THE CRASH of the stock market, in which thousands lost their life savings or ended up with huge debts that they are still paying off today, ensured that very few people would ever again view the Cyprus Stock Exchange as a trustworthy institution. The CSE authorities may have introduced tighter controls and tougher regulations after the fiasco but, 10 years on, investing in the shares of companies listed on the exchange is still considered risky activity by the majority of people.
Once the damage is done, it is very difficult to change people’s perceptions, more so when the authorities fail to take punitive action against the culprits, professionals who knowingly misled investors with cooked accounts and unrealistic forecasts. The overriding impression created was that the law offered no effective protection to investors from dishonest businessmen looking to make a fast buck at the expense of gullible people.
This same mistake has now been made in the property market, which also went through a ‘bubble phase’, attracting all sorts of cowboys, posing as developers, who saw an opportunity to make a quick profit. Most of the buyers were foreigners and therefore easy prey as they were not aware of the Cyprus laws and were not guaranteed reliable legal advice.
The results are well-known and far from flattering for Cyprus. One couple recently lost their flat, some buyers were sold properties that had already been sold, others ended up in flats without electricity and there are close to 10,000 foreigner property-owners without title deeds, praying that the developer would not go bankrupt and the bank takes over their property. There has been one positive case in which owners sued a lawyer who had misled them and were paid damages in the region of €100,000.
This mess has received extensive media coverage abroad, particularly in Britain from which most buyers of holiday homes came. British MEPs have raised the issue of title deeds at the European Parliament, thus making the problem known across Europe. It was the worst possible publicity the struggling holiday home market could have received as it amplified the effects of the recession and jeopardised the future of many developers.
Given that government proposals on the title deeds issue, which also affects some 90,000 Cypriots, will solve none of the old problems, there was only one way for Cyprus to re-build its tarnished image – taking a tough line in cases of developers deceiving buyers that were brought before justice. It was critically important to show that the law offered protection to foreigners who had been deceived by locals; the case of the lawyer who had to pay damages to his clients was a step in the right direction.
But in the last week this good work has been undone by the case of Connor O’Dwyer who had been assaulted by three men (a developer he was in dispute with, the developer’s son and an associate) and was hospitalised for a week. His three attackers were found guilty of causing actual bodily harm by the court but the judge did not give a custodial sentence. Father and son were given a 10-month suspended prison sentence while the third man was fined €3,000. The developer had also crashed his car into O’Dwyer’s but for that misdemeanour the court gave him two penalty points, instead of three that would have caused him to lose his licence.
The court’s leniency towards O’Dwyer’s attackers was quite astonishing and will not boost the confidence of foreigners in our justice system. It is more likely to encourage the view, rightly or wrongly, that the courts are not very tough on crimes by Cypriots against foreigners. To add insult to injury, O’Dwyer now faces criminal charges for posting offensive and harassing messages “without reasonable cause”, for publishing personal data and for threatening violence.
The Attorney-general may have been obliged to charge O’Dwyer after the police received a complaint, but it seems bizarre that the state would prosecute for alleged offences committed six years ago. On Friday it was reported that the Attorney-general would lodge an appeal against the court’s decision and lenient sentence in the O’Dwyer case. One prosecutor told the Cyprus Mail: The Attorney-general’s position is that nothing changes because he is British or any other nationality. Justice is for all.”
The authorities may have finally realised the damage being done to Cyprus’ image by our system’s failure to protect property buyers, but unfortunately, this seems like a case of too little too late.
THE Attorney-general will appeal a court decision and the sentence handed down in the assault of a British national by a developer following a dispute over a property.
On Wednesday, a Paralimni court sentenced property developers, Christoforos Karayiannas, 55 and his son Marios, 35, to a 10-month jail term that was however suspended for two years for assaulting Conor O’Dwyer in 2008.
A third man involved in the incident, 31-year-old Charalambos Ttigis was fined €3,000.
The court found the trio guilty last month of assaulting O’Dwyer and causing actual bodily harm (ABH) – and not the more serious grievous bodily harm (GBH) count, the state had charged them with.
State prosecutor Thanasis Papanicolaou told the Cyprus Mail yesterday that the state will appeal. “I have been authorised by the Attorney-general to file an appeal for both the decision and the sentence,” Papanicolaou said. He added that this would be done in the next few days.
