by Patroclos

AS IF IT were not bad enough that our country was partitioned, now we have to face the prospect of our biggest bank suffering the same tragic fate. Plans are afoot to partition our dear Bank of Cyprus, even though the brains behind the move have avoided use of the ‘P’ word, talking instead about a ‘splitting in two’.

There will be a B of C dealing with banking operations and a B of C asset management company that will be selling off the real estate of developers and other businesses that are unable to repay their loans. Thankfully, the partition will not lead to the creation of a pseudo-bank, but to two internationally recognised banks that will respect all uninsured depositors’ human right to be screwed by them.

However, we will be faced with the dilemma, eloquently posed by the sensitive poetess about Kyproulla’s division – which of the two banks we should love. To paraphrase the poem, ‘Our bank has been split into two, which part, must we now love? The lender which charges 8 per cent interest or the asset manager that will sell our property for peanuts?’
Many patriots, terrified of bequeathing their children another division, have launched an unyielding struggle to preserve the BoC as one entity, with a single international personality, single sovereignty, single board of directors (without rotating chairmanship), one balance sheet, one set of audited accounts and banking integrity.

It would be catastrophic if after unification with Laiki and generously housing all Laiki’s refugees, the BoC is partitioned and the asset company acts like an occupation force, heartlessly seizing and selling off properties of developers and the other nouveau-poor of post-bail in Kyproulla.

THE MAN who like a modern-day coupist laid the foundations for the partition of poor old BoC, former CEO Andreas Eliades, did exactly what our establishment had predicted he would do when he appeared before the geriatric investigative committee last Monday.

Patroclos proved his prophetic powers by writing last week that Eliades “will want to clear his name and explain that the collapse of the bank had nothing to do with him,” which was exactly what he did in a commendable performance that the king of personal innocence, comrade Tof, would have been proud of.

Wearing a grey suit, grey tie and grey face, with aggressive lawyer in tow, Eliades blamed his major cock-ups (Uniastrum, purchase of Greek bonds) on others, claimed not to remember critical matters, and kept bringing up the name of our friend Charilaos Stavrakis, who had left the bank at the beginning of 2008 and could not have had any responsibility for the reckless decisions that led to its collapse.

The irony was that even when Stavrakis was working at the bank, as part of a three-member senior management team, all the big decisions were being taken by the dictatorial Eliades, who had even sent a letter (presented by the investigative committee) to the other two when they complained about the situation to the board telling them that he had complete responsibility for the running of the bank.

The truth is that Eliades, who said he could not remember sending such a letter, had always run the bank like a dictator. One director had memorably quipped that the former CEO had replaced corporate governance with autocratic governance.

PERHAPS he could not remember how dictatorially he behaved because he claimed at the committee that everyone was entitled to disagree and express his opinion and he denied charges that he always imposed his diktats. “I never pressured anyone and I never shouted at anyone,” he said.

He obviously forgot – he would not have lied under oath – he regularly shouted at senior managers and members of the board, bullying them and humiliating them into submission. But he did not forget that in the years that Charilaos was still at the bank bonuses were paid. Why he kept mentioning poor old Charilaos, whom you could blame for many things but not the collapse of the BoC, will remain a big mystery. Eliades was after all collecting super-bonuses after Charilaos left the bank, in 2008 and 2009.

He even tried to blame Charilaos for the purchase of the grossly overpriced Russian Bank Uniastrum, which BoC now cannot sell at a fifth of the price it paid in 2008, claiming our friend had not objected to the deal when he was at the bank.
Our friend, as finance minister, tried to stop the sale, believing it was too risky – he had a meeting with the Governor in an attempt to stop it – another fact Eliades conveniently forgot about, stating: “Stavrakis never took a stand against the purchase.”

So if Stavrakis was not against the purchase of a struggling Russian bank (downgraded by Moody’s) the investment was justified.

THE FORGETFUL former CEO, surpassed himself when telling the committee about the purchase of the €2b worth of Greek government bonds at the end of 2009 and start of 2010. He had nothing to do with this and it was a lie he had given instructions for the purchase of 400,000 bonds in December 2009.

The purchase of bonds was not his responsibility he claimed. Others in the bank took decisions to spend €2b without the CEO’s authorisation. And these same people who were spending the bank’s billions on Greek junk bonds hid from their CEO a letter from the Central Bank warning of the risks of the investment. The letter was not shown to Eliades, who claimed he first saw it two years after it had been received.

We all expected that a former commando, who fought in 1974, would have had the balls to stand up in front of the committee and take full responsibility for the BoC fiasco like a man instead of blaming his minions and Charialos. He was after all the highly-paid, autocratic CEO, in total charge of the bank in the period that led to the collapse, unless he forgot about that as well.

WE HAD been waiting for the Cyprob to come up at the investigative committee for the economy at some point and it happened on Thursday when Michalis Sarris, finance minister during the Eurogroup meetings, appeared before it.
Sarris described the merciless hostility of our partners during these meetings, saying that nobody offered support to hapless Kyproulla. He believed that some of our partners wanted to destroy the island as a financial centre.

This prompted the chairman of the committee Giorgos Pikis to ask whether our delegation had cited our victimhood to soften the attitude of our partners. Pikis repeatedly asked if the Eurogroup had been informed that Cyprus had been the victim of an invasion and ethnic cleansing and that a big part of its territory was occupied since 1974.

Was Pikis suggesting that we made the Europeans feel sorry for us by marketing our victimhood? Perhaps our delegation should have included a couple of the poor old ladies in black – holding photos of their missing relatives – that our cynical political parties use as the mascots of their invasion anniversary gatherings.

Sarris explained that the Europeans were not concerned with the invasion when discussing economic issues. It did not occur to Pikis that it would have been a bit difficult to sell tales of our victimhood to the Krauts, given the size of our houses and the number of Beemers and Mercs on our streets.

THE TROIKANS met the leadership of the co-op movement last week to decide the restructuring of the co-ops that will need between one and 1.5 billion euro for their re-capitalisation. What was interesting was that the incompetents who brought the co-ops to the brink of bankruptcy are still in charge and negotiating the re-structuring with the Troika.

Ahead of the meeting, the Akelite former football coach Andreas Mouskallis, who is president of the Pancyprian Confederation of Co-ops, declared that reducing the number of co-ops to less than 18 would mean “the movement would not be able to survive with its people-centric ideology.” This ‘people-centric ideology’ will cost the taxpayer €1.5 billion, which makes it a pretty bad business model that must not survive.

