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Cyprus Internet Directory [ Shiarly: we have nothing to hide ]

Shiarly: we have nothing to hide

Elias Hazou

CYPRUS is ready to agree to any probe regarding its compliance with anti-money-laundering regulations, finance minister Vassos Shiarly said yesterday.

But to date authorities have received no official request for such an investigation, he added.

“We have nothing to hide and we are very clear when it comes to money-laundering issues and to sharing information for tax purposes,” Shiarly said.

He was responding to a Financial Times report claiming Cyprus and its EU bailout lenders were in talks to hire outside investigators to probe the island’s banking system for signs of money laundering.

The paper cited officials involved in the discussions as saying that Shiarly has “in principle” accepted the idea to allay misgivings from lender states on how committed Cyprus is to fighting money laundering and why the island is a magnet for Russian money.

The same officials said also the investigators are likely to come from a foreign consulting or auditing firm. The paper’s sources said the global accounting and advisory group PwC had been mentioned as a possible auditor.

But Shiarly clarified yesterday that any inspection would be carried out by an appropriate international organisation, such as the International Monetary Fund or MONEYVAL.

Should any of these organisations wish to send a mission here in order to compile an updated report on the island’s compliance, Cyprus would have no objection.

“We are willing to welcome them anytime, even tomorrow if necessary,” he said.

Shiarly revealed also that on Thursday he would be in the Netherlands to brief the parliament there on Cyprus’ request for a bailout but also “on other matters that might concern them, such as money laundering and the exchange of [tax] information.”

He is going to the Hague at the invitation of the Dutch parliament.

The Netherlands is among the group of EU nations – along with Germany, Austria and Finland – that are making noises about possible money laundering in Cyprus.

The issue of money laundering in Cyprus, including the notion of a possible inspection, was raised at the meeting of euro-area finance ministers last Monday. Shiarly told his counterparts that the IMF looked at the issue during a September mission, found that the legal framework was in place, and made recommendations for improvements which were immediately adopted by the government.

Shiarly has since stated that the final memorandum for assistance will include a section on money laundering setting out measures that Cyprus must examine, and that this process would be monitored.

Asked if he was concerned about the delay in the signing of a bailout deal, something that might plunge the country deeper into recession, Shiarly said the government could meet both its financing and fiscal needs through March.

Yesterday he was expecting updated data that would show whether the state could meet its obligations for the month of April as well.

The finance minister said Cyprus had held up its side of the bargain with international lenders, having struck a preliminary agreement by late November and then in December passing the relevant laws for the 2013 budget.

Any delays in concluding a final agreement, he noted, were down to the “sensibilities” of certain EU countries but also of the IMF.

Cyprus’ request for a full bailout has apparently been caught in limbo due to disagreements between EU members. But the indebted island has also had to contend with a discussion on how far Moscow should be involved in a bailout.

Russian Prime Minister Dmitry Medvedev yesterday signalled his country’s willingness to help, under certain conditions. The help could come in the form of an extension to a 5-year €2.5 billion loan Moscow granted Nicosia in 2011.

Cyprus said earlier this month it had formally launched a request for a 5-year extension to repay that debt, a step that could take the immediate heat out of Nicosia's financial woes and that, according to a German government document, euro zone finance ministers support.

"We think the main burden to solve these problems should be taken on by Cyprus and the EU states," Medvedev told the German business daily Handelsblatt in an interview held on the sidelines of the World Economic Forum in Davos.

"But we are not refusing to help under certain conditions. The conditions must be agreed first. Before that, there can be no money from us," he added.

Reuters cited a German government document indicating that eurozone finance ministers supported the idea of extending the Russian loan. "The government of Cyprus reported in the Eurogroup (meeting last Monday) that it had asked the Russian Federation for an extension of the existing loan by five years," the document read. "The government of Cyprus has the Eurogroup's support on this."

Last week, European Economic and Monetary Affairs Commissioner Olli Rehn told Reuters it would only be fair for Russia to share part of the burden over Cyprus.

"I would think that as there is significant economic and financial activity by Russia and especially by Russian citizens and businesses in Cyprus, it would be quite fair that Russia is making a contribution," Rehn said.

"We have had contacts with Russia but of course they take their own decisions in their own way," he added.

Medvedev said it was now important for the European Union to put clear demands to Cyprus.

"It would be better if nobody would lose anything. But most of all it is now necessary that the EU formulates its demands clearly on how the Cypriot economy should be cleaned up. Cyprus is more set than countries like Greece."

German Finance Minister Wolfgang Schaeuble is not yet convinced it can be seen as a systemic risk, which is a precondition for a bailout.

Reuters reported yesterday that according to the German weekly Spiegel magazine  the head of the European Central Bank (ECB), Mario Draghi, had clashed with Germany's finance minister over Cyprus, arguing that failure to bail out the island could endanger the wider euro zone.

Spiegel, which gave no sources, reported European Economic Affairs Commissioner Olli Rehnand the chief of the euro zone's bailout fund, Klaus Regling, had sided with Draghi against Schaeuble on the issue of aid for Cyprus.

"A Cypriot bankruptcy would undo the positive news which has recently led to a calming of the mood in the euro zone," Spiegel quoted Draghi and his colleagues as telling Schaeuble.

(Source: Cyprus Mail)
Copyright © Cyprus Mail 2008 Please contact Cyprus Mail for the copyright terms of this article.

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