THE Eurovision Song Contest is one of the programmes being looked at under cutbacks being discussed by state broadcaster CyBC whose budget has been slashed by €2 million.

However the hugely popular programme is unlikely to face the axe due to its high ratings in Cyprus. 

The CyBC board will be meeting next Tuesday to discuss how it will deal with the reduction in budget imposed by parliament. The broadcasting service had originally tabled a budget of €29 million but was rebuffed by parliament and given €27 million.

“At the meeting we will have to see which shows we will have to cancel and which organisations we might have to withdraw from,” Director-General of CyBC, Themis Themistocleous said. “One of those that we will examine is the Eurovision Song Contest of course, but due to its popularity and the fact that it brings with it income means it has the support of the board,” he said.

The Eurovision Song Contest, usually broadcast in May, draws income from sponsors and also from money generated by those voting by phone.

“People thoroughly enjoy the contest and it’s always number one in the ratings,” Themistocleous said. “We are always looking to reduce our costs because of the economic crisis and we try to minimise our costs when it comes to the contest by sending as few people as possible to the organising country,” he explained.

Other cost cutting measures include sharing the costs of recording the song with the singer and his or her record company. 

“We will look at each programme one by one and make a decision but for now no decision has been made to cut any programme,” Chairman Makis Symeou told the Cyprus Mail.

FOLLOWING the success of the neighbourhood watch scheme in Peyia, police and local communities are examining the feasibility of starting it in other areas of the Paphos district.

Paphos police spokesman Nicos Tsappis told the Cyprus Mail: “Kathikas is interested in setting up a neighbourhood watch scheme and we (the police) are discussing the matter with them.”

He said Kathikas doesn’t have a community policeman at present and no decision had been made to allocate one, but talks on the matter were ongoing.

The Peyia neighbourhood watch scheme was formally launched in September 2010, with close to 300 households participating. This number has now grown to 580.

Peyia community policeman, Spyros Pentaras, who helped to set up the scheme said: “I believe that the neighbourhood watch schemes could benefit many communities in Paphos and Cyprus as well. In conjunction with police efforts, such as increased patrols, crime rates could be reduced.”

According to Paphos police, most house and shop break-ins happen during the evening, a time when neighbourhood watch can be particularly useful.

According to the police spokesman, he doesn’t believe the number of burglaries and thefts from shops and homes in Paphos will be significantly more than those recorded last year.

“I don’t have any figures yet, but I don’t think that these types of crimes have risen dramatically in Paphos. I think there will be more, but not by a large number.”

He added: “Having said that, citizens must be diligent and take obvious precautionary measures themselves, such as ensuring all doors and windows are locked, a light is left on when the homeowner is out and if possible a security system to be fitted.”

Keith Allen the chairman of the Peyia NHW (Neighbourhood Watch) management team said: “From a burglary point of view in Peyia, it is much quieter than last year when we helped the police by undertaking local evening road patrols with them, trying to spot anything suspicious.”

He added: “We were recording two or three break-ins per week prior to this and I’m sure the action was effective as instances have reduced.”

Representatives from the Peyia neighbourhood watch gave a short presentation to residents of Anarita 18 months ago and they have subsequently started a similar scheme to try to reduce the numbers of burglaries taking place in the village.

OVER THE last two years, there has been an increase in prostitution rings from Greece, Bulgaria and Romania, head of the police anti-trafficking unit, Rita Superman said yesterday.

Also more Cypriot women are also being driven into prostitution due to the financial crisis, she said. Superman was speaking at a conference organised by the Mediterranean Institute of Gender Studies, the Cyprus Women Lobby and the European Parliament Office in Cyprus at Europe House in Nicosia, aimed at kick-starting a public dialogue on the issue of’ ‘Women in prostitution in Cyprus’.

Sex work is not illegal in Cyprus. What is illegal is trafficking, pimping, maintaining a brothel, violence against prostitutes and soliciting work.

In 2011 there were 18 cases involving trafficking and/or taking sexual advantage of women and so far this year the police have investigated 33 prostitution cases, five of which involved trafficking, Superman said. 

And Cypriot women have started listing their ads along with foreigners, showing that the debt crisis and the need to get cash fast “is driving more women towards prostitution,” she said. But Superman said the figures are the tip of the iceberg.

“We think that the number of women working alone is small, but even so they are not allowed to get into the wider [pimp-run] circuit,” Superman said. 

But why won’t women talk to the police or hand over their pimps or traffickers? 

Because they don’t trust the police, they feel safe with a protector, they don’t know any better, or they are afraid, Superman said.

“During police raids, the pimp can’t be seen and not even the leasehold is on his name,” she said.  “We can never be sure whether the case we’re dealing with has to do with a brothel or trafficking, and without women’s collaboration we cannot find out,” she said.

And “the law does not go after [customers] nor do the police get them to testify in court,” Superman said. “The customer is invisible on all occasions,” is thought of as a “gentleman… satisfying secret desires” while the women are shunned, she said.

During the eighties and nineties, the state kept granting visas to young women from poor countries arriving as ‘artistes’ “even though it was known they were destined for prostitution, Ombudswoman Eliza Savvidou told the conference.

When a young Russian woman, Oxana Rantseva, who was trafficked from Russia to Cyprus as a cabaret artiste, fell to her death from a balcony while trying to escape in 2001, her father took Cyprus and Russia to court.

In a landmark case concluded in 2010, the European Court of Human Rights condemned Cyprus for failing to take measures to protect potential victims of trafficking or investigate instances. 

Experts have said that “Cyprus is not taking adequate measures to discourage the demand for services by victims of trafficking,” Savvidou said adding however that there have been some positive legal changes.

HOMEOWNERS at a stricken development in Armou in Paphos were dealt another blow yesterday as they were informed that electricity supplies to their homes were due to be switched off.

The news comes a day after official notices were placed on the substandard homes that they were unfit to live in.

Louise Zambartas, lawyer for one of the homeowners, Simon Phillips, told the Cyprus Mail that the Paphos District office had confirmed the EAC would be cutting off the power supply to all of the homes, making it impossible for the families to remain there.