It is this same people-centric ideology that inspired co-op bosses to come up with the most colossally wasteful early retirement scheme in the history of Kyproulla. They propose to pay co-op workers as much as 41 salaries as compensation for taking early retirement. Three-and-a-half years’ worth of salaries for employees that had another 15 years of service before retirement, paid by a bankrupt movement, that would be bailed out by the taxpayer is a people-centric scam.

I hope the troika will protect the interests of the taxpayer by vetoing the redundancy scheme of the self-serving co-op bosses.

THE CO-OP workers make the bank employees union Etyk seem sensible and restrained by comparison. A bank employee with the same years of service as a co-op worker (15 years) would only receive 15 months’ salaries as part of the early retirement scheme, after Etyk secured another two months’ compensation from the spineless BoC board.

Now bank employees will receive seven months plus a month for every two years of service, which is a pretty good compensation package, when you consider Laiki’s 2,500 workers could have been made redundant with two months’ salary as compensation when the bank closed down. But some bright spark decided it was more socially just to steal a few more millions from the BoC depositors and distribute it among Laiki’s workers.

MORE ‘proof’ was presented by our West-hating politicians and journalists to support their view that Nato and the evil Yanks were behind the Turkish invasion. A document on Nato headed paper was presented by a leading CyBC hack who was convinced of its authenticity.
Labelled ‘TOP SECRET’, this was a memo allegedly written by the Nato General Secretary in 1974, Joseph Luns, to the US Secretary of Defence (no name given). It said:
“The Assistant Undersecretary of State Sisco’s visit to the Alliance, showed the decision of the American government to finish the Cyprus problem.
“We agreed with Mr Sisco for supporting the Turkish army during the landing, as well as, in the violent expulsion of Makarios.”

I am no expert on documents, but it is impossible to believe that the Nato chief would communicate in such terribly bad English, in a top secret message in which accurate and correct use of language is of paramount importance. But where did the CyBC’s intrepid reporter find this joke document?

I suspect he was a victim of a photo-shop hoax, because the Turk-loving Nato boss would never have credited the Turkish army with the ‘violent expulsion of Makarios’. Then again anything was possible when ‘the decision of the American government (was) to finish the Cyprus problem,’ as if it were a plate of chips.

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IN A MARKET economy, the fate of businesses that fail is bankruptcy. If a business cannot pay its creditors, suppliers or banks, bankruptcy proceedings could be taken against it so that creditors could recover some of the money owed to them. This practice was not often followed in Cyprus, a failure that is proving very costly to the economy.

There is no better example of this market failure than the Orphanides supermarket chain collapse, which left behind debts in excess of €80 million to suppliers and in the region of €140 million to the banks. Some suppliers are now also on the verge of bankruptcy because they allowed the chain to build up huge debts that they would never be able to recover.

How much better off they would have been today if they had stopped supplying Orphanides with goods after three months of non-payment instead of allowing the building up of debt.

The banks followed a similar approach. Its main banker Laiki allowed the company to keep increasing its borrowings as long as it provided collateral. It ignored the fact that the chain was a failing business that was unable to make its loan repayments and continually needed more credit to stay afloat; the bank even had additional intelligence as many of Orphanides’ unpaid suppliers were its clients. Had Laiki followed normal banking practices it would have turned off the credit tap and commenced bankruptcy proceedings in order to recover as much of its money as it could, instead of pouring more money into it.

This is also one of the basic principles for an efficiently functioning market economy. Inefficient, loss-making enterprises that cannot make their loan repayments are depriving more efficient and more productive businesses of capital resources; they are also preventing the banks earning a return on their capital, which is the reason of their existence. If Laiki had stopped lending Orphanides money after the company’s loans reached €60m it could have given loans to companies that were more efficient and profitable, thus helping their growth.

One of the main problems now facing the Bank of Cyprus is similar to the Orphanides-Laiki experience. It is owed many hundreds of millions by big companies, many of them developers who are unable to service their loans because of the recession. It could either start selling off the assets its customers used as collateral in order to recover some of its money now that it is in a dire financial situation or do nothing and risk going bankrupt. It is a no-brainer really.

However, when last weekend the idea of splitting the BoC into two banks – one handling normal banking operations and another functioning as an assets management company – was raised it sparked a public outcry. Politicians and developers were outraged that the assets management company would sell off real estate, held as collateral for non-performing loans, at cut-rate prices to hedge funds and speculators. What the critics of the move failed to realise was that even if the bank was not split into two, it would still have to put its debtors’ assets on sale. There is no escaping this, regardless of the form the bank would take, because the bank would be in desperate need of cash. It cannot hold on to real estate in the hope that in two or three years’ time it would be able to get a better price for it or the debtor would resume loan repayments. It needs to raise money now in order to increase its liquidity and be able to give loans to new businesses that would earn it a return. It cannot hold on to real estate that earns nothing when it is cash-strapped and unable to operate as a bank.

Developers are bound to complain, but is it anyone else’s fault that their business failed? In the market economy entrepreneurs take risks but do not always succeed. When their business fails they have to accept the consequences rather than expect the bank to hold on to their assets earning nothing from them until these can be reclaimed several years down the road. This does not happen in any properly functioning economy. And certainly not in an economy deep in recession in which the banking sector’s survival is on the line.

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By Simon Bahceli

VOTERS GO to the polls in the north today in what is expected to be a muted affair with few definitive outcomes.
The election comes after eight deputies from the ruling National Unity Party (UBP) resigned, leading to a vote of no confidence on June 5. ‘Prime Minister’ Irsen Kucuk resigned the following day.

“No single party will have enough of the vote to form a government alone. Therefore, we shall have a coalition,” head of Turkish Cypriot pollster KADEM Muharrem Faiz told the Sunday Mail this week. He added that he expected the opposition centre-left Republican Turkish Party (CTP) to gain the largest share of the vote, closely followed by right-wing UBP. The only gains will be made by the Democrat Party led by Serdar Denktash, who will double his previous 10 per cent of the vote to around 20 per cent.

Most notable in today’s election, Faiz predicted, would be an increased number of voters opting for a “mixed vote”, where voters split their vote between a number of candidates rather than plumping for a single party.

“Traditionally we’ve seen seven to eight per cent of the electorate choosing to vote in this way, but this time I expect that figure to be double if not more”.

Increased mixed voting stems from an epidemic of voter disillusionment over the two main parties’ inability to stand up to Ankara’s plans to rein in Turkish Cypriot public service spending and sell off many of the north’s ‘state’ owned enterprises, Faiz said. Incessant price increases, particularly that of fuel, were also cited as a source of deep displeasure with the two previous ‘governments’.

Whatever ‘government’ emerges from today’s vote will be faced with the same problems that have plagued the two previous administrations, Faiz insisted, and remained pessimistic about any administration’s ability to stand in the way of Ankara’s plans.

