewwy, vewwy angwy"