Resident Simon Phillips told the Cyprus Mail: “We have nowhere else to go, my two children are terrified that we won’t have a roof over our heads and even if we wanted to stay in our home, we will no longer be able to do that as we won’t have any electricity.”

Phillips and his wife Jen are permanent residents and bought their house outright. They don’t have the money to move. With Christmas looming, the family now faces the prospect of homelessness.

“We don’t pay a mortgage or rent and so these expenses are not factored into our earnings,” Phillips said. “It would be impossible for us to pay for somewhere to live but somehow, we have to ensure we have a home for our two young children. Nobody should have to go through what we all have to suffer. I keep hoping I will wake up and it will have all been a bad dream.”

Zambartas said: “The district office haven’t said if they will help to re-home the Phillips family or not. As instructed by them, we have written a letter to the man who signed the notices requesting assistance for the Phillips family. This is a dreadful situation for our client and his family.”

The homeowners were left in a state of shock and confusion on Tuesday after a representative of the Paphos district office placed notices on all of the houses informing them that they were unfit to live in. The notice states the decree shall remain in force until such time as repair works deemed necessary by the District Officer are carried out.

All of the houses, which were only built in 2004, have serious structural problems, from slanting floors, to the partial collapse of stairs, walls, swimming pools and patio areas. Outside drains are exposed in one garden and retaining walls have split. 

CYPRUS’ financial sector is among the most leveraged in the whole of the EU, a European Commission’s report said yesterday.

The European Commission kicked off yesterday with the second annual cycle of the Macroeconomic Imbalance Procedure (MIP) 2013 with the publication of the Alert Mechanism Report (AMR).

The report calls for in-depth reviews of developments related to the accumulation and unwinding of macroeconomic imbalances in 14 EU Member States: Belgium, Bulgaria, Denmark, Spain, France, Italy, Cyprus, Hungary, Malta, the Netherlands, Slovenia, Finland, Sweden and the United Kingdom.

As regards Cyprus, it noted that in May 2012, the Commission concluded the island was experiencing very serious imbalances, in particular as regards developments related to the external position, public finances and the financial sector.

“In the updated scoreboard, several indicators are above their indicative thresholds, namely the current account deficit, net international investment position, export market shares, private sector credit flow, private sector debt and general government debt,” the report says.

It adds that on the external side, the current account balance indicator remains above the negative threshold despite a recent strong decline in imports due to a compression of domestic demand.

“Looking forward, the losses in export market shares are in particular explained by the goods balance which has maintained its downward trend, while Cyprus continues to record surpluses in services trade”, it noted.

According to the report, “overall, the current account deficit is forecasted to decrease in the years to come. Losses in price and cost competitiveness have eased recently, the public sector wage freezes contributed to wage moderation in the private sector and export-oriented sectors”.

It also noted that “structural reforms to underpin sustained improvements in competitiveness have not materialised”.

“In parallel, the negative net international investment position is fast-deteriorating which raises concerns about the sustainability of external position of the country. The net international investment position has deteriorated on the back of current account deficits, but also due to valuation losses on banks` assets abroad,” it pointed out.

On the internal side, the report notes that “the highly leveraged private sector has continued to unwind its large outstanding debt”. 

“This is also indicated by the significant decrease of the private sector creditor flow indicator compared to the year before. The fact that the credit indicator remains above the threshold is primarily associated with the loan rescheduling process taking place, as the rescheduled loans are treated as new flows, rather than provision of new credit,” it said.

“Also Cyprus' financial sector is among the most leveraged in the whole EU,” it added.

As regards households, the report noted that “debt levels are matched by substantial assets, but these have been hit by a continuous decline in real and nominal house prices”.

“The public debt is also above the Treaty-based threshold and is expected to increase sharply”, it underlined. 

Referring to unemployment, the report said it has risen sharply recently, and was expected to increase further, indicating structural challenges in addition to cyclical factors.

“Any further fallout from the exposure of the Cyprus banking sector to Greece and further deterioration of economic activity will aggravate the risks and make structural adjustment more difficult”, it is noted.

The report says that “the situation is further exacerbated by negative feedback loops between developments in the housing and financial sectors and government finances”.

TELECOMMUNICATIONS giant CyTA has found itself stuck between a rock and a hard place in weighing up whether to give the government another €100m loan or see the state unable to pay public servants’ 13th salaries. 

CyTA chairman Stathis Kittis yesterday confirmed the semi-government telecoms organisation had to decide between feeding a cash-strapped state with another sizeable loan or watching as it fails to pay public servants’ 13th salaries.  

Speaking to the state broadcaster CyBC, Kittis said the government request for a second €100m loan was submitted some days ago, noting that “CyTA is examining whether we have the resources available, whether we can lend to the government”.

He added: “No decision has been reached yet.”

According to yesterday’s Phileleftheros, the CyTA board held a lengthy meeting on Tuesday to discuss the loan request, concluding that no decision will be taken until Finance Minister Vassos Shiarly meets the board to clarify the terms of a potential loan. 

The paper said the profitable organisation had a number of concerns, including its low liquidity and the fact that the last €100m lent to the state has yet to be repaid. 

A further headache for the CyTA board is the clear opposition to the loan voiced by CyTA unions, who threatened dynamic measures and legal action if more money is taken from the authority’s pension fund. 

Asked about how much influence the unions had on a final decision, Kittis said the board always takes workers’ positions seriously.

Probed further on the sticky situation the telecom authority is in, the CyTA chairman admitted CyTA had to decide between taking money from the CyTA pension fund to loan the government or have the latter fail to pay the 13th salaries of all workers in the wider public sector. 

“This is the dilemma posed,” he said, adding, “We need to weigh up all the factors and find the right balance to serve all sides, and the needs of the state, the country, our people, the economy.”  

According to CyBC sources, the government has also requested a sizeable loan from the port authority in the millions of euros.  

A FRESH war of words broke out yesterday between the government and former Central Bank (CB) governor Athanasios Orphanides whom the administration and ruling AKEL hold responsible for the problems plaguing the banks and by extension, the economy.

Responding to charges made by AKEL MPs that he had received a loan from the CB on preferential terms and that he had concentrated all the authority in his own hands, Orphanides, who currently teaches at the prestigious US university MIT, said he was not surprised by the mud-slinging.

