PENSION funds dabbling in the Cyprus Stock Exchange (CSE) were at the centre of attention yesterday, as the net of the Suphire’s ‘lost millions’ appeared to widen.
The head of the Securities and Exchange Commission (SEC), Marios Clerides, yesterday vowed to check every single account of financial services company, Suphire, for discrepancies, after reports emerged this week that millions of pounds were missing from high-profile accounts, including £9.2 million from the Pension Fund of the Electricity Authority of Cyprus (EAC).
The SEC suspended Suphire’s licence to trade on the Stock Exchange for six days on Tuesday. Clerides warned this could be extended for a further three months if it transpired that the company was using clients’ assets for its own purposes.
The company and its directors are also under criminal investigation for theft, after the EAC reported a gaping hole in its share portfolio, and accused Suphire of presenting them with incorrect and misleading accounts of the portfolio.
The treasurer of the Cyprus Airways pilots’ provident fund revealed that they had a £1.5 million shortfall in the fund, also managed by the under fire company, while the Cyprus Forest Industries is reportedly dealing with a shortfall of hundreds of thousands in its own staff provident fund. The committee managing the CY fund gave the SEC information on its accounts yesterday.
Four SEC officials are now investigating the books of all clients at Suphire to see to what extent violations exist. Three officials spent six hours yesterday examining the company’s files after being refused entry to the office three times the day before.
Referring to the initial non-compliance of the company, Clerides said that the SEC retained the right to charge them if they used delaying tactics or refused to co-operate again during the investigation.
He added that the supervisory body would check all accounts of the company, not just those involving the EAC or CY.
Deputy Attorney-general Petros Clerides said that at first instance, the actions of the company looked like violations of the criminal code. Clerides said that when dealing with stolen shares the crime was theft by a representative. “I believe the penalty is up to 14 years for this,” he said.
Police took statements from the EAC on Tuesday and questioned Suphire’s principle shareholder Yiannos Andronikou, while investigations continued yesterday, though no arrests were made.
Last week, the EAC was given a personal guarantee signed by the wife of Andronikou, Rea, for £9.5 million with the promise that the shortfall would be covered by April 11. EAC Vice President Andreas Louroutsiadis said the authority demanded bank guarantees and immoveable property to replace the gap in the pension fund. He charged Suphire with feeding them misleading facts.
He said the presentations of the portfolio situation by the company, its economic analysis and evaluation of investments were misleading, as the authority found out after an internal audit revealed £9.2 million worth of missing shares, mainly bank titles supposedly registered in the fund’s name at the Cyprus Stock Exchange.
Commerce Minister George Lillikas reiterated the government’s position yesterday, saying that the government was under no obligation to cover the deficit in the fund. He added that consumers shouldn’t be burdened through increased rates either. According to law, the EAC has an obligation to cover any deficit in the pension fund through its own budget, said Lillikas. The minister noted that other pension funds appeared to be in an equally difficult position.
Head of the CSE Akis Cleanthous said the news came as a significant blow to the stock exchange, after so much was done to restore confidence in the sector.
The Cyprus Association of Companies offering Investment Services ordered a disciplinary investigation into Suphire yesterday, appointing a three-member panel to look into recent allegations.
