NICOSIA, March 11 (Reuters) - Cyprus's auditor general, an anti-corruption watchdog who regularly reports on misuse of public funds, is the likeliest candidate to replace the head of the island's central bank who resigned unexpectedly on Monday, government sources said.
The appointment of Chrystalla Georghadji, whose hard-hitting annual reports on lapses in public administration have been the bane of several governments, could come as early as Wednesday, two sources familiar with the matter told Reuters.
"She has a well-established track record for being independent and autonomous, which should dispel any notion this is a political appointment," one source told Reuters on Tuesday.
A second senior government source confirmed Georghadji, 58, was a strong candidate.
Panicos Demetriades, an appointee of Cyprus's former communist government and a member of the governing council of the European Central Bank, quit on Monday, two years into a five-year term, citing "mainly ... personal and family reasons".
His poor relations with the centre-right administration which assumed power a year ago dogged his term, particularly amid the tumult of a chaotic bailout which saw a bank close and bank deposits raided last year.
A source who saw Demetriades's resignation letter, handed to the Cypriot finance minister in Brussels, said the banker had also cited difficulty in working with the board of directors - most of whom were appointed by the present government.
The Central Bank's board of directors had accused Demetriades of keeping them in the dark on several key issues - including a clause in a consultant's contract allowing it to claim a percentage of money required for the bailout of Cypriot banks.
Demetriades never addressed the essence of their grievances, contained in a November report by the board's audit committee. He was not immediately available to comment further on his resignation on Tuesday.
Nicos Anastasiades, the Cypriot president, had also frequently accused him of shortcomings, both before and after lenders agreed to give Cyprus 10 billion euros in aid which yanked it from the verge of bankruptcy in March 2013.
Cyprus's bailout was the first and so far the only in the euro zone debt crisis that was partly financed by seizing bank deposits, affecting thousands of people.
In a confidential memo Anastasiades sent to the European Commission last October and seen by Reuters, he had accused Demetriades of being "confrontational", and following the political agenda of the previous government.
Referring to their testy relations and Demetriades' past assertions that he would not resign, Anastasiades wrote in the October memo: "The question which arises is what does he suggest in order to rectify the situation?"
Persons close of Demetriades frequently complained of political interference in an institution whose independence was protected by the ECB.
Georghadji has been auditor general since 1998.