Cyprus Officials Alleged To Profit From High-Tech IPO

by Lorys Charambolous, Tax-News.com, Nicosia

23 October 2001

Cyprus government spokesman Michalis Papapetrou said yesterday that the government would examine allegations published in local newspapers that high-ranking ruling DISY and Presidential Palace officials had been involved in getting a quick listing for troubled software company LK GlobalSoft.

LK GlobalSoft.com Ltd (GlobalSoft) was formed in 1999 as a result of the merger of a number of prominent Cypriot software companies and started trading on the Cyprus Stock Exchange on 26th April 2000. With 300 staff and 6000 clients, Globalsoft is the largest IT company in Cyprus, marketing software, internet and e-business solutions, hardware systems and a wide range of technical support, training and implementation services.

According to the weekly business newspaper the Financial Mirror, which has been known to shoot from the hip on past occasions, at least three prominent officials 'played a crucial role in securing a quick listing for LK GlobalSoft'. The company, whose share price has followed a typical dotcom boom-to-bust cycle, and whose shares are now suspended, is currently under investigation by the US Securities and Exchange Commission (SEC) and its Cypriot counterpart for allegedly misleading shareholders.

The Financial Mirror said that the party officials had received two million shares during the Globalsoft IPO, using Isle of Man and British Virgin Islands holding companies, while the financial official reportedly received one million shares. One of the party officials subsequently sold his shares for £6.13 each after securing them for 25 cents each, said the newspaper. SEC Chairman Marios Clerides said he did not know whether political figures were involved with GlobalSoft, but said there had been no pressure to overlook any suspicious circumstances.

DISY deputy and House Watchdog Committee Chairman Christos Pourgourides told the Cyprus Sunday Mail that his committee would carefully investigate who bought shares, not only in GlobalSoft, but in all listed companies., saying: " Nobody will get any favours from us. If the allegations prove to be true then these people have no place in public life."

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