AROUND 1,500 cases pending in court will be affected by the Supreme Court decision, which declared unconstitutional a law that was supposed to force companies that had not been listed on the stock market (CSE) to return millions of pounds to investors. Only £12 million from a total £300 million was returned to investors since the law was passed three years ago. The Supreme Court’s decision on Monday declaring the law unconstitutional means that the 1,500 or so pending court cases will inevitably be withdrawn.
The law was enacted by parliament in July 2002, on the proposal of DIKO deputy Nicos Cleanthous, in an attempt to appease the thousands of small investors who in 1999 were talked into investing their lifesavings in bubble shares.
According to the President of the Investors’ Association, Demetris Hadjipapas, companies that were not even listed on the stock market managed to extract over £300 million from the people. Only around £12 million was returned to investors using the law enacted by parliament.
The Supreme Court’s shock decision leaves investors wishing to retrieve their money in desperation, said Hadjipapas.
The decision “creates vibrations to the system, to society, to the economic system, to the state and to everyone,” he said. The investors’ spokesman argued that the decision created a “complete lack of trust in the stock exchange and its institutions, as well as social and economic problems for the people”.
Hadjipapas said people were banking on the money they invested being returned so they could pay off their debts. The fact that this is no longer possible is a huge problem, he added.
“Between 1,000 and 1,500 cases that we known of are in court. All these cases will have to be withdrawn.”
Hadjipapas said there was no question of those who already received money giving it back, adding that the real issue was where the money invested had gone. “The £300m which (the companies) received has disappeared, been lost, and here we are discussing whether they should return the money or not,” he said.
Government spokesman Kypros Chrysostomides said the Supreme Court decision was binding and respected. The government would examine whether other legal measures could be taken to tackle the problem, said Chrysostomides, noting, however: “There are certain limits as to what the government can do in this case”.
Officials are now urging investors to take civil lawsuits against the companies.
Deputy Attorney-general Petros Clerides acknowledged that the decision carried serious consequences but refused to accept criticism that the Legal Service had failed to foresee the law’s flaws, arguing that at least some money had been returned through its enactment.
“This is not something we didn’t already think about when discussing the bill with Mr (Nicos) Cleanthous. We foresaw certain dangers, but that doesn’t mean we shouldn’t have made the effort.”
Regarding the law’s recent branding as being unconstitutional, he said: “Why feel bad? On the contrary, I feel extremely good, because at least some money was returned, at least the state met its obligation to try something.”
Clerides then went on to encourage investors to take up their claims through the civil courts. “Why do investors insist on criminal law, wait on the state always to make up criminal laws to punish specific actions like the non-return of money, and don’t pursue with their own lawyers civil lawsuits,” he said.
DISY deputy Christos Pourgourides blamed the decision on the Supreme Court’s huge workload, which often lead to haphazard decisions.
“For better or for worse we are obliged to respect the decisions of the Supreme Court. But in many serious cases, the Supreme Court doesn’t have the time and opportunity to study them with seriousness, and are forced to examine them haphazardly, and then you have the potential for wrong decisions.”
Pourgourides argued that the decision left many people hanging in the air. The courts had an obligation to a case like this, where thousands of people gave their money with the expectation of entering the stock market and did not do so, he added.
“It strikes me that, finally, these people cannot use criminal proceedings to get their money back… many cases are dealt with haphazardly. This should trouble the state. The Supreme Court doesn’t have the ability to examine cases with the seriousness with which they deserve.”
Cleanthous, who tabled the bill, said parliament had voted for the bill in the public interest, and with the knowledge of then Attorney-general Alecos Markides. He also called on investors to pursue civil lawsuits to retrieve their money.
