Is the Cyprus justice system broken?

Nigel Howarth
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Is the Cyprus justice system broken?

FOLLOWERS of the news in Cyprus will not have missed the many questions being raised about the Cyprus justice system, including allegations of cronyism, impartiality, complicity and corruption.

Just over a year ago lawyer Nicos Clerides remarked on Facebook “Our courts are controlled by the Polyviou and Chrysafinis law firm. There is not a single Supreme Court judge who does not have a child at the law office that promotes the banks’ interests.” His remarks were in connection with three criminal cases judged in favour of the Bank of Cyprus following appeals to the island’s Supreme Court.

In a lengthy statement Attorney-General Costas Clerides stressed that his brother’s views were his own, and that there had been no collusion between them in terms of coordinating their public remarks.

Referring to the Supreme Court’s final judgment in the market manipulation case filed against the Bank of Cyprus, the Attorney-General noted that “three of the five judges on the appeals court have children or a spouse who are employed at the law firm representing the Bank and its officer in the appeals process.”

(A full report on the above is available in the Cyprus Mail.)

We understand that following these ‘incidents’ Greco (the Council of Europe’s anti-corruption body) took the unprecedented step of visiting Cyprus to investigate and make recommendations designed to improve the system.

Speaking to Kathimerini in February 2019 Attorney-General Costas Clerides said that the proposed reforms to the Cypriot Justice system should be implemented immediately and that: ”No one has said that children or other relatives of judges should not work in law firms. No one has said that they should not work in influential firms or in any particular firm. However, when the time comes for a judge to hear a major case and before him appears the employer of his child, then the judge, if not ex-officio, should apply rigorously the principles laid down by the ECHR in the relevant decisions.”

Recent cases involving foreigners have also raised questions about the Cyprus justice system. Most notably the British teenager convicted of lying over being gang raped in Ayia Napa last July and, more recently, British man Conor O’Dwyer and his 15-year quest for justice whose appeal was heard by the Supreme Court several days ago. The former case received huge publicity in both the Cyprus and UK media with protests and demonstrations supporting the teenager organised in both countries.

Just two days ago Maria Hadjisavva of the law firm Elias Neocleous & Co LLC in an article entitled Justice delayed is justice denied referred to cases where the human rights of victims had been violated and a case that took the police 15 years to investigate. The latter resulted in the wrath of the European Court of Human Rights, which condemned Cyprus for breaching of Articles 2, 4 and 5 of the Human Rights Convention.

Reforms

Although the Cyprus justice system is undergoing reform, but these focus mainly on the speed at which cases are dealt with by the courts rather than addressing the fundamental reforms to do away with the alleged cronyism, impartiality, complicity and corruption.

Damning indictment of the Cyprus justice system

Recently, lawyers in Limassol were asked to give their honest opinions on the quality of the justice system on a questionnaire.

  • 95% believed that the rule of law did not apply in Cyprus.
  • 96% believed that the Cyprus justice system is in need of radical reform.
  • 97% believed that Supreme Court judges need to be trained.
  • 93% believed that some lawyers are treated by the Supreme Court in a privileged manner.
  • 90% believed that there are some Supreme court judges who are not law-abiding, professional or ethical.

The answers given by the 138 of the 139 lawyers who completed and returned the questionnaire (below) present a devastating indictment of the state of the Cyprus justice system.