“Besides, the communication tactic based on Lenin’s saying that a lie told often enough becomes the truth is well known,” Orphanides said in a written statement.

The former governor categorically denied any wrongdoing in receiving a loan from the CB and urged parliament to immediately carry out an investigation into the allegations.

Orphanides said he had taken out a loan from the CB that was in line with his employment contract.

Responding to the charge that he had abused his position by concentrating all the authority in his hands, Orphanides said he had fully respected the constitution and laws of the Republic.

Orphanides said the problem “is unfortunately something else.”

He said it was his refusal to agree to relax the rules in a bid to serve the interests of Greek businessman Andreas Vgenopoulos.

And this despite pressure from AKEL, former finance minister Charilaos Stavrakis and President Demetris Christofias himself.

After his refusal, Orphanides said, three government-appointed members of the CB board tried to change the institutional framework in a bid to wrest the decision-making power from him.

“I note that no explanation has been given yet for the support afforded to the specific businessman by the AKEL government,” Orphanides said.

The former top banker said he understood why there was an effort to disorient public opinion “but for the good of the country the undermining must stop.”

In response, the government said Orphanides resorted to lies and slander in “a desperate effort to shake off his huge responsibilities.”

“No matter how many lies Mr. Orphanides uses, he will not find an alibi for what he did or didn’t do with the supervision he ought to have exercised on the banking system,” government spokesman Stefanos Stefanou said.

He blamed Orphanides for allowing the banks to acquire Greek government bonds whose write-down later on caused huge losses and forced the island's two biggest banks to seek state assistance.

Stefanou also blamed Orphanides for allowing Greek lender Marfin Egnatia to be turned to a branch from a Popular Bank subsidiary.

This, Stefanou said, left the Cypriot economy saddled with around €4.5 billion in losses that Cypriot taxpayers have to pay.

“Mr. Orphanides has no answers to these and other inevitable questions and that is why he uses lies,” Stefanou said. “But lies have short legs and in no way can they cover the improper manner he had exercised his duties in.”

It has been reported in the past that it would not have made a difference whether Egnatia was a branch or a subsidiary – the country where the parent company is based would still have to foot the bill.

Orphanides has said he had warned the banks of the risks involved in buying Greek bonds.

He says the banks’ problems started when EU leaders, including Christofias, decided on an over 75 per cent haircut on Greek debt.

Banks’ losses widen in 2012

By George Psyllides 

THE Popular Bank, Cyprus’ second-biggest lender, which was nationalised earlier this year, said yesterday its nine-month net loss widened to €1.09 billion on higher provisions as the Bank of Cyprus (BoC) also posted a loss of €211 million for the same reason.

Popular said that including a goodwill and other intangible asset impairments of €580 million, losses attributable to shareholders totalled €1.67 billion. 

The bank posted a net loss of €292 million in the same nine-month period of 2011.  

Rescued by the state in June after its regulatory capital took a heavy hit from its heavy exposure to Greek sovereign debt, Popular said it had increased its provisions by 354 per cent in the first nine months, or €1.3 billion, compared with €283 million in the same period last year.

“Provisions for the Cyprus portfolio amounted to € 306 million whereas for the Greek portfolio they reached € 967 million,” the lender said. “The resulting coverage ratio of non-performing loans stood at a satisfactory level of 45 per cent for the Group.” 

The state now owns an estimated 84 percent of Popular. 

BoC, the island’s biggest lender, which is also heavily exposed to Greek sovereign debt and the neighbouring country’s economy, posted a €211 million loss for the first nine months, on account of provisions for impairment of loans amounting €822 million -- a 179 per cent rise compared with the same period of 2011.

The bank posted a net loss of €793 million in the nine month period of 2011 on its Greek bond exposure.

BoC is also in the process of receiving state assistance.

“Based on the Group’s capital position of 30 September 2012, the capital deficit as defined by the European Banking Authority is estimated at €722 million,” BoC said.

The banking crisis was instrumental in Cyprus seeking a bailout from the IMF and its EU partners, collectively known as the troika, in June.

BoC said it will submit a recapitalisation and restructuring plan to be approved by the Cypriot Authorities and the troika, which will determine the way and timing of repayment of the state aid the group will receive.

Before provisions, BoC said it made a €517 million profit, down 15 per cent compared with the same period last year.

The ongoing economic crisis in the main markets the group operates in resulted in a significant deterioration of its loan portfolio, the bank said.

The non-performing loans ratio reached 17.1 per cent at the end of September, compared with 14.2 per cent at the end of June.

At the end of September total provisions for impaired loans and the overall coverage ratio of non-performing loans with tangible collateral at forced sale values and provisions amounted to €2.2 billion and 103 per cent, respectively. 

Cyprus and international lenders last week struck a preliminary agreement on the terms of a bailout programme but several more steps are necessary before any cash is released.

The terms of the deal can only be finalised once the interim results of the due-diligence into the banks’ loan portfolios are known and after agreement by the Eurogroup. 

The due diligence results are expected in early December.

Beyond the austerity measures designed to reign in government spending, the bailout agreement includes terms regarding the banking system.

The highlight was the agreement to raise Core Tier 1 capital from 8 per cent to 9 per cent by the end of 2013, instead of 10 per cent as the troika initially proposed.

The two sides also agreed that supervision of co-operative banks would be shifted to the central co-operative bank from the trade and industry ministry.

The Central Bank will also have a role in the supervision.

Former Central Bank Governor Athanasios Orphanides

AS IF AKEL’S and the government’s, merciless war on the struggling banks had not caused enough damage to the most important sector of the economy, the political parties also decided to participate in this mindless campaign. The institutions committee of the legislature started an investigation into the banking crisis on Tuesday, with the supposed aim of establishing the culprits and sending them court.

An indication of what to expect was given at Tuesday’s open meeting to which 15 guests from the banks, finance ministry and other agencies attended. They were subsequently told that they would be sent questionnaires to respond to in writing and that their answers would be discussed at a closed meeting. Meanwhile deputies used this opportunity to engage in the familiar rhetoric about the bonuses for executives, loans for directors, links between banks and political parties, media groups etc. 

