BANK of Cyprus (BoC) yesterday dismissed a civil suit for $162 million filed against it by the US government for allegedly helping to launder hundreds of millions of dollars in the AremisSoft securities fraud.
The US government filed two suits on Monday. The second was filed against Lloyds TSB Bank Plc for $130 million.
The two banks are accused of having allowed AremisSoft’s former chairman, Cypriot national Lycourgos Kyprianou, to launder the money from an alleged securities fraud.
AremisSoft, which was listed on the Nasdaq as a software company, filed for bankruptcy amid allegations by US authorities of massive insider trading. In 2002, a federal grand jury indicted Kyprianou and others on securities fraud, money laundering and conspiracy charges.
Kyprianou, who is in Cyprus, was said to have artificially inflated the price of AremisSoft’s stock, misleading the investing public. After his indictment and the collapse of the company, the two banks were alleged to have assisted him to launder money through numerous accounts.
Kyprianou was detained by local authorities in October 2002 on suspicion of conspiracy to defraud and exporting currency under false pretences.
He was remanded in custody for a week and was released without ever being charged.
But BoC said in a statement yesterday that in September 2006, the Trustees of the AremisSoft Corporation Liquidating Trust filed civil actions against Bank of Cyprus and other European banks in connection with accounts maintained at Bank of Cyprus and other European banks by Kyprianou.
The bank said that in August 2007, a federal judge in New York granted the Bank’s motion to dismiss that case and found that the appropriate forum for any claims against the Bank is the judicial system in Cyprus.
“To date, the Trustees have not filed any claims for damages against the Bank in Cyprus,” BoC said.
It said the latest claims by US prosecutors were based on very similar allegations to those already dismissed.
“Despite the fact that the Bank did not engage in any conduct in the United States, the United States Attorney’s civil suit claims that the Bank violated United States law by enabling Kyprianou to channel though $162 million of proceeds from his own fraudulent conduct through accounts maintained at the Bank,” said the BoC statement.
“The Bank denies the allegations contained in both civil actions, and regards them as totally unfounded.”
BoC said it had acted according to the law at all times, and was determined vigorously to contest all allegations of wrongdoing, whether advanced by the Trustees in Cyprus or the United States Attorney in New York.
“The Bank does not expect any significant financial or business consequences as a result of such actions because the civil claims are – in its view – factually and legally without merit,” it added.
BoC shares dropped 2.5 per cent to €13.20 on the Cyprus stock exchange yesterday after over £5 million worth of its shares were traded.
Reuters yesterday quoted a spokeswoman for Lloyds TSB Group as saying the bank would also defend itself against the US allegations.