No. Question Yes No Don’t know/
No reply
1 Do you believe that we live in a country where the rule of law applies? 6 131 1
2 Do you think that the way in which justice is delivered in Cyprus requires radical reforms? 133 5 –
3 Do you think that the appointment of judges is fair and transparent? 3 129 4
4 Do you think that the Cyprus courts decide on cases brought before them strictly on the basis of the issues in question and the law? 10 120 5
5 Do you think there are judges who decide the cases brought before them beforehand? 123 2 10
6 Do you believe that the decisions taken by judges are influenced by extrinsic factors? 126 2 10
7 Do you believe that the Supreme Court has sufficient jurisdiction over the lower courts? 18 114 6
8 Do you believe that the decisions of the Supreme Court are influenced by the relationships maintained by Supreme Court judges with lower court judges? 111 10 17
9 Do you think that Supreme Court judges are all law-abiding, professional and ethical? 4 124 10
10 Do you think there are judges of the Supreme Court who should be removed from their position? 77 9 36
11 Do you think the manner in which Supreme Court judges are appointed and dismissed is correct? 2 125 10
12 Do you think that lawyers should have a say in the appointment and removal of the judges of the Supreme Court and of the lower courts? 90 36 10
13 Do you think that the judges of the Supreme Court need training themselves? 134 1 2
14 Do you think that the Supreme Court’s status according to which their decisions are not subject to review leads to arbitrariness? 132 2 3
15 Do you think Cyprus needs at least a Higher Court? 111 14 8
16 Do you believe that the High Court should be staffed by the present judges of the Supreme Court? 9 108 20
17 Do you think the promotions given to lower judges is based on merit? 4 123 10
18 Do you think there are lawyers who are treated by the Supreme Court in a privileged manner? 129 2 6
19 Do you think that the Cyprus Bar Association and local law associations are effectively assisting in tackling the problems faced by the justice system? 3 131 3
20 Do you think that lawyers are respected by judges? 13 113 10
21 Do you believe that the exercise of good law practice affects the outcome of cases? 63 61 12
22 Do you believe that mitigating factors are properly taken into consideration by the courts? 22 85 27
23 Do you think that Cyprus courts are effectively enforcing and safeguarding the human rights of citizens? 7 119 11
24 Do you think that the Supreme Court takes due account of lawyers’ suggestions and pleadings? 4 120 13
25 Do you believe that as things stand today, it is possible to effect substantial changes in the manner in which the courts are operating? 40 79 18

I have spoken with the lawyer referred to in the originating article published in the Greek language ‘Politis‘ on 26th January, London-born Evangelos Pourgourides.

Mr Pourgourides collated the replies and wrote to President Nicos Anastasiades and the president of the Supreme Court advising them both of the analysis of the questionnaire responses, but has yet to receive a reply.

From the answers given, it is clear that problems with the Cyprus justice systems are deep-rooted and intractable and cannot easily be resolved without radical reforms.

Of course, it’s quite possible that lawyers in Nicosia, Paphos, Larnaca and Famagusta have a different opinion of the justice system, but it seems unlikely.

Foreclosure warning letters on the rise

Annie Charalambous
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1
Foreclosure warning letters on the rise

LETTERS sent out by banks in Cyprus to borrowers who fail to pay their instalments are on the rise warning of the imminent foreclosure of properties, according to information from the Cyprus Central Bank.

Warning letters sent between January and June of 2019 concerned a total of 1,971 properties – mainly plots of land and agricultural fields.

The Central Bank information, which was recently sent to parliament, also shows that out of the 1,971 notified properties, 266 have already been sold.

Concerns raised by political parties over foreclosures mainly focused on primary residences. However, out of the 266 foreclosures that took place during the first nine months of 2019, only three concerned primary homes.  And in the third quarter, only one primary residence was sold at auction for €154,000.

During the second quarter of 2019, two primary residences were sold worth a total of €1.71 million. An increase in foreclosure warning letters sent out in the third quarter of 2019 concerned mainly the ready/under-construction home/apartment division with the number totalling 216 compared to 137 in the second quarter.

Warning letters for the sale of land totalled 101 in the third quarter compared to 54 in the second, while letters for the sale of agricultural fields were 374 in the third quarter compared to 244 in the second quarter.

The Central Bank information also shows that the outcome of properties sold by banks at a second auction during the first nine months of 2019 is poor; only 21 apartments and plots were sold.

Banks buying foreclosure auction failures

The banks seem to be buying more properties following unsuccessful auctions than the number of the foreclosed ones they are putting up for sale.

In the third quarter of 2019, banks bought a total of 196 properties compared to 171 in the second quarter and 219 in the first quarter. I.e. they bought 1,119 properties and sold only 266.

The majority of properties purchased (107) are plots and fields, 20 are houses/apartments, 20 are commercial properties, 6 are primary residences and 13 are other properties.

Disappointing start for property sales

Nigel Howarth
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3
Disappointing start for property sales

THE FIRST month of the new decade saw Cyprus property sales fall by 3 percent compared to January 2019 according to official figure from the Department of Lands and Surveys.

Since their peak in May 2019, property sales have been like riding a roller-coaster; up for a month or two and then down and up again. It’s difficult to predict how the situation will change in the coming year, but we know that the Cyprus Land and Building Developers Association (LBDA) is concerned.