It was like a mock public tribunal used by deputies to show off their alleged commitment to bringing the guilty parties to justice. For AKEL deputies it was yet another opportunity to have a go at the former Governor of the Central Bank, bringing up the nonsensical issue about his laptop hard-drive and misleadingly claiming that a low-interest loan he had received from the Central Bank (a term of his employment contract) was a corrupt practice.

The Attorney-General Petros Clerides turned out to be the only voice of sanity as he pointed out the folly of the committee’s demand for the names of every person and company that received loans at lower interest rates from the banks. “Do you really expect the Central Bank or the finance ministry to give you a list that includes all those who got loans at lower interest rates from the CB, Bank of Cyprus, Laiki Bank, Hellenic Bank or their village co-ops,” asked an exasperated Clerides.

The committee meeting may have attracted plenty of media attention, but the general tone suggested that it is more a publicity exercise than a serious investigation. Then again there is no need for an investigation into the mismanagement of the banks. An international firm was brought in to investigate the whole matter while the Capital Markets Commission is also carrying out a probe; the investigation into the banks’ assets by Pimco, another international firm, is also currently in progress. These organisations have the know-how to pin-point what went wrong and who was to blame, while deputies do not have such an expertise.

Under the circumstances, it is difficult to believe that the House investigation will achieve anything other than to give TV time to deputies and help the government’s ongoing campaign to abrogate all responsibility for the current economic mess.

THE GOVERNMENT will introduce staggered public payroll cuts of up to 12.5 per cent from next month ahead of signing a loan agreement with international lenders, it transpired yesterday. 

Government spokesman Stefanos Stefanou yesterday confirmed reports that the government would introduce staggered payroll and pension cuts ranging from 6.5 per cent to 12.5 per cent as of December 1. The cuts would also apply to 13th salaries and 13th pensions.  

He rejected reports that the government was scrambling to save money until a bailout from the troika of international lenders was secured, arguing that everybody knew the cuts would start before the end of the year. 

Right-wing union SEK yesterday “categorically rejected” Stefanou’s claims. The union called on the government spokesman to “restore the truth” but stopped short of calling him a liar. 

Local daily Phileleftheros yesterday reported that staggered cuts in salaries of over €1,000 and pensions would start from December 1 in a government effort to save €20m from the 12th and 13th salaries. 

According to the paper, the December public payroll exceeds €320m, not including the one-off bonuses that have to be paid out to those opting for early retirement ahead of any memorandum signed with the troika to secure a bailout.  

Speaking after yesterday’s cabinet meeting, Stefanou confirmed the “contribution” from public servants would start in December and also apply to the 13th salaries. 

He rejected reports that the government decided to implement cuts early in a desperate search for cash until a memorandum could be signed. 

Stefanou insisted that during discussions with political parties and social partners on the measures to be taken for the purposes of securing a bailout, it was “clear” that the staggered pay cuts would start in December. 

Asked if powerful civil servants union PASYDY was aware of the cuts, he repeated that the parties and social partners, including PASYDY were informed.  

SEK wasted no time responding with a released statement rubbishing Stefanou’s claims: “During the official briefing of the unions on the terms of the loan agreement at the finance ministry on Friday, November 23, 2012, before the labour minister and the government spokesman, it was clarified that no measure would be taken until January 1, 2013.” 

SEK “categorically denies the government spokesman’s statement and invites him to restore the truth,” said the union. 

Meanwhile, the heads of the three big unions, SEK, PEO and PASYDY, met yesterday to discuss their response to the measures agreed between the troika and government regarding public sector workers. 

The measures include staggered public payroll cuts of up to 12.5 per cent, a freeze in wage indexation until 2016, followed by a 50 per cent cut after it is restored, and taxing part of the lump sum civil servants receive upon retirement. 

SEK’s Nicos Moyseos said the unions would meet again on Friday afternoon to confirm measures to be taken. He ruled out “dynamic strikes”, noting that the unions wished to avoid labour unrest during this difficult economic period. 

According to state broadcaster CyBC, the unions are expected to agree to hold a work stoppage and rallies against the proposed memorandum. 

A handful of DEOK union members held a protest outside the finance ministry yesterday afternoon. DEOK head Diomedes Diomedous said certain provisions of the proposed bailout agreement were “unacceptable”.

Unions bosses meeting on Wednesday (Christos Theodorides)

THE Popular Bank, Cyprus’ second-biggest lender, which was nationalised earlier this year, said yesterday its nine-month net loss widened to €1.09 billion on higher provisions as the Bank of Cyprus (BoC) also posted a loss of €211 million for the same reason.

Popular said that including a goodwill and other intangible asset impairments of €580 million, losses attributable to shareholders totalled €1.67 billion. 

The bank posted a net loss of €292 million in the same nine-month period of 2011.  

Rescued by the state in June after its regulatory capital took a heavy hit from its heavy exposure to Greek sovereign debt, Popular said it had increased its provisions by 354 per cent in the first nine months, or €1.3 billion, compared with €283 million in the same period last year.

“Provisions for the Cyprus portfolio amounted to € 306 million whereas for the Greek portfolio they reached € 967 million,” the lender said. “The resulting coverage ratio of non-performing loans stood at a satisfactory level of 45 per cent for the Group.” 

The state now owns an estimated 84 percent of Popular. 

BoC, the island’s biggest lender, which is also heavily exposed to Greek sovereign debt and the neighbouring country’s economy, posted a €211 million loss for the first nine months, on account of provisions for impairment of loans amounting €822 million -- a 179 per cent rise compared with the same period of 2011.

The bank posted a net loss of €793 million in the nine month period of 2011 on its Greek bond exposure.

BoC is also in the process of receiving state assistance.

“Based on the Group’s capital position as of 30 September 2012, the capital deficit as defined by the European Banking Authority is estimated at €722 million,” BoC said.

The banking crisis was instrumental in Cyprus seeking a bailout from the IMF and its EU partners, collectively known as the troika, in June.

BoC said it will submit a recapitalisation and restructuring plan to be approved by the Cypriot Authorities and the troika, which will determine the way and timing of repayment of the state aid the group will receive.

Before provisions, BoC said it made a €517 million profit, down 15 per cent compared with the same period last year.