Papanicolaou stressed, that the fact that the plaintiff was British did not make any difference to the state.
“Every person has rights in the Republic of Cyprus, whether they are Cypriots, foreigners, EU nationals or third country nationals,” he said. “The Attorney- general’s position is that nothing changes because he is British or any other nationality. Justice is for all.”
The GBH charge carries a maximum of seven years in jail while ABH goes up to three years.
In her decision on October 27, Judge Evi Antoniou said O’Dwyer – when he testified during the trial – was “excessive in most points.”
“He was stressed, lost his temper, and through his testimony it became evident that the only thing he wanted was the punishment of the defendants,” the judge said. “This led him to numerous contradictions in his testimony.”
During sentencing, the judge said she accepted the position that Christoforos and Marios Karayiannas had been repeatedly provoked by the plaintiff. “Recording most of the conversations the plaintiff had with defendant One without him knowing … publishing the conversations on the Internet, the claims of the plaintiff that defendants One and Two are liars and they mislead people, and publishing these claims as well as harassing” the defendants’ clients “cannot be ignored,” the judge said.
“The plaintiff’s behaviour cannot be isolated from the way things went. He activated four spy cameras; one being a micro- camera hidden well in his jacket to peacefully measure, according to his claim, the pavement of the house he bought and to take pictures,” the judge said.
That provocation was taken into consideration when deciding whether to suspend the sentence, the judge said. It is believed that this particular point will be disputed by the prosecution in the appeal.
The legal precedent cited by the judge stated that provocation can be a mitigating factor in passing sentence but nowhere did it explicitly say that it can be used to suspend a sentence.
By: George Psyllides Published: Friday 5th November 2010
To see comments from British expats read this article in the Cyprus Property News
THE property developers convicted last week of assaulting a British expat escaped jail yesterday after the presiding judge handed down a 10 month suspended prison sentence for two of them and issued the third a €3,000 fine.
Christoforos Karayiannas, 55, and his son Marios Karayiannas, 35, received the jail sentences suspended for two years while their associate Charalambous Ttigis, 31, who allegedly pinned down Conor O’Dwyer during the assault in 2007, received a €3,000 fine.
They were found guilty of actual bodily harm (ABH) against O’Dwyer, who said yesterday “I am absolutely shocked and disgusted. This trial was 100 per cent worse than the assault. It seems that in two years of hearings the judge has lost sight of who the victim was.”
O’Dwyer’s lawyer in two other cases that he has against the Karayiannas’, Yiannos Georgiades, also expressed his surprise at yesterday’s decision. He told the Cyprus Mail “I’m quite shocked. In other cases… where three men have assaulted one vulnerable man… the assaulter has ended up in prison.”
He also questioned the judge’s decision to reduce the conviction from grievous bodily harm (GBH) to ABH, and from a custodial to a suspended sentence.
The sentences follow an equally lenient sentence handed down to Christoforos Karayiannas for crashing into O’Dwyer’s car during the incident in 2007. He received a mere two penalty points on his driving licence. Had he been given three he would have lost his licence.
During the trial, the court heard how the men rammed O’Dwyer’s rental car at a busy junction in the eastern village of Frenaros, he was then subjected to a savage beating, including having his head stamped on – the attack left him in hospital for a week.
The controversy between the two parties began five years ago when O’Dwyer claimed he purchased a house in Frenaros that was then resold without his knowledge by the developers.
An emotional O’Dwyer said he was in a state of shock at hearing the result, having spent years protesting and campaigning to have his case heard. “So far all I have gained is two points on (Karayiannas’) licence and a suspended sentence”.
The civil case against the Karayiannas’, which will examine a dispute over the termination of the contract between the O’Dwyer and the developers, is due to begin on Friday.
A second private criminal prosecution case is already underway, for the alleged double sale of O’Dwyer’s house. At the same time, Georgiades said, the Attorney General is also bringing a case against O’Dwyer for the content of his website.
THE SENTENCING of three men in the Conor O’Dwyer assault case has been adjourned until Wednesday morning.
The case involves a developer from Paralimni, his son and an associate who were all convicted last week of the actual bodily harm of O’Dwyer in a dispute over property in the tiny eastern village of Frenaros.