LBDA representatives met with Central Bank officials last month and raised the issue of banks not providing loans for first-time home buyers as most of their applications are rejected during the  screening process.

The banks are naturally fearful of giving out loans as it may result a repeat of events that led to the 2012 financial crisis. Remember the PIMCO due diligence report of the banking system, which laid the system’s ‘idiosyncrasies’ bare?

The government’s new housing policy is offering incentives to developers to offer cost-price homes for low-income groups, but developers have shown little interest in the scheme.

Property sales January 2020

According to official figures 742 contracts for the purchase of property were deposited at Land Registry offices during January 2020; a fall of 3% compared to the 766 deposited in January 2019.

Although sales in Larnaca and Nicosia rose by 29% and 22%, these were wiped out by falls of 28% in Limassol, 10% in Paphos and 6% in Famagusta.

Total Property Sale Contracts – 2019/2020 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2019 161 194 131 169 213 145 174 103 137 183 208 180
2020 197
Famagusta 2019 53 48 45 96 87 43 49 30 40 50 48 64
2020 50
Larnaca 2019 114 125 118 140 173 102 157 93 102 160 122 162
2020 147
Limassol 2019 251 256 287 428 546 219 286 196 240 228 296 284
2020 180
Paphos 2019 187 211 185 224 404 205 230 166 173 192 233 220
2020 168
Totals 2019 766 834 766 1057 1423 714 896 588 662 813 907 910
2020 742

Stripping citizenship of 26 investors problematic

Nigel Howarth
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0
Stripping citizenship of 26 investors problematic

THE PROCESS of revoking the citizenship of 26 foreigners who obtained passports under the island’s much criticised citizenship by investment scheme is proving more difficult than expected.

Informed sources have advised Phileleftheros that the law enabling a passport to be revoked excludes people who have acquired citizenship under the provisions of the scheme.

The Population Registration Law of 2002 (Law 141 (I) / 2002) section 113 states that the Council of Ministers may deprive a naturalised citizen of citizenship (by decree) if it is satisfied that the citizen:

“(a) By works or in words, has shown dishonesty or malice in the Republic, or

(b) in any war conducted by the Republic illegally engaged in a transaction or communicated with the enemy or engaged in or engaged in any operation which was carried out in his knowledge to assist the enemy in that war; or

(c) within ten (10) years of his registration or naturalization, he has been convicted in any country of imprisonment for a particularly heinous offense or for an offense involving moral obscenity, provided that the conviction in question is an offense which constitutes an offense in the Republic as well – and which is particularly heinous or morally abusive and carries a prison sentence.”

According to Phileleftheros, a review of investors who were granted citizenship before the stricter criteria were introduced last May has uncovered no further problem cases to date.

Cypriot citizenship was granted to 579 individuals during 2019, the majority of which resulted from applications submitted prior to the introduction of stricter criteria in May.

Also last year, Cyprus limited the number of naturalisations of investors granted under the citizenship by investment scheme to 700 a year.

Currently more than 700 applications are waiting to be processed and Phileleftheros reports that no new applications will be considered – at least for 2020.

No EU intervention (yet)

In early 2019 the European Commission set up a committee to create a common set of controls for member states offering citizenship by investment scheme, but progress has been very slow.

The committee’s aims were to develop safeguards including risk management procedures that take into account money laundering, tax evasion and corruption.

By the end of 2019, the committee had made little progress and their next meeting has yet to be scheduled. However, the Commission has stressed that it will continue to support the committee until it has found a common set of controls for member states.

Watch this space!

Saudi ‘should not have been granted’ citizenship

George Psyllides
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Saudi ‘should not have been granted’ citizenship

THE CITIZENSHIP application filed by the Saudi owner of jet used by President Nicos Anastasiades on various trips should have been rejected because it did not meet the criteria, the audit service said on Friday.

Through the citizenship by investment scheme, the Saudi owner and 38 other individuals – family members and friends – received Cypriot passports, the audit report said.

The auditor-general launched a probe into the affair after it transpired that the presidency had used a private jet to travel to New York for the UN General Assembly last September.

It later emerged that the owner had been granted Cypriot citizenship in 2015.

According to the auditor’s report, a joint citizenship application had been filed by the owner of the jet, two siblings and three other individuals.