The ongoing economic crisis in the main markets the group operates in resulted in a significant deterioration of its loan portfolio, the bank said.

The non-performing loans ratio reached 17.1 per cent at the end of September, compared with 14.2 per cent at the end of June.

At the end of September total provisions for impaired loans and the overall coverage ratio of non-performing loans with tangible collateral at forced sale values and provisions amounted to €2.2 billion and 103 per cent, respectively. 

Cyprus and international lenders last week struck a preliminary agreement on the terms of a bailout programme but several more steps are necessary before any cash is released.

The terms of the deal can only be finalised once the interim results of the due-diligence into the banks’ loan portfolios are known and after agreement by the Eurogroup. 

The due diligence results are expected in early December.

Beyond the austerity measures designed to reign in government spending, the bailout agreement includes terms regarding the banking system.

The highlight was the agreement to raise Core Tier 1 capital from 8 per cent to 9 per cent by the end of 2013, instead of 10 per cent as the troika initially proposed.

The two sides also agreed that supervision of co-operative banks would be shifted to the central co-operative bank from the trade and industry ministry.

The Central Bank will also have a role in the supervision.

The Bank of Cyprus posted a loss of €211 million

DRIVERS of the Limassol bus company EMEL have called an indefinite strike starting today over their employer’s failure to pay their wages in full.

The company, which is in the red, yesterday proposed that it pay 50 per cent of salaries to people employed on a weekly basis, and 60 per cent to those employed on a monthly basis.

Unions rejected the offer, and drivers will be going on an indefinite strike beginning today.

In mid-September, Limassol bus drivers called off a 24-hour strike at the last minute when EMEL agreed to pay up salaries owed to 110 drivers.

Also in September, parliament passed a supplementary budget of €21 million for public transport after government cash for this year ran out.

The 2012 budget for public transport was reduced to €45 million from €68 million, with bus companies warning at the time that this would only cover fuel costs.

HUNDREDS of people in Cyprus have AIDS and dozens are diagnosed with the HIV virus every year, the health ministry said yesterday. 

But Cyprus is subscribing to the United Nations’ goal of zero new infections or AIDS-related deaths by 2015, Health Minister Androulla Agrotou said yesterday at a news conference for World AIDS Day commemorated tomorrow. 

From 1986 until 2011, a total of 735 people have been diagnosed with HIV in Cyprus and 118 have died, according to the health ministry’s epidemiological study. 

Up until October, this year 49 people were diagnosed with HIV in Cyprus, 54 people were diagnosed last year and 41 were diagnosed in 2010. 

About five people died from AIDS in 2011 and five others died this year, health ministry officials said. 

Among the Cypriots, only one woman is diagnosed for every seven men and 334 men have been diagnosed versus 50 women. 

The gender difference accounts for the fact that 68 per cent or 501 people diagnosed in Cyprus have been men, while only 234 women or 32 per cent were diagnosed.

The infection rate is roughly split between Cypriots and nationals of other countries (349 non-native Cypriots have been infected as of 1986), but the infections have been rising. 

However, 256 of those do not live in Cyprus and are foreign nationals who were diagnosed on the island, while over the years some 23 Cypriots living abroad have been diagnosed with HIV.

In Cyprus, almost 68 per cent of all diagnoses have been people from the ages of 20 to 39. Most get HIV through sex, the health ministry said.

Therefore a new programme in high schools across the island has been ongoing this year, hope to educate students in the first year of Lyceum – most 15 years old – about learning to say ‘no’, or ‘only with a condom’. 

The programme aims to get people talking and thinking about HIV/AIDS and how it can be transmitted, as well as getting kids to develop a “healthy attitude” towards sex, health educator Pampitsa Gavriel said.

“I’d be nice if you were in the classroom to see what discussions the children have,” she said referring to one of the questions students get to debate: does girls’ dressing sexy mean they want to have sex? 

“Girls have a different opinion, boys have another and through discussion they reach a compromise in their views,” Gavriel said. 

According to the World Health Organisation (WHO), about 25 million people have so far died of AIDS-related health issues. About 34 million people are living with HIV, with the most affected region, Sub-Saharan Africa, having one in twenty adults with HIV.

World AIDS Day is celebrated every year on December 1 each year to raise awareness and remember those who have died, as well as celebrate the leaps in medical science that have made treating the infection much more manageable. 

COLONIAL officials in Cyprus considered producing adventure comic books and running an essay competition in a propaganda bid to stop young Greek Cypriots rebelling against British rule, previously secret government files have revealed.

Schoolchildren threw petrol bombs, caused disturbances and regularly went on strike from school during the mid-1950s as they sided with the nationalist EOKA movement for "Enosis" - union with Greece - the Foreign Office files revealed.

In 1956, Colonial Secretary Alan Lennox-Boyd damned a record of 18 months of disturbance from secondary school pupils.

In a previously secret document, released by the National Archives, he said: "The picture presented by the record is one of indiscipline and defiance of authority on a scale which is not readily comprehensible to those accustomed to the decorum of educational establishments in the United Kingdom."

The violence prompted the commissioner of Cyprus to ask if it was possible to produce adventure comics to try to sway opinion.

The secret files contained an extract from one of the unnamed commissioner's letters, which read: "Schoolchildren have been used as a weapon in the nationalist campaign and it is therefore at them that government propaganda should particularly be aimed.

"Here again, crude propaganda against Greece is useless. The aim should be again to shift the focus off Greece - not necessarily on to Britain but to a broader, more international, outlook.

"This might be done by commissioning a firm in England, if necessary, to print weekly comics with Greek and English captions using adventure stories and the exploits of explorers, etc. as material."

But the director of information services, LG Durrell, said the idea would not appeal commercially to publishers and that the real problem was that Cyprus is "dreadfully boring".

He wrote: "Nicosia (the capital) is a dreadfully boring town to live in with its glaring lack of amenities."

Durrell said the lack of a good library, a public swimming pool or a polytechnic college where young people could take courses left children bored and so driven to disturbance.

He went on: "Apart from stadium football matches there seemed to be nothing to do and nothing to look forward to.

