Court rejects appeal to cut Gary Robb’s sentence

Staff Reporter
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Gary Robb
Robb at AGA’s notorious Amaranta Valley project

IT HAS been a bad couple of weeks for Gary Robb, the British national sentenced here to a ten-month jail sentence for the appropriation of Greek Cypriot property in the north.

This week the Supreme Court in Nicosia rejected an appeal by Robb’s lawyers to reduce the length of the sentence.

The appeal had been filed on the grounds that the offences were committed between August 2004 and April 28 2005, and that therefore the offences should be judged under the penal code applying before March 31 2005.

The penal code was amended on that date, providing for more severe penalties. Robb’s lawyers argued that sentencing should have been based on the regime applying before March 31 2005.

However the Supreme Court rejected the appeal, noting that the offences in question could not be deemed as having been committed in distinct periods – i.e. before and after March 31 2005.

In its judgement the top court said that, far from being severe, the 10-month jail conviction was lenient. The maximum sentence provided under the law is two years. Previously (prior to March 2005) the maximum sentence had been six months.

Robb was sentenced last September, having been found guilty on charges of developing and selling property belonging to the Republic of Cyprus and to Greek Cypriots without their consent. Last August he was extradited to Cyprus by Britain, after serving a drugs-related prison sentence there.

Robb was one of the managers of a Turkish Cypriot development company, called AGA Development LTD. The company aimed to build 335 luxury residences in the occupied village of Klepini, in the northern Kyrenia District.

Construction work began on January 9, 2005 and by the end of April of 2005 around 85 per cent of the residencies had been sold, with the selling price ranging from 50 to 100 thousand Cyprus pounds. The project was never completed.

Also this week in the north a group of British nationals who bought houses by Aga Development expressed their dissatisfaction with the fact that their houses which are located at occupied Vasilia village and were seized by Akfinans Bank, are going to be sold in a public auction on May 6.

The British nationals moreover said that 900 more houses would be sold in a public auction.

Yet another blow to Robb’s fortunes came late last month, when a High Court Judge in London ruled that almost £1.66m sterling in a bank account belonging to Robb is the proceeds of crime.

The case was brought to court by Britain’s Serious Organised Crime Agency (SOCA). In the civil recovery proceedings, SOCA argued that Robb had derived the money through fraud, in particular obtaining property by deception and conspiracy to defraud, in connection with his property development schemes in north Cyprus.

His scheme was to market and sell 65 villas in Hz Omer and 250 in Amaranta Valley “off plan” through a local estate agent between February and October 2004. According to the SOCA statement released after the ruling, “further investigation showed that Mr. Robb offered his clients incentives such as a 10 per cent discount if they paid in full up front. By January 2005 Gary Robb was spending much of his time in Thailand and work on both sites had almost ceased. Most of the houses in Hz Omer were built but with significant complaints and only one villa in Amaranta Valley was completed, at the expense of the clients themselves.”

The London court found that for the seven-month period between February and July 2005 Robb, who was attempting to transfer frozen funds out of north Cyprus, was acting dishonestly and fraudulently, and conspiring with others to remove as much money from the business as possible. The money was stopped by the UK authorities.

There will now be a civil process whereby alleged victims of Robb will bring applications for a declaration that part of the money in the bank account belongs to them.

SOCA’s Stephanie Jeavons said: “SOCA’s absolute priority was to stop these funds being returned to Mr Robb. No matter where criminals are, SOCA wants to ensure they do not profit from their illegal activity. Gary Robb deliberately cheated his victims, now he will lose his illicit profits.”

Property industry problems to be discussed on Monday

Editorial
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ALL ISSUES concerning the real estate industry will be addressed at the Annual General Meeting of the Cyprus Land & Building Developers Association, which will take place on Monday 23 April 2012 at 12.30pm, at the Hilton Hotel in Nicosia.

Through a review of the previous period, the problems facing the industry will be presented and analyzed before Eleni Mavrou, Minister of Interior, who will attend the Meeting and provide an address.

Problems faced by the industry include the dramatic decline in sales and the lack of external demand for real estate, the rapid increase of unemployment within the industry, plus the the functional, bureaucratic and structural problems of the sector, and many others.

