Cyprus Brokerage Loses Pension Fund Assets

by Lorys Charalambous, Tax-News.com, Cyprus

29 March 2005

The Cyprus stock exchange, while has languished in the doldrums since a spectacular collapse four years ago, is now being touched by another scandal as pension funds go missing at brokerage Suphire.

Suphire has been suspended for several weeks after electricity authority EAC reported that CYP9.2m from its pension fund, managed by Suphire, was unaccounted for. Other state bodies also reported that funds placed with Suphire had been lost or were missing.

Last week the Securities and Exchange Commission (SEC) extended the suspension of Suphire’s operating licence for three months last after its two directors failed to show up at a hearing, and warned that Suphire could face expulsion from the Cyprus Stock Exchange (CSE) and a £100,000 fine if found guilty of irregular dealings. SEC chairman Marios Clerides said the investigation into Suphire was continuing in parallel with that of the police.

EAC began civil court proceedings against Suphire owners Yiannis and Rea Andronicou last Thursday, seeking over £9 million from them and five companies of the Suphire group.

The police and the SEC have come under attack for their failure to act against Suphire when rumours first surfaced about its problems in January. Critics say that Suphire were able to take advantage of the delay to destroy or remove evidence; and even after the scandal broke two weeks ago the police simply asked politely for the information they needed and were told to wait by Suphire's staff. Accusations have also been made that Suphire benefited from contacts at the highest levels of government.

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