"To sum up: as a short-term propaganda device such an idea might prove effective. But it will not touch the heart of the unrest which is rooted in boredom and for which Enosis provides something exciting to think about."

John Reddaway, another colonial official, proposed an essay competition to counter EOKA's challenge for schoolchildren on "Why I Want Enosis".

In a letter to a Mr Papadopoulos, he wrote: "The enemy thought it was worthwhile to run an essay competition for schoolchildren on 'Why I want Enosis'. Would it be too crude if we were to take a leaf out of their book and offer a really handsome prize for essays on 'Why I don't want Enosis', suitable precautions being taken to preserve the anonymity of the authors?"

Mr Papadapoulous said the idea was "frivolous" but recommended an alternative essay - "The Advantages of Self-Government".

Mr Papadapoulous wrote: "I do not think we can get away with this one without being made to look somewhat frivolous. The noise that is bound to be created over the idea on all sides will be considerable and I can see us being attacked for employing tactics unbecoming a responsible, seriously-minded government."

Various other pamphlets and propaganda releases in the documents showed how British officials tried to influence parents to give up their children if they were petrol bombing.

Detective Sergeant G Whitcomb wrote to the Assistant Commissioner of Police, RG Lock, saying: "Past experience has shown that when caught and taken home, the parents cannot be convinced that it is THEIR son, it is always someone else's son but never their own."

He recommended an appeal to be broadcast in cinemas.

It said: "AN APPEAL TO PARENTS.

"Throwing, carrying or making petrol bombs is a serious offence for which the death penalty can be imposed. It is known that the boys of Varosha have been actively engaged in this type of senseless activity.

"As the senior police official responsible for the safety of everyone in this area, I make this special appeal to all parents to take a greater interest in the movements of their sons to ensure that he is not involved in any way.

"By doing so you will be doing a great public service by helping to restore order and a quicker return to happier times." Cyprus attained independence from the UK in 1960.

A young man is beaten by a British soldier during the EOKA struggle

A RESTRUCTURING firm auditing Cyprus’ two major banks yesterday set the record straight on a rumour spread by a deputy for main opposition party DISY, which was picked up by the press.

The Central Bank in August hired the professional services and restructuring firm Alvarez & Marsal (A&M) to look into the Bank of Cyprus and the Popular Bank, which have asked for state aid. 

“Recently, it has been mistakenly reported in news outlets and other means that one of our employees, Spyros Martsekis, based outside of Cyprus, has participated [in the investigation],” A&M said. 

The media were reporting on an allegation made by DISY MP Kyriacos Hadjiyiannis.

Hadjiyiannis was among the lawmakers in parliament this week making allegations and demanding to be given names of people who may have received preferential treatment in securing loans.

During the intense meeting of the institutions committee on Tuesday, Hadjiyiannis asked whether if a rumour was true that a member of the team auditing the banks’ loan portfolio had worked as an advisor in various bank administrations.

“Prior to joining A&M, Mr Martsekis was affiliated with KPMG where he was part of its corporate finance practice. The allegation that Mr Martsekis participated in matters related to the Cypriot banking system while employed by A&M is in error,” the announcement said.

Hadjiyiannis refused to comment yesterday.

The investigation “is being undertaken by a discreet A&M team sworn to confidentiality, and without disclosure to any other persons outside this group other than the Central Bank. Mr. Martsekis is not, nor has he ever been, a part of this professional service group,” A&M said. 

Martsekis currently consults companies in the Balkans and does not offer services to financial institutions, regulators and/or EU member states, A&M said.

In addition to A&M, investing company Pimco is doing an asset quality review of Cypriot banks and co-operative banks. 

The Attorney-general Petros Clerides said yesterday that once investigations were concluded, he would decide whether there were any grounds to prosecute bank executives, board members and politicians receiving preferential treatment. 

If sound suspicions arise, “then yes, the police will be instructed to proceed with statements with the prospect to prosecute those involved in possible crimes,” Clerides said. 

HELLENIC Bank, the island’s third-biggest lender has bucked the trend, posting a nine-month net profit of €219,000 despite a 27 per cent rise in provisions for non-performing loans.

Hellenic said it recorded a 49 per cent rise in net revenues, to around €248 million while managing to cut expenses by 7 per cent – €119 million.

The lender, the least exposed to Greece from the Cypriot banks, said provisions for impairment of loans rose 27 per cent to €128.6 million.

Excluding the cost of impairment of the Greek government bonds, the profit of the group before provisions amounts to €136.6 million, recording an increase of 46 per cent compared to the corresponding period last year. 

But Hellenic said provisions for non-performing loans were lower for Greece, helping the bank cut its loss by around €6 million.

“Despite the ongoing financial crisis and its negative impact on the real economy and consequently on the quality of the loan portfolio of the branch network in Greece, the loss before taxation was €63.2 million compared to a loss of €69.6 million for September 2011,” the lender said. “The decrease of the loss is mainly due to a decrease in provisions for impairment of loans and advances.”

On Wednesday, the Popular Bank, Cyprus’ second-biggest, posted a net loss of €1.09 billion on higher provisions as the Bank of Cyprus (BoC) also posted a loss of €211 million for the same reason.

Both banks are heavily exposed to Greece and have sought state assistance.

Popular was nationalised earlier this year after seeking €1.8 billion from the state to replenish its battered capital.

BoC is also in the process of receiving state assistance.

“Based on the Group’s capital position as of 30 September 2012, the capital deficit as defined by the European Banking Authority is estimated at €722 million,” BoC said.

CYPRUS could receive the first tranche of a bailout by the end of January, Finance Minister Vassos Shiarly said yesterday, provided that an agreement is struck with eurozone members by mid-December.

It could be an uphill struggle for Cyprus however, as some countries may raise demands.

After agreement at the Eurogroup, the deal would have to be approved by individual eurozone member-states.

“The procedure at Eurogroup level is not easy and it will be even more difficult in some parliaments of eurozone members which have certain impressions about Cyprus that we need to dispel,” Shiarly told the House Finance Committee. “There are countries, which will have demands.”

Cyprus and international lenders last week struck a preliminary agreement on the terms of a bailout programme but can only be finalised once the interim results of the due-diligence into the banks’ loan portfolios are known. 