“To resist will take great sacrifices that no one seems willing or able to make,” he said.

A stark indication of this had come when the cross-party caretaker administration holding fort till today’s election, had been forced to sign a promise to adhere to the Turkey-‘TRNC’ protocol in order to release funds to pay state employees at the end of last month, he said. Withholding funds until the promise had been signed has widely been seen as an indication that Ankara will not tolerate non-adherence to the protocol, regardless of who is in power in northern Nicosia.

It is the Turkey-‘TRNC’ protocol that lies at the heart of the matter for whoever takes over governance of the north from tomorrow onward. As Turkish Cypriot economist Erdal Guryay of the Near East University (NEU) said in a recent interview, “With the government having to live according to the protocol, it has little room to manoeuvre, meaning in effect that it cannot rule. They [Ankara] can tell you what to privatise and which companies will benefit from the sell-off.”

What binds the north to the protocol, signed initially by the CTP in 2009 and then later by the UBP, is the mountain of debt under which the breakaway state languishes. At around 4.7 billion dollars it constitutes approximately 145 per cent of GDP, a situation Guryay describes as “worse than that of Greece, Spain or Portugal”.

As another Turkish Cypriot economist Mustafa Besim of the Eastern Mediterranean University (EMU) explained, the north owes 3.2 billion US dollars to Turkey for its help covering the budget deficit since 1974, plus a further 1.5 billion dollars to local banks.

“We are fortunate that Turkey does not ask for all the money back,” he says, but adds that in order to gain further credit the north “has to adhere to the conditions of the protocol, which is almost wholly unsuited to the needs of the Turkish Cypriot economy”.

Serdar Denktash is expected to double his share of the vote

While many Turkish Cypriots oppose the protocol because it aims to switch Turkish funds from paying public sector wages to building a sustainable private sector, it is deemed a sensible approach by a Turkish government hoping to boost GNP by attracting foreign (for foreign, read Turkish) investment to the north. The problem is that it does not take into account that the breakaway state remains under crippling economic embargoes that place local businessmen at a disadvantage to powerful Turkish business interests not affected by such restrictions to trade, Besim says.
And then there is the further 1.5 billion dollars the ‘state’ owes local banks.

As Guryay says, “incessant borrowing” by the ‘state’ has deeply damaged the north’s banking sector. Two state-owned banks, namely the Cooperative and the Vakif Bank, along with the ‘state’ provident fund, have effectively been raided by successive governments to raise cash to pay for ‘state’ employees’ salaries, he says.

“It’s not just a question of the debts but the damage done to these institutions,” he said ominously.

Memories of the UBP as Ankara’s stooge may still be fresh in voter’s minds, but those thinking the CTP might be better were on Wednesday reminded that it might not be the case as maverick daily Afrika published a pre-election bombshell.

It came in the form of a “secret” transcript of a recording from 2009 where Turkish Cypriot leader Mehmet Ali Talat was quoted as saying, “I never gave a thought to the economy when I was prime minister”. He is also quoted as saying he would wage war on the unions, supposedly his staunchest allies, but what is perhaps most striking about the transcript is that it showed Talat and co’s genuine surprise at Turkish Prime Minister Tayyip Erdogan’s insistence that the Turkish Cypriots produced some sort of budget.

Today as Turkish Cypriots go to vote, they find themselves in an uncannily similar situation to that faced by Greek Cypriots just months ago. Greek Cypriots had to decide whether to cut ties with the euro, or face years of externally imposed austerity with virtually no fiscal control. Sadly, they had little choice and chose austerity. Turkish Cypriots seem destined to do the same.

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Cyprus and its international lenders have agreed to convert 47.5% of deposits exceeding 100,000 euros in Bank of Cyprus to equity to recapitalize it, banking sources said on Sunday.

Under a programme agreed between Cyprus and lenders in March, large depositors in Bank of Cyprus were earmarked to pay for the recapitalisation of the bank. Authorities initially converted 37.5 percent of deposits exceeding 100,000 euros into equity, and held an additional 22.5 percent as a buffer in the event of further needs.

“There was an agreement concluding at a final figure of 47.5 percent this morning,” a source close to consultations told Reuters.

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Britain’s Lewis Hamilton seized his first win for Mercedes in a sweltering Hungarian Grand Prix on Sunday while Red Bull’s Sebastian Vettel moved 38 points clear in the Formula One championship despite finishing third.

Finland’s Kimi Raikkonen, who could be Vettel’s team mate next season, took second place for Lotus – 10.9 seconds behind Hamilton – after determinedly holding off the German in the closing laps.

Hungary marked the midpoint in the season and after 10 of the 19 races Vettel goes into the August break with 172 points to Raikkonen’s 134. Ferrari’s Fernando Alonso has 133 after finishing fifth.

Hamilton, the 2008 Formula One world champion who won at the Hungaroring for McLaren last season, led from pole position to seal his fourth win at the circuit and 22nd of his career.

Driver and Constructor standings

1. Sebastian Vettel (Germany) Red Bull 172
2. Kimi Raikkonen (Finland) Lotus 134
3. Fernando Alonso (Spain) Ferrari 133
4. Lewis Hamilton (Britain) Mercedes 124
5. Mark Webber (Australia) Red Bull 105

1. RedBull – Renault 277
2. Mercedes 208
3. Ferrari 194
4. Lotus – Renault 183
5. Force India – Mercedes 59

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An honorary doctorate has been awarded to Cypriot judge Giorgos Aresti by the University of Kent for his contribution to European Union Law. The ceremony was held at Canterbury Cathedral.

Aresti is an appointee to the Court of Justice of the European Union since May 2004. At the award ceremony Professor John Fitzpatrick talked about Aresti’s career and the importance of some of the recent decisions the EU Court’s had taken in which Aresti had participated.

In his reply, Aresti, the only non-Briton to receive the award, spoke about the role of EU law in the life of every European.

Aresti began his career as a lawyer in his hometown of Famagusta after studying law at Athens University and subsequently studying for a Master’s degree in Comparative Politics and Government at Kent in 1970. After the Turkish invasion he moved to Nicosia and later Limassol. He had a successful career as a judge and was appointed as a Judge of the Supreme Court of Cyprus in 2003. In May 2004 he was appointed as the first Cypriot judge in the European Union Court of Justice, where he serves until today.

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By Miles Surrey

The Cyprus National Dragon Boating team will be returning on Tuesday from the 11th World Championship Dragon Boat Racing competition with two bronze medals and a lot of pride.

The team of 35, in their first international appearance, were the clear underdog in Szeged, Hungary.