Sentencing and mitigation had been due to be given yesterday morning at Larnaca District Court.
Having already spent five days in custody, developer Christoforos Karayiannas 55, his son Marios Karayiannas, 35, and Charalambous Ttigis, 31, were returned to police cells.
During the trial, the court heard how the men rammed O’Dwyer’s rental car at a busy junction in the eastern village of Frenaros, he was then subjected to a savage beating, including having his head stamped on – the attack left him in hospital for a week.
Meanwhile, the state has filed charges against O’Dwyer – following a complaint from the developer — over a website he created, http://www.lyingbuilder.com documenting the dispute with Karayiannas and his treatment.
According to the indictment, O’Dwyer faces seven charges – two for posting offensive messages “without reasonable cause”, two for posting harassing messages “without reasonable cause”, two for publishing personal data and one for “threatening violence”.
The latter, according to the details of the charge, refers to a threat the defendant allegedly made, to post recordings of his conversations with Marios Karayiannas on his website unless he “carried out an act, which he had no legal obligation to undertake”.
The indictment further adds that O’Dwyer’s goal was to insult the reputation of Marios Karayiannas and his company.
The alleged offences took place between January 1, 2006 and December 31, 2008.
Though not too serious, some of the charges do carry custodial sentences.
The state’s decision to prosecute O’Dwyer on these grounds has raised questions, especially after the attorney-general back in May decided not to prosecute anyone over death threats against a journalist posted on the Christofias-watch blog.
The timing of the state’s case has also raised eyebrows as it comes some four years after the alleged offences took place and during a private prosecution case O’Dwyer has initiated against the developer.
In fact, O’Dwyer, says he was served with the papers on the day he was due to testify in his private prosecution case.
The private prosecution case concerns the alleged unlawful sale of O’Dwyer’s house to a third party.
O’Dwyer filed a private prosecution case under Article 303 (A) of the penal code, after the state said it would not press charges against the developer citing lack of evidence.
However, the court has found there is a prima facie case. Closing arguments for that case are scheduled for November 26.
Three days earlier, O’Dwyer will have to appear before court to answer to the charges regarding his website.
It is understood that his defence will file a motion for the case to be thrown out because of the time that has lapsed and that it was frivolous, vexatious and an effort to intimidate O’Dwyer for pursuing his rights.
CONOR O’DWYER will move into a self constructed ‘cardboard villa’ outside the presidential palace in an attempt to highlight a state criminal case being brought against him for publishing his story on the internet.
It is the latest twist to the on-going saga which last week saw a developer from Paralimni, his son and an associate convicted of the assault and actual body harm of the British man in a dispute over property.
The new case against O’Dwyer was filed by the Paralimni Police Chief in connection to O’Dwyer uploading material, including phone calls and emails relating to his property dispute, to the internet in 2006.
O’Dwyer says he built his website to prevent and detect a crime, whilst highlighting his plight during his dispute with Karayiannas Developers.
It has been confirmed that the state will proceed with the extraordinary action, case 793/2010, which could raise significant issues concerning freedom of speech online in Cyprus.
O’Dwyer is set to appear in court in late November in relation to the case.
In a separate development, O’Dwyer will arrive on the island this weekend to witness the sentencing of the three men convicted of assaulting him outside the disputed property two-years ago. The controversy between the two parties began five years ago when O’Dwyer claimed he purchased a house in Frenaros that was then resold without his knowledge by the developers.
Developer Christoforos Karayiannas 55, his son Marios Karayiannas, 35, and Charalambous Ttigis, 31, will be sentenced on Monday morning following mitigation at Larnaca District Court.
The three men have been held in police custody since last Wednesday.
During the trial, the court heard how the men rammed O’Dwyer’s hire car at a busy junction in the eastern village of Frenaros, he was then subjected to a savage beating, including having his head stamped on – the attack left him in hospital for a week.
The assault resulted in O’Dwyer receiving deep tissue injuries near his kidneys, loss of balance from ear injuries and severe bruising to his body and face.
A letter presented to the court by his doctor stated that, “Since that time (the assault) he has suffered from severe vertigo which was worsened by movement. This had prevented him from performing normal daily activities.”