In his speech Lakis Tofarides, the President of the Association, is also expected to submit a series of specific proposals that many act as a catalyst for the property market recovery, as well as increase government revenue and create new jobs.

Timeshare touts are back in Paphos

Bejay Browne
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TIMESHARE touts were out in force in Paphos over the Easter holidays last week doing what they do best: mercilessly hassling tourists to hand over their cash for a holiday ownership scheme.

One victim was Irene Heymore, a retired school teacher from the UK, on holiday in Cyprus for two weeks.

“I was walking with some friends along the sea front in Paphos, when I was approached by a young man trying to get me to take a scratch card. I didn’t want to, but he was insistent,” she said. “He told me that I’d won a prize and would have to go and collect it from his office, but I’m aware that this is how timeshare touts operate and I refused. He kept badgering me and in the end we walked away. The experience was unpleasant and I could see other touts giving the same treatment to other holiday makers.”

For the Paphos regional board of tourism, Irene’s experience is tiresomely familiar.

“I am very sorry to see that even though we have been trying for more than ten years to clear the streets of this phenomenon, we have not managed to do so successfully,” said a member of the board who wished to remain anonymous.

He said despite endless meetings with government departments and other involved bodies, and although the police make some efforts to clear the street of touts, the problem is still there.

“Easter seems to be the time these touts begin operating again for the season and I personally saw at least five touts on the sea front in Kato Paphos when I visited the harbour area over the Easter period,” he said.

The street operators, normally foreigners employed for the season, grab visitors passing by, encouraging them to take a scratch card. They then take the unsuspecting visitors to their offices for a presentation and then try to get them to sign a timeshare agreement.

The official said the tourism board isn’t opposed to holiday ownership schemes as a form of tourism, but that they strongly object to the way in which these schemes are being promoted.

“We have had a lot of complaints about these touts and you only have to look at any of the Internet portals such as Trip Advisor to see the number of complaints about this matter.”

Last year a police hotline was set up to receive complaints on matters including touting.

“We need to have a hotline again this year and more needs to be done by the relevant authorities. This situation has been going on for far too long and we need to clear these operators off the streets of Paphos.”

Tougher fines are one option. At present, fines are just €85 and operator’s supervisors often collect the fines together and pay them in one go.

“It’s worth their while to continue to operate as they do, as they can easily offset the fines against signing up people to their schemes,” said the official.

He also pointed out that by the time any case against a tout comes to court they have often left the country.

The tourism official says requests to impose fines of €500 on touts caught operating on the streets were refused by the government and has called on government departments to check  the touts’ employment status, their location of work and so on.

Banks should offload distressed properties

Shavasb Bohdjalian
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CYPRUS’ three largest banks, Bank of Cyprus, Popular Bank and Hellenic Bank are involved in ambitious capital raising exercises to cover massive losses sustained on their Greek sovereign debt exposure and distressed property holdings in Greece and Cyprus.

The attempt to reach the capital targets may however not be successful if the banks don’t rush to offload distressed and non-core assets.

Bank of Cyprus and Popular Bank have already disposed of their assets in Australia and Popular Bank recently completed the sale of more subsidiaries in east Europe, but the proceeds from such sales is not enough to cover the massive capital injections that the banks need.

The banks need to offload billions of Euros of property left on their books by bankrupt developers, who would have gone under if it had not been for the vain attempt by the banks to keep them afloat. Cypriot banks appear to think that the people are stupid and they will rush to buy property at current inflated prices when they know well that sooner rather than later, banks will offload the distressed property.

The question is not if, but when.

And the way to offload the distressed property is very simple and is already being done in Spain with great success and I’m sure will be repeated in Cyprus soon. Two weeks ago, Reuters had an article on how Santander, the euro zone’s largest bank, offered a two-bedroom apartment in Sesena area near Madrid with a communal swimming pool for €65,000, with 100 percent mortgage over 40 years, costing as little as €242 a month to service, about a sixth of the average Spaniard’s monthly income.