“These individuals were granted Cypriot citizenship with a cabinet decision dated January 14, 2015,” the report said. “Along with the six individuals, citizenship was granted to 36 members of their families (spouses and children), 19 of which were members of the families of the three brothers.”

According to the criteria, the report said, the six applicants should have invested at least €15m (€2.5m each). No additional investment was needed for the family members to be granted citizenship.

The market value of an investor’s permanent residence is not included in the amount unless they decide to buy one residence only at a cost of over €2.5m. In that case they are not obliged to buy a permanent residence of at least €500,000.

“Approval of the application was not in line with the criteria in force on the date of the examination and consequently the citizenship application should have been rejected,” the auditor said.

The report said the applicants should have owned a permanent residence of at least €500,000 plus VAT.

“Since all purchases in the case in question were conducted through companies jointly controlled by the six applicants, there should be a legally binding designation of the residence that each owned,” the report said.

In the files presented by the finance ministry there was a December 31, 2014 note referring to an agreement signed by all applicants, “which, however, we haven’t located,” it added.

“It appears that such an agreement was not submitted to the finance ministry.”

Even if it had been, however, it does not seem to meet the condition stipulating that each applicant must own a permanent residence of €500,000 plus VAT, the auditor said.

Specifically, one of the six applicants declared as residence two adjacent flats in Paphos bought together for €500,000.

“Ownership of the two adjacent flats, each of a lower value, did not meet the condition for a €500,000 plus VAT residence,” the report said.

According to the application filed by the applicants’ lawyers, their clients had invested in real estate in Cyprus, as per the scheme’s criteria, after buying all the shares of a company, Mrv Ltd.

The auditor said the investors essentially bought all the company’s shares but not its immovable property.

This, according to the auditor, was a classic case of acquisition of a company, thus falling under a different criterion of the investment scheme.

That criterion calls for the acquisition of a company, which should employ at least five Cypriot nationals.

“At the time of acquisition, Mrv Ltd did not employ anyone since it was not active, and only had immovable property.”

The interior ministry said the citizenship applications had gone through all the necessary checks and parliament had been informed before approval.

Responding to the audit service’s report, the ministry said the applications had been examined based on the criteria in force on March 19, 2014, whose minimum requirements called for applications from at least five individuals and a total investment of €12.5m.

The investment in question exceeded the criteria with six investors and €19.8m plus taxes, the ministry said.

After they were examined by the authorities and after informing parliament, the applications were submitted to the cabinet, which approved them on January 12, 2015, it added.

“Examination of the particular applications was carried out strictly on the basis of the criteria followed in all similar cases and there was absolutely no discrimination in favour of the specific applicants, something the auditor also determined in his report.”

To Diko, the auditor’s report proved that the administration’s awful and opaque handling had turned a pillar designed to boost the economy into a tool for smearing Cyprus and an incubator of bad practices that humiliated the state and its citizens.

A 16-storey tower in Germasogeia

Annie Charalambous
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1
A 16-storey tower in Germasogeia

A 16-STOREY tower called “Mandarin Park” is on the cards for Limassol’s Germasogeia area, according to an Environmental Impact Assessment report which also shows that the development is divided into two parts.

The first part is a mixed development for commercial and office use and the second is a modern and luxurious residential tower. Part of existing premises at the location of Mandarin Park, namely the abandoned Maroza Hotel Apartments, will have to be demolished. The project’s owner is Mandarin Park Mediterranean LTD Company and the cost is estimated to be over €16 million.

The 16-storey tower will be 71.7 metres high and have 36 apartments, including an entire floor for its mechanical services, two floors consisting of a fitness centre, spa and swimming pool for private use by the occupants, as well as a roof garden.

The apartments will be studios, two bedroom, three bedroom and a penthouse, designed at the highest standard. The report notes that the integrated development is estimated to accommodate 67 people. The plan also includes a total of 98 underground parking spaces, of which six will be designated for people with disabilities while parking facility for bicycles will also be installed.

The proposed development falls under Limassol Town Planning and is located within the administrative boundaries of the Municipality of Germasogeia. It is on the corner of Vasileos Georgiou I Avenue and Ampelakion Street.  Three other towers – the Marr Tower, the I100 and the Icon – are within a very short distance.

Demolition and construction work is expected to start in 18 months to two years; completion should take at least three years.

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