Other teams were able to bring as many as 500 athletes, whose spots were paid for by various sponsors, and there were over 3,000 total participants in the championship.

By contrast, the Cyprus team had no backers and had to fund their own travel and accommodations. Need compelled them to hold fundraising events at the Germasogeia Dam and they were only recognised in March as a national team by the International Dragon Boat Federation.

The Cypriot team placed third in both the 500-metre and 200-metre mixed senior A races on Friday and Saturday respectively. These races are for competitors aged 40 years and above. These accomplishments were a great feat for a team pitted against other countries with years of experience in international competition.

The only other countries that were appearing in their first world championships were Iran, Romania and Serbia.

Debbie Theophanous, who helmed the women’s boat in the championships, was very pleased with the way the newcomers were treated by the rest of the dragon boating community.

“What really impressed us was the hospitality, they’ve been so kind to us,” Theophanous told the Cyprus Mail.

After the five days of gruelling competition, athletes enjoyed a day in Budapest before returning to their normal lives and regular jobs.

Hopefully the team’s success overseas will translate into growing popularity for the sport on the island, and at the very least they deserve mountains of praise for their impressive accomplishment.

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ITALIAN Prime Minister Enrico Letta rebuked Europe for its handling of the Greek crisis on Monday, saying the harsh austerity imposed on Athens had deepened the recession and worsened unemployment across the continent.

“There is no doubt that serious mistakes were made about Greece by Europe in the past few years,” Letta said during a visit to Greece, now in its sixth straight year of recession.

“The timing was wrong. The instruments were wrong. The interventions were not made in the right way and at the right time and this worsened the crisis,” he said, in one of the strongest official criticisms of the bailout terms set by the European Union, European Central Bank and International Monetary Fund.

“The crisis would have been different. It would have created less of a financial disaster, it would have led to fewer job losses across Europe if Europe’s attitude to Greece had been different at the beginning,” he said at a joint news conference with his Greek counterpart Antonis Samaras.

Greece has been at the centre of the euro zone debt crisis since seeking its first rescue package in 2010. Repeated rounds of tax hikes and spending cuts have thrown thousands out of work and fuelled violent demonstrations against the measures demanded as the price for staving off default on its huge public debt.

Italy, with a public debt burden second only to Greece’s in the euro zone as a proportion of its overall economy, has also suffered severely as successive governments have struggled to get its battered public finances in order.

Letta, who has repeatedly urged Europe to emphasise growth and jobs rather than pure budget rigour, said it had to be clear to people in the debt-ridden countries of southern Europe that the sacrifices demanded of them would improve their lives.

“These sacrifices are not an end in themselves, they’re not the goal, they’re the instrument to reach the promised land,” he said.

Letta also repeated that Europe risked feeding growing anti-EU sentiment that would become clear in next year’s European parliamentary elections.

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By Nemanja Bjedov

Marcos Baghdatis received a bye into the second round of the ATP World Tour 500 Citi Open in Washington, DC, and will face either Lukas Lacko of Slovakia or Colombian Alejandro Falla in his opening match.

The 16th-seeded Cypriot is in the bottom half of the draw and could face second-seeded Japanese Kei Nishikori in the third round, including also eight-seeded American John Isner, Alexandr Dolgopolov of Ukraine and Frenchman Gael Monfils, who reached the semifinal of the Croatia Open in Umag over the weekend.

This will be the third appearance in the Citi Open for Baghdatis where, after reaching the final during his 2010 debut – eventually losing to Argentinean David Nalbandian – he also reached the quarterfinal in 2011.

The 28-year old Cypriot, currently ranked 44th in the Emirates ATP Rankings, will be looking to get back to winning ways on the tour after recording nine consecutive first round exits, ever since reaching the quarterfinals in Rotterdam in February.

He also lost in the Challenger of Dallas first round in early March, while playing for Cyprus he recorded a Davis Cup victory over Benin’s Theophile Segodo in April.

More recently he featured in two rounds of the German elite club competition and recorded two singles victories and one in the doubles.

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OIL FROM the spill in the north, which had drifted south, is dispersing and the situation is under control with crews at the ready to deal with any clumps of drifting residue, authorities said yesterday.

“Day by day the amount of oil in the sea is decreasing thanks to the clean-up crews who have been working extremely hard,” coastal inspector Giorgos Economou said.

Members from the ParalimniMunicipality, district offices, forestry department and volunteers from civil defence and the scouts have been involved in the clean-up process.

“The message is clear and that is that we have the situation under control and there is absolutely nothing to worry about,” he said.

Economou revealed that only small amounts of oil had made it to the beaches and they were quickly removed by the crews.

“Our people are ready to deal with any circumstances that may arise and we patrol the shores from the first light until sundown,” he added.

Authorities had been put on alert on Friday after the oil-spill in the sea off the coast of the Karpas in the north reached government-controlled waters.

According to reports in Turkish Cypriot Kibris on Sunday, ‘minister of tourism, environment and culture’ Mehmet Harmanci said, that the small amounts of oil residue which were spotted off the Palm Beach coast of Famagusta may be oil waste from ships which pass from the area.  He added that tight measures had been taken in order to prevent the oil spill from spreading.

The paper also reported that members of the public spotted oil and tar on the beach.

“Like a nightmare!” was the title of Turkish Cypriot daily Havadis’ front page on Sunday. It reported that the inhabitants of Gastria village had been living a nightmare for years now. Apart from the latest destruction caused by the oil spill, they have to breathe the poisonous gases coming out from the chimneys of power station AKSA, , which has been fined for the spill as the oil had been destined for the plant when it occurred.

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By Mark Felsenthal

US SECRETARY of State John Kerry named former US ambassador to Israel Martin Indyk as his main envoy in Israeli-Palestinian talks which were due to start in Washington later on Monday and said he was seeking “reasonable compromises” in the tough negotiations.

“Going forward it is no secret this is a difficult process. If it were easy, it would have happened a long time ago,” Kerry told reporters. “It is no secret, therefore, that many difficult choices lie ahead for the negotiators and for the leaders as we seek reasonable compromises on tough, complicated, emotional and symbolic issues.”

Israeli and Palestinian officials have put forward clashing formats for the peace talks which have been stalled for nearly three years.

After intense mediation, Kerry planned to bring the negotiators together in the evening and on Tuesday to renew talks that broke down in 2010 over Israel’s settlement of occupied land where Palestinians seek a state.

Indyk’s job will be to oversee the negotiations.

Indyk is a veteran of US efforts to resolve the Israeli- Palestinian conflict. He was a senior official in the Clinton administration, which oversaw a failed summit in 2000 after which violence erupted in Israel and Palestinian territories.