At the peak of the decade-long property boom that preceded the crash, similar apartments would have sold for at least twice that, and for properties it isn’t selling, a Santander mortgage would cover 80 percent of the property price over 25 years.

Like Santander, most Spanish banks offer 100 percent financing over 40 years at interest well below the market rate to get rid of the homes that sit on their balance sheets, eating up capital in provisions and costing money in taxes and maintenance.

Guess what? According to Reuters, the apartments were selling so fast that the banks could not fill in demand. The banks in Cyprus similar to those in Spain, Greece and other countries should realize that since it was their stupid lending schemes that created the property bubble in the first place, they now need to fix the problem by at least offering the distressed property at huge discounts to attract interest.

Local property experts will quickly realize who much Cyprus property is expensive compared to similar property offered in Spain and Greece, which is also on the radar screen of foreign buyers.

Banks also need to offer 100 percent mortgages spread over 40 years, similar to that being offered in Spain to allow Cypriots who were forced out of the property market to come back and purchase decent property at affordable rates. As the Reuters article revealed, the €242 a month mortgage offered by Santander in Spain is about a sixth of the average Spaniard’s monthly income.

Assuming that the average monthly income of a Cypriot male is €2,250 a month, such a ratio would mean a monthly payment of €375, spread over 40 years.

Vassos Shiarly, the new Finance Minister knows the banking industry better than anybody else and he also has the experience and knowhow on how the lending market should develop from here onwards. He needs to impose tough conditions on the banks to go back to basics, sell non-core assets and distressed property, offer affordable mortgages that among others will allow banks to slowly repair damaged balance sheets.

About the author

Shavasb Bohdjalian is a certified Investment Advisor and CEO of Eurivex Ltd., a Cyprus Investment Firm, authorized and regulated by CySEC, license #114/10 and approved by the Cyprus Stock Exchange to act as Nominated Advisor for listings on the Emerging Market. The views expressed above are personal and do not bind the company and are subject to change without notice.

Efforts to combat illegal real estate agents stepped up

Nigel Howarth
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SEVERAL court orders prohibiting unlicensed estate agents from practising in Cyprus have been issued by District Courts in Limassol, Paphos, Nicosia and Larnaca.

The orders require the defendants, some of whom appear to be British, to suspend their business operations until a final adjudication of their cases has been made. Failure to comply with the orders could result in the “confiscation of assets or even imprisonment”, according to the President of the Council of Real Estate Agents, Dinos Soteriou.

(The Council carries a prominent notice on its website warning of the potential consequences of operating as an Estate Agent without a valid license).

To comply with the European Union Acquis Communautaire, Cyprus introduced a new law on 17th July 2010 that removed restrictive practices that penalized estate agents from other EU-member states wishing to practice on the Island.

Bill to repossess homes put on the backburner

Elias Hazou
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THE CYPRUS government has reportedly put on the backburner a bill allowing the repossession and auctioning off of mortgaged property, on the grounds that enacting the law now in the midst of the financial squeeze would be bad timing.

The bill has been prepared by the Land Registry Department and has been vetted by the Attorney-general’s office. It aims to amend the ‘Immovable Property (Transfer and Mortgage) Law 9/65’ so that mortgagees – such as banks – may sell off real estate, including via a private auction.

It would pave the way for mass repossessions by banks of mortgaged properties (residences and plots of land).

But on March 26 the Interior Ministry – where the bill is currently stuck – informed parliament in writing that it had been “suspended indefinitely due to the economic crisis.”

The ministry also informed legislators that “perhaps this is not the appropriate time for the mass auctioning of immovable properties by lenders.”

Hundreds of sale warrants for properties are pending at the Land Registry Department. Sale warrants are issued by the District Courts at the request of the Inland Revenue Department or other governmental agency for repayment of monies owed to the state.

One of the factors taken into account by the Land Registry in progressing sale warrants is the existence of encumbrances on property in question.

An encumbrance is any right or interest that exists in someone other than the owner of a property that restricts or impairs its transfer or lowers its value. This might include a mortgage, a writ of sale, a court judgement for an unpaid debt, a contract of sale, or accrued and unpaid taxes.

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