The due diligence results are expected in early December.

Shiarly avoided speculating on the figure that would be needed for the banks.

"Many figures have been speculated, from €5 billion to €15 billion. Let's wait for the assessment, and even then, that could change," he said, citing the example of Spain, where recapitalisation assessments have moved significantly lower.

The minister warned MPs that the coming weeks would be hard, and appealed for everyone’s cooperation.

“We all have to work together as a group for the good of the country,” he said.

To make it easier, Shiarly told MPs, some bills would need to be approved before the Eurogroup.

The minister said he expected a first discussion on Cyprus to be held on December 3 with another one scheduled around 10 days later.

The entire process, including discussion at national parliaments, is expected to take around six weeks, MPs heard.

The minister said he expected the first tranche of the assistance to be released towards the end of January but did not rule out it being later than that.

The four-year programme under negotiation with the 'troika' of international lenders envisages heavy spending cuts and targets a primary budget surplus - the balance before deducting debt financing costs - of 4.0 per cent of gross domestic product (GDP) by 2016.

A finance ministry document submitted to parliament calls for a 6.5 to 12.5 per cent cut in public sector salaries, a two-year increase in the retirement age for the public sector, an incremental reduction in the public sector workforce by at least 5,000 by 2016 and a suspension of wage indexation.

Shiarly said authorities were discussing an interest rate of 2.5 per cent with lenders, which he described as "very good" under the circumstances.

The government is now heavily reliant on short-term borrowing. It paid 5.0 per cent in a private placement for €240 million in 30-day bills last month, and the equivalent for 13-week treasury bills worth €151.6 million maturing in January.

Shiarly also informed MPs that the island’s gas reserves could generate income (as collateral) no earlier than late 2013.

“At this stage, there is no possibility of drawing funds from the exploitation of hydrocarbon reserves,” Shiarly said.

“For the time being, this is purely theoretical, and will only become feasible once the reserves are proved following the completion of appraisal drilling,” he added.

This was the considered opinion of technocrats and experts whom the government consulted, he said.

Asked about the reported dispute with the troika on the management of natural gas revenues, the finance minister said the disagreement had more to do with “semantics than with issues of substance.”

He said the troika has agreed to the government’s proposal that part of the revenues would be diverted to investing in infrastructures, such as an LNG terminal.

Central Bank Governor Panicos Demetriades suggested Cyprus got the best deal under the circumstances.

“It is my conviction that faithful implementation of this agreement constitutes a strong base for the gradual reversal of the negative developments in the Cypriot economy in recent years,” Demetriades told MPs. “Our primary objective is to fully restore the credibility of the financial sector, thus strengthening stability, which will set the foundations for the recovery of the real economy.”

Shiarly yesterday presented the state budget, which does not incorporate all the measures expected to be put in place as part of the bailout.

Finance Committee chairman, DIKO MP, Nicolas Papadopoulos, said the final text could be changed but the aim was to vote on it by December 20.

During a press briefing in Washington later yesterday, IMF spokesman Gerry Rice said discussions with Cypriot authorities are continuing, adding that EU partners are seeking a solution ensuring the sustainability of the island’s debt.

Asked when a bailout deal could be expected, Rice said he did not have any date in mind.

Finance Minister Vassos Shiarly at the House yesterday

FORMER CEO of Popular Bank Efthymios Bouloutas primarily, but also former chairman of the board Andreas Vgenopoulos, share responsibility for the purchase of Greek government bonds that went sour with the subsequent Greek haircut, an internal audit by the bank has found.

The confidential memo, which the Cyprus Mail has seen, is dated May 22, 2012 and titled “Internal Audit report on the purchase of Greek Government Bonds.” It was compiled as a response to an inquiry made by the Central Bank on 29 February.

It points out that “many factors have contributed to the problem. It is not just the high-risk appetite.” But it goes on to list the individuals “whose role was instrumental to our losses.”

According to the memo’s author, internal auditor Costas Constantinou, the “highest degree of responsibility” for the purchase of Greek government bonds (GGB) lies with Bouloutas. The former CEO is said to have been directly involved “during the acquisition phase,” giving “direct personal instructions to the Greece Treasury staff in April and May 2009 to buy bonds,” and that he was in “direct negotiation with Goldman Sachs for the purchase of €1 billion bond (sic).”

The report notes that Bouloutas’ “subsequent handling of the issue was disastrous; he consistently rejected the idea of cutting our losses when this was really possible. He advocated to the end that we shall avoid the bulk of the losses because of the short-term nature of our holdings.”

Regarding a warning issued by the Central Bank of Cyprus against the purchase of Greek bonds, and the subsequent response by Popular, the memo says Bouloutas “failed to inform the BoD [board of directors] accordingly.

“However, I do not think that he did this intentionally in this particular case,” the report goes on to say, “because this was the normal way for him to deal with the BoD.”

The memo notes that “on the other hand, the BoD and Group Audit Committee members were aware of our holdings and the related losses because of detailed presentations made to them by the External Auditors during the deliberations for the approval of the 2009 results.”

On Vgenopoulos, then executive vice chairman (and later chairman), the report says he “influenced all the decisions, or the non-making of any decision either directly (he spoke to the Cyprus Treasurer and asked her to expedite the purchases of HGP [High Grade Portfolio]) or indirectly by not guiding/coordinating the deliberations of the BoD effectively.

“In fact,” the memo continues, “we had our chances to liquidate most of our GGBs portfolio either late in 2009 (the markets recovered) or early in 2010, particularly during the BoD deliberations for the approval of the 2009 results.”

And the memo finds fault with Demetris Spanodemos, the bank’s Chief Risk Officer, for “continuously underestimating the risk” and for never making “any recommendation to cut our losses by liquidating part of our holdings.

“Had he made a strong recommendation for partial sale of the holdings, even at the time we got the Central Bank letter, today things would have been entirely different. Instead, he played down the associated risks relying on his convictions based on the first ‘mnimonio’ [memorandum], i.e. that after getting €130 billion Greece would honour its obligations.”

The leaked memo comes out just a day after Sigma TV aired an interview with Vgenopoulos.