O’Dwyer, who lives with wife and two children in Surrey, will start the protest outside the presidential palace on Monday November 8.
The national ITV network is currently following the case and will be in Cyprus to film the palace protest for their prime-time programme “Homes From Hell”.
The palace protests will be indefinite and are planned to take place between court dates in regard to a civil case for breach of contract and a private criminal case of fraud in the unlawful selling of his house.
By Nathan Morley Published on October 30, 2010
To see comments from British expats read this article in the Cyprus Property News
THERE was jubilation last night amongst supporters of British property buyer Conor O’Dwyer as a developer from Paralimni, his son and an associate were convicted of assault and actual body harm.
In a surprise outcome after hours of summation, Judge Evi Antoniou at Famagusta District Court ordered the three men into police custody pending mitigation and sentencing next Monday.
The case, which has been in court for several years, came after O’Dwyer reported being beaten up following an incident outside a disputed house in early 2007.
The father-of-two was forced to travel to Cyprus on more than seven occasions to be present at court hearings, only to be faced with a series of obstacles and adjournments.
O’Dwyer’s lawyer, Yiannos Georgiaides, said he was pleased with the outcome, but also noted that there was a feeling of disappointment that the charges had been downgraded from grievous bodily harm to actual bodily harm – which carry more lenient custodial sentences of up to five years.
“At least these people have been found guilty of his assault. I think justice has been done and we now have to wait for the sentencing,” he said.
Those convicted of actual bodily harm are also subject to a custodial sentence, but the Cyprus Mail understands that the prosecution legal team is now considering an appeal to have the charges upgraded to GBH.
“It’s a good result, now we wait,” Georgiaides added.
British national television network ITV has also been following the story and were on hand to film yesterday’s events – for a programme which will be broadcast to millions of viewers next year.
The case has been a hot topic of conversation for the past two years, with some legal commentators expressing bewilderment that an assault case should have dragged on for so long.
O’Dwyer spent a week in Larnaca General Hospital after the attack and said the incident blighted his family life.
The controversy between the two parties began five years ago when O’Dwyer claimed he purchased a house in Frenaros that was then resold without his knowledge by the developers.
The developers dismissed the accusations and accused O’Dwyer of attempting to extort a more expensive house from them – a charge that O’Dwyer flatly denies.
He claims the spat resulted in him losing the house and £100,000 he had paid for the property.
Last month O’Dwyer gained international attention when he held a four-day peaceful protest outside the Presidential Palace in Nicosia, spending two nights sleeping just yards from the main entrance to publicise his lengthy legal battle.
Video clips of O’Dwyer’s plight, posted online, have caused outrage amongst many home-owners, who demanded to know why the dispute was not quickly settled in court.
He widely publicised the details of his property dispute with the developers on YouTube and on the website lyingbuilder.com. However, since the beginning of the court case he ceased posting updates.
Developers have been twitchy about the long-running saga, which has been reported worldwide and is said to have caused “untold damage” to the local real estate industry according to commentators.
Cyprus property developers Christoforos Karayiannas, Marios Karayiannas and an employee of their company have been found guilty of causing British home buyer Conor O’Dwyer actual bodily harm as a result of their assault on him in January 2008.
CONOR O’Dwyer was assaulted in 2008 while gathering evidence for what is now a five-year legal battle with property developers Christoforos Karayiannas & Son Ltd of Paralimni.
Conor O’Dwyer recovering in hospital after savage beating
The brutal attack left him hospitalised for six days while his attackers Christoforos Karayiannas, Marios Karayiannas and an employee of their company were released shortly after from jail.
Earlier today the presiding judge in the Famagusta Court, Evi Antoniou, found all three of the accused guilty of causing Mr O’Dwyer Actual Bodily Harm; they have been remanded in custody pending mitigation and sentencing on Monday. (In the UK, the maximum penalty for Actual Bodily Harm is five years imprisonment and/or an unlimited fine).
The prosecution team is considering an appeal to have the charges upgraded to Grievous Bodily Harm.
This assault case has been dragging on since January 2009 and has suffered numerous adjournments and delays. O’Dwyer camped outside the Cyprus High Commission in London for 74 days and nights in his quest for justice and has been forced to fly between his home in the UK and Cyprus on more than twenty occasions for this and other court cases. He recently protested outside the Presidential Palace in Nicosia for four days. The costs involved and the strain on his family have been tremendous.