Previous attempts to resolve the decades-old conflict had sought to ward off deadlock and the risk of knock-on violence by tackling easier disputes first and deferring the most emotional ones like the fate of Jerusalem and Palestinian refugees.

President Barack Obama welcomed the talks but cautioned that a tough path lies ahead.

“This is a promising step forward, though hard work and hard choices remain ahead,” Obama said in a statement. “I am hopeful that both the Israelis and Palestinians will approach these talks in good faith and with sustained focus and determination,” he said. “The United States stands ready to support them throughout these negotiations, with the goal of achieving two states, living side by side in peace and security.”

The Palestinians, with international backing, want their future state to have borders approximating the boundaries of the West Bank, adjacent East Jerusalem and the Gaza Strip before Israel captured them in the 1967 Middle East war.

Yasser Abed Rabbo, a senior official in Palestinian President Mahmoud Abbas’ umbrella Palestine Liberation Organisation, said the US letter of invitation to the Washington talks had not specified which disputes were to be discussed.

But Abed Rabbo told Voice of Palestine radio the talks “will begin, in principle, on the issues of borders and security”.

Israel’s Prime Minister Benjamin Netanyahu had resisted Abbas’ calls to accept the 1967 border formula before talks resumed.

This time “all of the issues that are at the core of a permanent accord will be negotiated simultaneously”, Silvan Shalom, a member of Israeli Prime Minister Benjamin Netayahu’s cabinet and rightist Likud party, told Israel’s Army Radio.

Shalom said that the Israeli position would help keep the talks, which are slated to last nine months, comprehensive.

“Had the matter of borders and territory been given over, what incentive would they (Palestinians) have had to make concessions on the matter of refugees or Jerusalem?” Shalom said.

Israel deems all of Jerusalem its capital and wants to keep West Bank settlement blocs under any peace accord. The international community considers the settlements illegal and rejects Jerusalem’s status.

Israel quit Gaza in 2005 and that enclave is now ruled by Hamas Islamists hostile to the Jewish state and opposed to Abbas’s peace strategy.

Palestinian refugees from the 1948 war at Israel’s founding, along with millions of their descendants, claim the right to return to their original homes in what is now Israel. The Israelis rule that out as demographic suicide, saying the refugees should resettle in a future Palestine or elsewhere.

Netanyahu says any peace accord must safeguard Israel, which has often clashed with Hamas in Gaza and fears the Islamist movement could gain ground in the West Bank. Kerry has also described Israel’s security as “paramount”.

Abed Rabbo said Israel and the United States, its main ally,  had been conferring about security without including the Palestinians.

“This is a big shortcoming in the Israeli and the American behaviour because they are not discussing their bilateral security, they are discussing a central and a fundamental issue of ours and it concerns our future as a whole,” he said.

After months of intensive and discreet mediation, Kerry announced on July 19 in Amman, Jordan, that the parties had laid the groundwork to resume negotiations on the so-called “final status” issues that must be resolved to end the dispute.

“The meetings in Washington will mark the beginning of these talks,” Kerry spokeswoman Jen Psaki said.

In what it dubbed a goodwill gesture required to restart diplomacy, the Israeli cabinet on Sunday approved the release of 104 long-serving Palestinian security prisoners in stages. Thousands more Palestinians remain in Israeli jails

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By Iain Rogers

Lithuanian teenager Ruta Meilutyte lit up the second day of action at the world swimming championships with the first world record of the week as Brazil, Australia, Hungary and Sweden all struck gold at Barcelona’s hilltop Palau Sant Jordi on Monday.

Following up on her Olympic title in London last year, the 16-year-old Meilutyte scorched to a time of one minute 04.35 seconds in the semi-finals of the 100 metres breaststroke, shaving a tenth off the previous record of 1:04.45 set by American Jessica Hardy in 2009.

Cesar Cielo of Brazil claimed a second consecutive 50 metres butterfly title, Australia’s Christian Sprenger took gold in the 100 metres breaststroke and there were triumphs for Katinka Hosszu of Hungary in the 200 metres individual medley and Swedish teenager Sarah Sjostrom in the 100 metres butterfly.

Hosszu’s race produced the biggest surprise of the day when Olympic champion Ye Shiwen of China failed to defend her title from the 2011 championships in Shanghai and finished outside the medals in fourth.

Meilutyte, who trains in England and is chasing the tiny Baltic nation’s first world championship gold, had already gone close to the world record in her heat on Monday morning with a time of 1:04.52.

She then became the first Lithuanian woman to break a swimming world record since the country gained its independence from the Soviet Union more than two decades ago.

Improving on Hardy’s time had been “one of her dreams” and was more important than winning Tuesday’s final but a gold would nonetheless be the “cherry on the cake”, Meilutyte told reporters.

“I’ll have a relaxing day tomorrow and save all my energy for the final,” she added. “My biggest aim is accomplished now and I’ll give it my best shot.”

SLOW RACE

Australia came into the championships hoping to put a woeful performance at the London Olympics behind them and Sprenger gave them just the tonic they were seeking when he came from behind to beat Olympic champion and world record holder Cameron Van Der Burgh of South Africa in the day’s opening final.

Van Der Burgh, who was coming back from a knee injury, led at the turn but Sprenger powered through to touch in a time of 58.79 seconds, with the South African just behind in 58.97. Felipe Lima of Brazil took bronze with 59.65.

“I remember getting to that first wall and thinking, man I’m travelling really fast and it’s not even hurting at all, so I knew I was on track,” Sprenger told reporters.

“I could see Cameron in the corner of my eye and I knew he had gone out fast, but I have a stronger back end so it was my turn to come back,” added the 27-year-old, second behind Van Der Burgh in London.

“The first thing I saw was Cameron’s block and it had the two lights showing and I thought, oh I think I’ve got him. And then I turned around and saw 58.7 and it blew my mind.”

Victory for Brazilian Cielo, a gold medallist in Shanghai, made him only the second man to win the 50 metres butterfly twice after South African Roland Schoeman.

In a relatively slow race, Cielo touched in 23.01 seconds and was close to tears on the podium as his national anthem boomed out around the arena. American Eugene Godsoe took silver in 23.05 and Fred Bousquet of France was third in 23.11.

“It was a very tense final, everyone was very nervous,” Cielo, 26, told reporters.

“I think my finish was the key, I think I just put my hand on the wall and I would say that last 10, even the last five metres that was the main difference for me,” he added.

“The final is not the time to swim fast, the final is the time to touch first and I’m not surprised we swam a little slower tonight.”

