THE first hearing in the lawsuit filed by Eurocypria’s liquidator against the Republic and Cyprus Airways (CY) took place at the Larnaca district court yesterday.
The lawsuit, filed on behalf of Eurocypria’s liquidator Chris Iacovides, accuses the state and CY of conspiring to defraud Eurocypria and its investors of the airline’s assets.
Iacovides claims the state and CY effectively stole from Eurocypria the latter’s Larnaca/Paphos to St. Petersburg route. He says the rights to the route were conferred on Eurocypria in February 2005 via a memorandum signed between the governments of Cyprus and Russia, and that no act has since been passed revoking those rights.
Iacovides is therefore asking Larnaca district court to issue an interim order prohibiting CY from flying to that destination.
Iacovides says the St. Petersburg route is an asset worth millions of euros. He says that under a new business plan, the airline formerly known as Eurocypria – which declared bankruptcy late last year – was poised to bring 130,000 Russian tourists to the island.
In court yesterday, lawyers for CY rejected the liquidator’s claim that the airline stripped Eurocypria of its assets. They argued that the rights to the St. Petersburg route belong to the state and not to CY per se, therefore the act of conferring them to CY was a public-law act.
They further argued that, at any rate, CY plans to sell the rights to the route to another airline.
Meanwhile Eurocypria is claiming its share of a €20 million compensation given by the state to CY as a result of a ban on flying in Turkish airspace.
Iacovides says that on making enquiries with the European Commission, he discovered that the government did not brief the Commission on its plans to give CY the cash.
In a response dated 28 February, which the Mail has seen, the Commission said:
“I would like to inform you that, to date, the Cypriot authorities have not formally notified possible aid in this field. The Commission, therefore, cannot take a position on the matter at this time.”
The Commission added: “Such State aid should be financed by national resources and not Community funds.”
Four days later, on 3 March, parliament approved the €20 million for CY at the Finance Minister’s urging. At the time, the Finance Minister Charilaos Stavrakis told MPs the government has sent EU an initial notification of its intentions to prop up CY.
