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Cypriot Finance Minister Michalis Sarris resigns

April 02, 2013|By Anthee Carassava | This post has been updated. See the note below for details.
  • Cyprus Financial Minister Michalis Sarris resigned after the government announced an investigation into how the island's economy came so close to collapse.
Cyprus Financial Minister Michalis Sarris resigned after the government… (Petros Karadjias / Associated…)

ATHENS -- The finance minister of Cyprus, Michalis Sarris, resigned Tuesday after brokering the final details of a complex and controversial bailout cobbled together to keep the island’s faltering financial system from crumbling.

Sarris’ decision to quit the government was accepted by President Nicos Anastasiades, who issued a terse statement thanking him for his service.

It was not immediately clear who would replace Sarris, the target of fierce criticism for his handling of a $20-billion rescue deal that forces many depositors at Cyprus' two biggest banks to chip in with emergency levies up of to 37.5% on their savings.

[Updated, 11:10 a.m. PDT April 2: Anastasiades quickly appointed one of his closest associates, Labor Minister Harris Georgiades, 41, to fill the vacancy.]

Critics in Cyprus said Anastasiades’ flat response to Sarris' resignation was indicative of failing relations between the two men in light of the government’s decision to launch an investigation into who is responsible for the island’s economic mess.

Earlier Tuesday, Anastasiades appointed three retired Supreme Court judges to oversee the probe. Cyprus is among Europe’s smallest economies, accounting for 0.2% of the Eurozone’s economic output.

Before taking on the post of finance minister, Sarris served as chairman of Cyprus Popular Bank, the island's second-largest bank, which the government forced to begin closing last week, moving its healthy assets to the Bank of Cyprus. Under the international rescue deal, big account-holders at both banks face losses of anywhere between 40% and 80% on their deposits, according to government estimates.

Sarris' resignation comes on the heels of allegations that multimillion-dollar deposits, including those belonging to the president’s extended family and a number of other politicians, were moved out of the country as the government negotiated a bailout deal with its European partners and the International Monetary Fund.

On Sunday, the Cypriot newspaper Charavgi published a list of scores of companies said to have pulled their money out of the tiny island before the central bank imposed stiff capital controls, barring transactions over an initial ceiling of 5,000 euros, or about $6,500.

Anastasiades urged the panel of three judges to leave no stone unturned in their investigation.

"A series of acts or omissions by individuals authorized to manage the economy and its banking system led the country to the brink of bankruptcy and to the dissolution of one of its largest banks” and the loss of billions of euros in deposits at another, Anastasiades said.

"These three respected judges ... will be given the mandate to investigate anything that might relate to me or my relatives by marriage," he said.

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