Following the publication by online media of a summary of the report yesterday, Vgenopoulos issued a statement threatening to sue the author and the bank for slander.

The Greek banker called the memo “self-contradictory,” pointing out in particular that it states that external auditors were aware of the bond losses in 2009.

“The only thing the report succeeds in confirming is what I said during my interview, namely, that no commissions were ever paid for the purchase of bonds at Popular,” the statement said.

Vgenopoulos went on to ask why the internal auditor never contacted either him or Bouloutas, and wondered why the auditor did not raise these questions during the time in question.

In his interview with Sigma broadcast on Wednesday night, the financier insisted everything was done by the book during his tenure at Popular.

He hit out at the former governor of the Central Bank Athanasios Orphanides, rejecting the latter’s claims that he had sounded the alarm about the purchase of Greek government bonds.

Vgnenopoulos went on to accuse Orphanides of staging a “coup” by shackling him and not allowing him to deal with the Greek debt crisis that broke out later.

Bouloutas resigned in early December 2011, with Christos Stylianides taking over as CEO. Vgenopoulos had stepped down as non-executive chairman in November of the same year, citing a potential conflict of interest as a major shareholder in attempts to boost capital levels of the bank.

The headquarters of Popular Bank in Nicosia

A COUPLE of hundred men hired as casual labourers, on an hourly rate, by the government went on the rampage yesterday after they were informed that they would not be offered work in the future. First they invaded the foreign ministry demanding to see the minister and then they marched to the legislature where they pushed aside the police guard and entered demanding to be seen by the House president.

About one thousand low-paid labourers, hired by the government on a seasonal basis for unskilled jobs, will be without work from tomorrow as they have fallen victim to the government’s cutbacks. They were protesting against the decision to terminate their employment and demanded that the government and the parties made every effort to ensure it was rescinded. The anger of the labourers was understandable even though breaking into the legislature and resorting to threatening behaviour was totally unacceptable - a step towards mob rule.

Not surprisingly, deputies who spoke to them promised to look into their demand and try to help them. Not one deputy had the decency to tell them the truth – the state was cutting its spending and there was no provision in the budget for the employment of a thousand casual labourers. All would try to help, even though they did not say how they would do so; the objective was to get the labourers out of the legislature.

This is what happens when the state acts as an employer of casual labourers. If government did things rationally, the jobs done by these labourers would have been contracted to private companies. Then again these labourers are given seasonal work by the political parties in exchange for their support. Regrettably, this is how the political parties keep their supporters under control, offering them favours and, when possible, government work. So now they have to deal with consequences of their nepotistic practice.

It is ironic that these workers - the lowest-paid of the public sector, enjoying none of the benefits of full-time public employees - will be the only casualties of the government spending cuts, while the fat cats of the public service would suffer just a small pay cut. The saving from not offering them work again would be a paltry €9 million a year, which could have been raised by cutting another half a per cent from the wages of top earners in the public service.

We are sure none of the parties, which promised to try to help the labourers, would make such a suggestion. And neither would the government that likes to pose as the guardian angel of the workers, the well-paid and privileged workers, that is.

CYPRUS saw its first real taste of austerity-related unrest yesterday when hundreds of casual government workers due to be laid off, stormed first through the finance ministry and then parliament.

A total of 992 seasonal government employees will be out of work starting from today as part of government cuts, about half of whom took to the streets yesterday. The move aims to save €9 million a year.

Inside parliament, Finance Minister Vassos Shiarly was briefing the House Finance Committee on the status of talks with international lenders, the troika.

The first fracas occurred at the finance ministry where protesters had gathered outside waving banners and chanting: ‘No to poverty and unemployment, the rich should pay and not the workers’, ‘Instead of getting rid of foreigners, they’re getting rid of us’. 

The protesters also called for the ‘greedy thieving bankers’ to be handed over to the people. 

Emotions were running high by that time and when the group lunged for the entrance, the hopelessly inadequate police barricade was no match for the pushing protesters.

After managing to enter the main hall of the finance ministry, a group of the protesters started making their way upstairs in an attempt to get to the minister’s office, although he was not there as ministry staff looked on from a safe distance. The angry protesters were stopped by union leaders who convinced them to continue their demonstration outside the parliament. 

Some stayed outside the ministry where they approved a resolution they planned to give to Shiarly and House President, Yiannakis Omirou.  

One protester told reporters: “I have seven children and I make €1,100 a month, that’s already not enough to pay my electricity bill or to make the payment on my loan. What are we supposed to do now? We are imprisoned in our own homes. We can’t even afford to go to a cafι for a coffee any more.”

Another female protester said:  “If they’re trying to eradicate the middle class then they’ve managed it, that’s all I have to say.”

A third said: “It’s all right for them [politicians]. They have work. Everyone here has three or four people at home depending on them.”

He also complained about the numerous free benefits offered to Turkish Cypriots. “What about us [Greek] Cypriots? Or are we only considered Cypriots when they want us for the army?”

When part of the group from the finance ministry arrived at the House, another surge towards the entrance seemed to take police by surprise. They blew their whistles but to no avail as they were outnumbered and overrun.

Part of the angry mob, trying to make their way to the finance committee meeting where the minister was, ended up at the legal affairs committee instead where its chairman Ionas Nicolaou assured them he would take their issues up at his committee as one woman screamed abuse at the top of her lungs, and another was in tears as she appealed to the committee.

Another part of the group did find their way to a room where the finance committee was meeting but were stopped from entering.

The head of the House President’s office, Antonis Koutalianos, who had earlier been heckled when he tried to speak to the protesters outside the House,  suggested the demonstrators send a group of representatives to see the House President but they demanded that they all go to see him. This meant that a meeting was not possible. 

Eventually the situation calmed down and by noon all of the protesters had left the parliament area while their representatives met with party officials who all assured them that their problems would be raised at various committee meetings and that they would do whatever was in their power to make sure they didn’t lose their jobs. 

The angry mob pushing through the main entrance of the House yesterday (Christos Theodorides)

THE TROIKA has given the green light for the Memorandum of Understanding with the Cyprus government to be released to the political parties.  The full text of the ‘Memorandum of Understanding on Specific Economic Policy Conditionality’ is attached as a PDF.