Sjostrom, who won the 100 metres butterfly at the 2009 championships in Rome, reclaimed the title after a fourth-place finish in Shanghai.

The 19-year-old touched in a time of 56.53 seconds, while Australia’s Alicia Coutts repeated her silver from 2011 with 56.97. Olympic champion and world record holder Dana Vollmer of the United States was third in 57.24.

Coutts went on to claim another silver in the 200 metres medley which may help make up for the disappointment of surrendering the lead to the United States on the final leg of Sunday’s 4×100 freestyle relay.

Hungary’s Hosszu, sixth in Shanghai and a bronze medallist in Rome in 2009, led on all four legs and touched in a time of two minutes and 07.92 seconds.

Coutts finished in 2:09.39, repeating her second place from 2011, and Spain’s Mireia Belmonte Garcia held off Ye and delighted the home support with bronze in 2:09.45 before dedicating her medal to the victims of last week’s train crash in Galicia.

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By Simon Bahceli

A COALITION between the centre-left Republican Turkish Party (CTP) and the political maverick Serdar Denktash’s Democrat Party (DP) looked likely on Monday as both parties made gains in elections held in the breakaway state on Sunday.

With voter turnout at just 69 per cent – the lowest in two decades -, no party claimed outright victory. However, by gaining the largest share of the vote (38.4 per cent), giving the party 21 seats in the 50-seat ‘parliament’, the CTP will be the first party charged with forming a ‘government’.

Turkish Cypriot ‘president’ Dervis Eroglu said after Sunday’s poll that he had “not been surprised” that his former party, the UBP, had been voted out of office.

“If a ruling party suffers an internal crisis during an economic crisis, it is not surprising their share of the vote fell from 44 to 27 per cent,” he said, adding: “It is time for the parties to begin a dialogue that will address the country’s problems”. He blamed the low turnout on the fact that the election had taken place during Ramadan and while many were abroad on summer holidays.

It is unlikely the CTP will attempt for form a ‘government’ with former rulers the UBP, whose ousting from power through a no confidence vote just over a month ago led to Sunday’s early poll. Moreover, a coalition with Mehmet Cakici’s centre-left Communal Democratic Party (TDP) is out of the question as the party only received only 7.4 per cent of the vote, gaining it a mere three deputies in the 50-seat ‘parliament’. This leaves only Denktash’s DP as a likely option for the CTP.

Claiming victory, the CTP said on Monday it would “lay out its principles at a press conference” to be held today, after which it would begin negotiating with possible coalition partners. Its leader Ozkan Yorgancioglu pledged to form a “transparent government, reformist government”.

Having more than doubled his number of deputies in ‘parliament’ from 5 to 12 Serdar Dentash was on Monday claiming the position of “real victor”. His party is seen to have benefited from the mass defection from the UBP that led to the election, and from voter dissatisfaction with the two major parties. His eleventh hour declaration that he opposed Ankara’s privatisation plans for the north may also have boosted his popularity. It is likely Dentash will bargain hard for an influential post in the new ‘government’, likely that of ‘foreign minister’.

What was perhaps most striking about Sunday’s poll was the voters’ use of the “mixed vote”, whereby voters could choose from a selection of candidates rather than giving their vote to one single party. It is not clear yet how many voters used the mixed vote option, but the figure is believed to be at least double the approximately eight per cent who used their vote in this way in the 2009 election and it is credited for propelling twenty new younger faces into the 50-seat chamber. Many of the new 20 deputies were born after the division of the island in 1974.

One such CTP deputy Birikim Ozgur told the Cyprus Mail his party’s main objectives were a federal solution to the Cyprus problem and the making of sweeping changes to the north’s constitution, which he said the party would seek to put in place through a referendum next year.

“Our constitution does not uphold freedoms and still ties the police to the military; such things have to be changed,” he said on Monday. He added that his party would review the ways in which a protocol that exists between the north and its benefactor Turkey works.

“Our party has designed a social-economic programme that addresses more accurately the needs of the Turkish Cypriots. We will communicate this to Ankara and we expect their respect and support on this,” he said. He added that while agreeing with Ankara that over-employment in the public sector and lax budgeting had led to the imminent collapse of the north’s finances, some of Ankara’s approaches to dealing with genuine problems had and would affect the Turkish Cypriot community adversely.

“We will have to sign a pledge that our government will adhere to the Ankara protocol that has already been signed by previous governments, but we will do our best to alter the parts that are damaging to us,” he said, referring to agreements in the protocol to sell off most of the north’s ‘state-owned’ assets to Turkish conglomerates.

“By voting the UBP out of office, the people have clearly expressed that they do not want to see the protocol implemented the way the UBP was implementing it,” he added.

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Ten boxes of fishing nets worth €3,000 were stolen from a warehouse belonging to the fisheries department in Paphos, The theft was discovered on Monday afternoon. According to police, the perpetrators broke in through the main entrance to the warehouse. The theft is believed to have occurred at some stage between last Wednesday and Monday morning. Paphos police are investigating.

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THE NUMBER of people driving without insurance is on the rise due to the crisis, and has been on the up for two years police said on Monday.

In the first six months of this year 1,428 drivers without insurance were charged. “Over the weekend another 47 people were found driving without insurance” traffic chief Demetris Demetriou said.

Police on Monday began an clampdown, which will run until August 4. Cars found without insurance coverage will be impounded, Demetriou warned.

“The driver will be taken to a police station and the car will be held until the driver can secure a valid insurance,” he said.

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By Elias Hazou

FORMER energy czar Solon Kassinis is heading up to the Palace today for a talk with the President that may – or not – clear the air on the government’s approach to energy policymaking.

Kassinis, executive vice-chairman of the Cyprus National Hydrocarbons Company (CNHC), known in Greek as KRETYK, was called to the Palace by Nicos Anastasiades after threatening to quit last week. Their meeting has been scheduled for around 6pm.

Despite the warning shot, Kassinis has not yet tendered any letter of resignation, and his chat with the President may determine whether he decides to stay on.

The outspoken official feels snubbed at being left out of a team appointed earlier this month by the Cabinet to negotiate with Noble Energy and other companies the earliest possible supply of natural gas from offshore block 12 and the construction of an LNG plant as soon as possible.

According to the official announcement at the time, the team members are: Stelios Chimonas (chairman), permanent secretary at the trade and energy ministry; Nora Nicolaidou, state’s attorney; Stelios Koundouris, treasury accountant; Eleni Vasiliadou, chairman of the Natural Gas Public Company; Odysseas Michaelides, head of the department of control, ministry of communications; and “a representative from the CNHC.”

The latter wording was perhaps deliberately left vague, sources told the Mail.

