Cyprus said on Friday that it will launch a criminal probe into the island's economic meltdown that prompted it to seek a harsh international bailout and dismantle part of its banking sector.
The move comes after a committee of enquiry -- appointed three months ago to probe the reasons behind the economic crisis -- decided it could not investigate issues that were pending in court.
The cabinet met on Friday and agreed that the public enquiry could continue its work in tandem with a criminal investigation.
Justice Minister Ionas Nicolaou told reporters that issues caused by the committee's decision not to investigate cases before the court "can be resolved with a parallel investigation by criminal investigators".
Attorney General Petros Klerides said the criminal investigation will focus on possible offences between 2006 and 2013 committed by individuals who are potentially responsible for the economic crisis.
Reportedly the criminal probe will focus on the transfer of funds from now defunct Laiki Bank to Greece, loan write-offs, miss-selling of bank bonds to the public, the purchase of toxic Greek bonds by Laiki and Bank of Cyprus and the expansion of both banks abroad.
It was the banking sector's exposure to Greek bonds that triggered the island's euro crisis.
President Nicos Anastasiades vowed to get to the bottom of what led Cyprus to an unprecedented eurozone bail-in/bailout agreement, but the enquiry team of ex-judges he appointed has been slammed as toothless.
In a deal struck in March with international lenders, the cost of the bailout ballooned to 23 billion euros ($30 billion), including an unprecedented bail-in from uninsured depositors as the large banking sector was cut down to size.
An independent report published last week said the banking sector crashed because there was no coherent policy to restrain the booming industry.
It said a policy of complacency, oversight, weak bank governance and foot-dragging on reforms was partly to blame for the downfall of the sector, coupled with its heavy exposure to debt-crippled Greece.
Cyprus was forced to wind up failed lender Laiki and impose a massive levy on larger deposits in Bank of Cyprus, the island's largest.
BoC customers with deposits of more than 100,000 euros could lose up to 60 percent of those holdings.
Those in Laiki will have to wait years to see any of their money over 100,000 euros, after it was split into a good bank and bad bank - the good part being absorbed by the BoC.
The unprecedented eurozone "haircut" on deposits forced the government to close all the island's banks for nearly two weeks in March and impose draconian controls when they reopened.
Critics say that the island's second largest lender overreached itself when it merged with Greece Marfin Egnatia bank in 2006, triggering an over-ambitious expansion project in Greece, Russia and the Balkans.
The Bank of Cyprus has also been criticised for overplaying its hand in Greece and Russia, and the public enquiry heard that its buying of Greek bonds was not approved by the entire board.