Need to investigate insurance company/provident fund transactions

It seems parliament is not willing to turn a blind eye to the role played by insurers and provident funds in the collapse of the Cyprus Stock Exchange (CSE). In a behind-closed-doors confidential meeting of the House Finance and Watchdog committees on June 11, the subject was broached once again, Politis has found out.

Provident Funds
During the meeting DIKO MP Zaharias Koulias said MPs must examine the suspicious trades carried out by provident funds, a subject that has not been tackled to date but is one of the CSE's "gaping wounds". Mr. Koulias said, the provident fund chapter must be looked at, as their investments led to the loss of millions of pounds. He referred specifically to the provident fund of one of Cyprus' banks, which used to have a provident fund worth £95m that is now worth barely £15m. This is because the provident fund managers invested money in shares of the bank to which it is associated without seeking the permission of a general meeting.

Insurance
Within this framework, Mr. Koulias also calls for an investigation into the stock market transactions of insurance companies. He said insurers were only allowed to invest a maximum of 15% to 20% of their insurance funds. Companies that wished to invest more had to seek the mediation of the Insurance Superintendent who, in turn, had to obtain the permission of the Finance Ministry, he said. Alas, investments went ahead unchecked, Mr. Koulias noted, adding that the Finance Ministry gave its permission for the excesses postdated, which is illegal. "This is how people's money was lost," he said.

KISOS MP Marinos Sizopoulos said the way in which insurance companies invested their money must be investigated, not least of all because it has led to losses for people who never invested on the CSE and who have seen the value of their life insurances plummet. "Why did they ignore the maximum permissible limits when it came to their investments?" The companies are accountable first and foremost, but the Finance Minister is also responsible for giving them political cover in the aftermath of events, he said.

Legal responsibility
Commenting on the matter, AKEL MP Stavros Evagorou said it was not up to parliament to play the role of the law enforcement authorities. He said the role of insurers in the CSE scandal had been looked at in the past. It is up to the law enforcement authorities to look into allegations against government officers, as outlined in the verdict on the CSE events, he said.

The role of insurance companies in the CSE downfall was also discussed in the open meeting of the House Finance and Watchdog Committees on Tuesday in the presence of the Finance Minister. Both the chairmen of the Finance and Watchdog committees, Messrs. Chrysostomou and Pourgourides criticised the actions of insurers.

Translated from Politis