They said Kassinis, who until recently headed a committee tasked with evaluating gas exploration licences, was omitted from the new team negotiating with Noble, apparently by Chimonas, the current permanent secretary at the energy ministry.

The team is now composed of people with little experience in the field, some of whom were previously subordinates to Kassinis – a move that did not sit well with the former director of the Energy Service.

But personal ambitions or antagonisms aside, the same sources said, the administration’s handling of energy decision-making so far leaves a lot to be desired.

The energy ministry has stripped the CNHC of some of its key powers. Whereas the entity was set up as the commercial vehicle for the LNG project, curiously it was not a party to the signing of a preliminary agreement for the development of an LNG plant on the island.

Instead, the June accord was concluded between the government and a US-Israeli partnership, with the CNHC relegated to the status of observer despite having done all the legwork.

“Perhaps it was a case of the energy minister taking all the glory,” sources said, adding there was no doubt the CNHC has been sidelined.

Minister Giorgos Lakkotrypis recently informed the CNHC that this removal of powers was temporary and that he would reinstate them at a later date.

The organisation meanwhile is operating on a shoestring budget, something that has limited its scope of functions.

The government had hired the services of a Norwegian law firm as consultants to draft a review of the energy sector. Their findings have since been forwarded to the energy ministry, which apparently is sitting on them.

Among others, the consultants recommended that CNHC and the Natural Gas Public Company (DEFA) be merged and moreover that CNHC should be the ‘command vehicle’ for the LNG project in Cyprus.

But the government’s intentions on re-organising and/or merging the two entities remain unclear.

Another worrying sign, the sources said, is the apparent holdup in reaching an agreement for the import of interim supplies of natural gas for electricity generation.

Media reports have hinted that preferred bidder Itera has proposed extending the supply period to 2020 or 2021 – the tender had initially set a deadline of late 2018.

“Does this signal that the timetable for an LNG plant producing electricity from our own gas has been pushed back?” the sources asked.

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By Bejay Browne

VOLUNTEERS in Paphos are struggling to take care of close to 200 cats and kittens at a dedicated cat park in Tala and say the situation is getting out of hand as numbers are growing so fast.

They not only feed and water the cats at the Ayios Neophytos monastery cat park but they also do their best to ensure all of the felines are in good health. But volunteers say this is getting harder due to the poor economic climate and the park’s successful reputation.

In the last four months alone, more than 100 kittens have been dumped there, according to volunteer Dawn Foote, who along with husband Mark has been involved in caring for the animals for the past two years.

“The problem is people are struggling financially and they are not able to care for the kittens or to pay for cats to be spayed or neutered. Although a local animal welfare charity

Paphiakos will perform this for free, people don’t seem to be taking them there,” she said.

Unfortunately, once the volunteers’ undertook to raise money to help towards the health and upkeep of the cats, they no longer qualified for the free service provided by the charity.

“We had to build a fence to keep the cats inside the park, as requested by the local community council and then the charity said it would no longer be able to provide a free service for the monastery cats,” said Foote.

Instead, volunteers now take the animals to be spayed or neutered to a vet in Lemba in Paphos who gives a ‘substantial’ discount .But the park’s ongoing success has also encouraged more people to dump animals there, says Foote.

“People see how lovely the cat park is, it’s clean as well – and they see how well cared for the cats are. The park is well maintained and this seems to encourage them to dump unwanted animals with us. We now have a team of volunteers who attend to the park twice a day, ensuring there is enough water and that food bowls are clean.”

The park has also become popular with visitors from both Cyprus and abroad with the monastery cats gaining recognition world wide.

Although volunteers are doing their best to keep numbers down and to re home the animals, cats and kittens are being dumped on an almost daily basis.

“In the last two months we have managed to re- home about 40 kittens and 10 adult cats,” said Foote.

The cat lover said, however, that volunteers were finding it hard to keep up with the costs involved.

The cats were moved to their current residence a while ago, which is further down the road from their initial home close to the car park of Ayios Neophytos monastery.

As numbers grew, the cats were moved for health and safety reasons, to an area about 50 meters away. The piece of land was provided by the monastery.

The cats are able to roam the park and have plenty of shade.

Volunteers are needed for fundraising, foster care and feeding, Foote said. Bedding, cushions and feeding bowls are always required. Food and other donations can be left in the hut on the right hand side of the feeding area.

The majority of female cats have already been spayed but Foote always advises that adopted cats are taken to a vet before introducing them to their new home. There is no charge to adopt a cat but donations are welcome.

‘But please don’t just take them. We have procedures which we follow and we worry if cats disappear,” said Foote.

Contact Dawn Foote 99253430
www.talamonasterycats.com
www.facebook.com/talamonasterycats

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AN ITALIAN-flagged research vessel conducting depth soundings off the Paphos coast within Cyprus’ Exclusive Economic Zone (EEZ) was reportedly harassed by the Turkish war navy last week, in what was the third episode over the past two months.

According to daily Politis, the incident occurred last Thursday when the ‘Odin Finder’ was intercepted by a Turkish gunboat. The survey vessel was in the area measuring water depths as preparatory work for the laying of fibre-optic cables.

After intercepting the vessel, the Turkish warship ordered it to retreat as it had encroached into Turkey’s continental shelf, the paper said.

At that point the vessel was located at the intersection of blocks 1 and 7 of Cyprus’ EEZ. Block 1 lies south and southwest of Paphos. The gunboat later began circling the vessel, which eventually headed back to shore after alerting Cypriot authorities. The research ship is currently surveying waters off the coast of Limassol.

Politis said the Turkish warship intercepted the ‘Odin Finder’ just outside the two blocks’ intersection. It was later joined by another Turkish vessel, and the two were patrolling the area until Saturday afternoon.

On the day of the incident, the National Guard General Staff convened a crisis response team to monitor the situation. The meeting was attended by the National Guard chief and the minister of defence, among others. It is reportedly the third time over the last few months that Turkish gunboats have accosted or harassed research vessels near or inside the EEZ.

The government here has neither confirmed nor denied the latest incident. However Politis said the administration has delivered diplomatic demarches to both the Italian and US governments.

Turkey has signed a ‘continental shelf delineation agreement’ with the breakaway regime in a purported effort to protect the rights of Turkish Cypriots to the island’s natural resources, while also serving to support Turkey’s argument against islands having any right to an EEZ.

Maps published in Turkey’s official gazette show that oil drilling permits issued to TPAO, Turkey’s national oil and gas company, stretch as far as the Greek island of Rhodes as well as blocks 1, 4, 5, 6 and 7 in Cyprus’ EEZ, south and south-west of the island.