His last trip was on the 29th September but once again the case was adjourned as the judge was not ready to deliver a verdict and one of the accused failed to turn up in Court.
O’Dwyer has two further Court cases that he is pursuing in Cyprus:
Civil case for breach of contract.
Private criminal case of fraud in the unlawful selling of his house.
In addition, the authorities in Cyprus are proceeding with a criminal case against Mr O’Dwyer concerning information on his website www.lyingbuilder.com; the next court date is scheduled for late November.
Conor & Michaela O’Dwyer with an ITV film crew outside the Cyprus High Commission in London earlier today
ITV Homes from Hell
The O’Dwyer case will be one of those featured in a new series of the ITV program ‘Homes from Hell’ which is scheduled for transmission in the UK during the summer of 2011.
As a well-known columnist from the Financial Mirror wrote on the 16th June 2010:
“The Conor O’Dwyer case has reached such a level of international notoriety it is difficult to see Cyprus ever living it down.”
Conor O’Dwyer, whose court cases in Cyprus have been dragging on for four years, is staging a four day protest outside the Presidential Palace in Nicosia.
THE bizarre twists and turns in Conor O’Dwyer’s quest for justice took a further step today when he started a protest outside the Presidential Palace in Nicosia.
Mr O’Dwyer intends to remain outside the Palace until October 4 when he is due in court to face criminal proceedings concerning allegations made on his website LyingBuilder.com. The proceedings were apparently sanctioned by the Island’s Attorney General and in a statement to this magazine, O’Conor said that he believed they were “an attempt to intimidate, silence and prevent me from pursuing my rights through the courts in Cyprus”.
O’Dwyer’s court cases against his developers have been dragging on for more than four years through the Cypriot judicial system. They resulted from a decision by the Attorney General not to start proceedings against his developers in spite of strong prima facie evidence that O’Dwyer’s developer had fraudulently sold the house he was buying for a second time.
Protests
In 2008, Mr O’Dwyer spent 74 nights sleeping rough for justice in a tiny tent outside the Cypus diplomatic mission in London; only relenting when he when he received a court date for an assault he suffered in January 2008. That case is still being heard in a Cypriot court.
He has also staged several protests at overseas property exhibitions in the UK designed to highlight his plight and to warn others of the risks of buying property in Cyprus.
Mr O’Dwyer told me that his lawyers have notified the Police and the British High Commission about his protest and that he intends to remain outside the Presidential Palace until his court case continues on Monday.
Dr Alan Waring considers the growing problems with the Cyprus property market and wonders where it is heading and if there are ways to prevent the industry from destroying itself.
“THOSE whom the gods wish to destroy they first make mad”, an ancient Greek saying goes. Judging by the growing eccentricities in the Cyprus property market, there are quite a few parties heading for destruction.
For example, some developers seem to have declared open warfare on buyers and any who try to protect themselves or defend the rights of buyers. Is threat of legal action, assault or other intimidation a good way to attract new buyers?
The Long March
OVER the past 5 years, Risk Watch has commented many times on the overall scandal of Title Deeds, property fraud and official blind eyes and deaf ears.
The recent Financial Mirror Editorial ‘A Sad Day for Cyprus Property’ plus the article from George Mouskides of APPDM ‘We have not learnt our lesson’ have highlighted yet again the uphill battle that property buyers, especially foreigners, have in Cyprus both against those developers and lawyers who decide to treat them badly and against the state infrastructure and justice administration, which thus far have failed to protect them.
The new government legislation may partly correct some aspects but it almost certainly will not fix the overall problem. For example, it will not address the developer mortgage debt bubble hanging over Cyprus, estimated to be at least Euros 7 billion. It does not address the issue of rogue lawyers or errant banks or inefficient government departments or the tardy justice system. No obvious anti-corruption/anti-rusfeti mechanisms are included.
Much of the buyer protection, which the government has asserted as being exemplary in its official response to probes by the European Parliament, is therefore virtual or illusory. Fortunately, the EC is still pursuing the matter.
Risk Watch understands that further questions about the Cyprus government and its handling of the property scandal are being tabled in the EP, the initial ones being:
With reference to previous Parliamentary Written Questions E-0110/09, E-6793/08 and E-6513/08.
