STOCKBROKERS Suphire Securities and Financial Services Ltd. are under criminal investigation in connection with the £9.5 million missing from the Pension Fund of employees of the Electricity Authority of Cyprus (EAC).
The Securities and Exchange Commission (SEC) yesterday decided to suspend its operating licence for a six-day period, while investigations continue into the discrepancy. Suphire, which handled the portfolio of the EAC pension fund, will be barred from offering investment services or consultancy on investment matters for the remaining five days.
The whopping figure was revealed after an EAC internal audit found that official stock exchange figures for 2004 did not match those given by Suphire on the fund’s portfolio, leaving a gaping hole in the fund’s supposed portfolio account.
The EAC released a statement last night accusing Suphire of presenting the management committee of the pension fund with “misleading and incorrect information on the portfolio, which, according to the company, largely contained shares of banking organisations worth millions of pounds,” but in reality were sold and the profits of the sale never submitted to the fund, as should have been done, the announcement said.
EAC Chairman Georgios Georgiades spent the day in meetings with Deputy Attorney-general, Petros Clerides, head of the SEC, Marios Clerides, and with EAC unions to discuss the issue of the missing millions.
The EAC board of directors decided last night to report the case to the Chief of Police. The board also agreed to take all legal measures at its disposal to retrieve the money and every benefit owed to the Pension Fund.
The board refused an offer by Suphire to replace the portfolio with other shares, demanding instead either the reinstatement of the portfolio with its original shares, mainly those of banking organisations, or the immediate provision of a bank guarantee for the total amount missing from the portfolio, worth some £9.5 million.
The EAC attempted to calm any fears by employees, stating that the fund remained intact, despite the problems currently faced, due to investments in property.
Georgiades told reporters that the case was very serious. The discrepancy was uncovered on the last day of the year in 2004. The authority does not know where the missing £9.5 million has gone. He added that the EAC has in its hands a bill of exchange signed by Suphire’s co-owner Rea Andronikou, acknowledging that she owes £9.5 million. The company’s pledge to get a bank guarantee on the missing money had not come to fruition by yesterday.
“Our problem is that a picture was given which eventually didn’t exist, in other words, they said we had so many shares in the portfolio, that they sold this, bought that, made a profit here, and suddenly, we find that we didn’t have all that in the portfolio,” said Georgiades.
Yesterday, Suphire was threatened with the imposition of a monetary fine after refusing to allow SEC officials access to company files. After three failed attempts, the Commission decided to take action against the criminal act of blocking access to files. By 6.30pm, a representative of the company said that its files would be open to the SEC to investigate first thing this morning. It could have faced a daily fine and even imprisonment if it continued to refuse access to important information.
The SEC announced the suspension of Suphire’s licence based on suspicions of serious criminal violations by the company of the Stock Exchange laws. SEC head Clerides said he would not be satisfied even if the company secured a bank guarantee for the missing millions, saying: “If we don’t understand what happened and how we are in a situation where £9 million is missing from a fund then we are not doing our job.”
Meanwhile, the SEC is also investigating £1.5 million missing from the Provident Fund of Cyprus Airways (CY) pilots. The fund was also managed by Suphire stockbrokers.
Deputy Attorney-general Clerides said at first instance it seemed that criminal offences had been committed. “Police were informed and investigators are being appointed. The AG’s office is also taking measures. We are fast tracking procedures to recoup the money and are co-operating with the EAC and SEC.”