Turkey demands that Cyprus cease hydrocarbon explorations pending reunification talks and has previously said it would take measures to protect its interests.

Meanwhile Turkey’s research vessel, the ‘RV Barbaros Hayreddin Paşa’, is reportedly set to carry out surveys in the Mediterranean for oil and gas field exploration in August or September.

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By Peter Stevenson

ON SUNDAY July 14 while most people on the island were at the beach or in the mountains relaxing, one man was taking a stand against cruelty to all living beings.

Kypros Constantinou, 30, began a hunger strike 18 days ago in an attempt to spread the word about both people and animals suffering in this world.

An unemployed postgraduate at the University of Cyprus, Constantinou became a vegetarian overnight, eight years ago.

“It wasn’t anything that I saw but it was my conscience,” he explained. “I didn’t have many pets growing up but eight years ago I adopted a dog and it clicked, how could I care for animals and still eat them?” he asked.

He made the move from vegetarian to vegan last year after reading-up on the ‘evils’ of the dairy industry as he put it.

“I would not classify this as a regular hunger strike like someone protesting when they lose their job but it’s about protesting what is happening in the meat industry and also showing solidarity for the children who don’t have enough to eat and the animals which are being mistreated,” he said.

Constantinou said he felt it was tragic that as a society we are over-breeding animals and over feeding them to satisfy our needs when there are people starving in Africa. Every evening he goes to the Phaneromeni area in Nicosia to press home his point in public.

“I might be asked what I might achieve by doing this. They tell me the starving children won’t get fed because I’m not eating but what I hope to do is help get the message out and also to shock people and make them understand what is happening in the world,” he added.

The 30-year-old explained that he hopes that once people heard about his protest that they might try to better inform themselves about what happens in the meat and dairy industries.
Meat-eating is a huge global industry, producing some 228 million tonnes of meat each year.

By 2050, according to the Food and Agriculture Organisation, the world will be eating twice as much meat as we eat now, primarily driven by the increased demand from a growing middle class in China and other developing nations.

The essential problem with meat is that it is a highly inefficient method of converting plant material into human food. Every kilo of meat requires between four and ten kilos of plant-based feed, and the oil-based chemicals used to grow it.

“Peoples’ constant need for meat is destroying the world and it’s very upsetting when you try to explain to someone what is going and all they tell you is that they can’t do anything about it,” he said.

Constantinou is taking a leaf out of Mahatma Gandhi’s book. The Indian peace guru used fasting and hunger strikes to get his point across.

“Ghandi said, be the change you want to see in the world, so myself and all of the others who are trying to get this message across to the people are trying to be that change,” he said.

Habit and routine are difficult to break but changing peoples’ attitudes is proving even more difficult, according to Constantinou.

“Cyprus is a small island and we have a small island culture which is difficult to change but thanks to networking sites like Facebook we can get our message to thousands of people for free,” he said.

So when will this hunger strike end? The 30-year-old has spoken to doctors who have told him to stop the strike. He said he feels fine but as soon as he starts feeling unwell he will stop.

“If I begin to feel unwell then I will start eating again but as long I feel fine, which I do, I will continue,” he concluded.

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By Elias Hazou

THE CHAIRMAN of the Cyprus Telecommunications Authority (CyTA) stuck to his guns yesterday, reiterating that the pension fund’s investments were sound and risk-averse.
Stathis Kittis, CyTA chairman and head of the pension fund management committee, was being quizzed by a panel that is looking into a 2011 land deal.

The land in question in Dromolaxia, next to Larnaca airport, was bought in 2007 from its Turkish Cypriot owner by the Greek Cypriot company Wadnic Trading Ltd for €1,273,770, whereas the land registry –in calculating the transfer fees – had placed the value at €2,970,000.

Wadnic Trading Ltd allegedly changed the terms of use, upgraded the coefficients, built on it and sold it on to the CyTA pension fund in 2011 at several times the price they bought it from the Turkish Cypriot original owner.

Allegations have since surfaced of millions given to unions, a political party, an MP and a CyTA official to grease the deal.

But Kittis yesterday dismissed the claims as deliberate misinformation. He suggested instead that the slurs against CyTA came partly from businessmen who had approached the organisation with alternative investment proposals and were turned down.

The false allegations, he said, were being motivated by “hidden agendas and petty-political ambitions, or even a wrangling between trade unionists, which appears to be evolving into a ruthless undeclared war.”

On the Dromolaxia land deal, Kittis said the pension fund decided to go for it after concluding it was an attractive investment yielding high returns.

The land would be used to build offices to be rented out to businesses wanting to set up shop in the vicinity of the airport. Based on a valuation of the real estate in the area, Kittis said, CyTA’s pension fund figured it could rent out office space at €20 per square meter, ensuring a return on investment of 7.5 per cent at the most and 6.5 at the least – a significantly higher yield than keeping the money in the bank at an interest rate of 4 per cent.

Moreover, the pension fund shielded its investment from risk by agreeing with the contractor to withhold some €1.7m in a blocked account until delivery of the project.

And in a bid to kill any notion of dodgy dealing, Kittis said CyTA was never presented with a ‘comparable alternative’.

Kittis explained that a different proposal was submitted to the pension fund on January 25, 2011 – the very day a businessman was telling the House watchdog committee that he had earlier approached CyTA with a more beneficial offer involving another plot.

But the businessman’s claims were false, in fact, Kittis said, this other offer was officially put before CyTA just after the hearings at the House committee that same day.

CyTA turned down the proposal by a company called ‘New Dimensions’, which involved a project consisting of 80 apartments located at a distance of three kilometers from Larnaca airport.

The reasons for the rejection was that CyTA did not want to manage so many apartments, and had set its sights on investing in real estate in close proximity to the airport. By contrast, the Dromolaxia plot was ideally situated just 700m from the entrance of the airport.

Kittis said also the Dromolaxia project was expected to be completed by the end of this year or early 2014. Up until June 28 of this year, the pension fund had paid out €14m, and another €5.2m is pending, minus the €1.7m held in a blocked account.

Kittis cited two recent valuations which placed the value of the completed project at €18.65m and €17.5m, respectively.

The CyTA boss reiterated that had the pension fund not diversified its portfolio and kept its money in the banks, it would have lost almost everything.

Had the fund’s management committee not invested its €250m profits in diverse projects, Kittis said, the cash would have been all but lost through the ‘haircut’ on deposits.
Citing an actuarial report (dated December 31, 2012) drafted for the fund, he said the total value of the fund’s assets stood at €745m, while the level of financing was at 116.5 per cent of actuarial liabilities.

The land deal probe continues.

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