1. Cyprus Title Deeds Legislation
“With a view to the new legislation that is about to be put in place by the Cypriot government to address the problem of withheld Title Deeds, would the Commission answer the following questions:
Does the Commission agree that this new legislation will not address the main problem cited in the numerous buyer petitions or indeed the above-referenced Parliamentary Questions, since it will not help buyers whose properties are encumbered with developer mortgages?
Does the Commission agree that the sale of mortgaged property without full disclosure at point-of-sale is practised systemically by Cypriot developers and should be prevented in all EU countries, with stringent penalties for transgressions?
How can a prospective buyer find out about the possibility of existing developer mortgages on the property? Do any developer websites or brochures mention this possibility or how to carry out searches to discover the risk before purchase? Historically buyers’ own lawyers have not alerted them to this risk in the majority of cases.
Finally, will the Commission send a fact-finding mission to Cyprus in order to investigate these problems in more detail?”
2. Cyprus Developer Mortgages
“With a view to the new legislation that is about to be put in place by the Cypriot government to address the problem of withheld Title Deeds, would the Commission answer the following questions:
How many individual properties whose sales contracts are lodged at the Land Registry in Cyprus are encumbered with developer mortgages? How many of these have been sold to Cypriots and how many to non-Cypriots?
What is the current balance of the total mortgage debt of Cypriot developers and the percentage increase, year on year, over the last three years?”
The recent Supreme Court landmark ruling, whereby a British couple’s Paphos lawyer was forced to pay them 120,000 Euros in compensation for negligent searches, took 11 years to conclude.
It is staggering that the guilty lawyer is still practising and that mandatory duty of care rules or professional standards for lawyers’ conveyancing search duties still do not exist in Cyprus.
Other cases involving developers, lawyers or both are also taking years to pursue through the court system. It is almost as if there is a conspiracy by the Cyprus establishment to ensure that buyers with real and often horrendous grievances are deterred from seeking justice by grinding them down and exhausting their energy, health and finances with a deliberately long drawn out process. Undoubtedly, some plaintiffs will die before their cases are concluded.
However, a growing number are determined to go all the way to the European Court if necessary, no matter how long it takes.
Some More Appalling Cases
THE NUMBER of cases of alleged serious wrong-doing against property buyers in Cyprus in recent years is now legion.
Many have been logged in detail by the Cyprus Property Action Group (CPAG) and Denis O’Hare, who has been the subject of a gagging order and a withdrawn libel suit by Leptos (Armonia Estates). Nigel Howarth’s website www.news.cyprus-property-buyers.com cites more.
Yet another is the case of Mr & Mrs Smith reported in Cyprus Mail 9 June 2010 ‘British couple plan to sue property developer’ which has even prompted the Cyprus President’s Under-Secretary to personally intervene publicly to try to ensure they receive full and prompt justice.
Will he also do the same for the hundreds of others held up by slow courts and the Attorney General’s block on criminal investigations into alleged property fraud? I have selected five cases as further illustration:
Case 1: Alleged Developer Fraud and Assault
The Conor O’Dwyer case has reached such a level of international notoriety it is difficult to see Cyprus ever living it down.
Mr O’Dwyer alleges that he paid CYP75k towards a property in Frenaros from the developers Karayiannis. On raising some concerns about the contract, he alleges that the developers then sold his property again without his knowledge or permission and also failed to return his money. As the Attorney General views such issues as civil and not criminal, Mr O’Dwyer was forced to take a civil case against the developers.
The developers and their lawyers contest Mr O’Dwyer’s allegations and counter-charge him with attempted extortion. While collecting video evidence of the property in question, Mr O’Dwyer alleges that senior representatives of the developer arrived and assaulted him.
Initially dismissing it as a simple road traffic accident, the police were then persuaded by intervention from the British High Commission to raise assault charges against the alleged attackers. His injuries were serious enough to keep him in hospital for a week.
Both the fraud and the assault cases have now been before the Cyprus courts for some years, largely owing to multiple adjournments. In the meantime, he has organised a protest campaign in the UK including a vigil outside the Cyprus High Commission, protests outside Cyprus property exhibitions and a DIY protest website.
Case 2: Alleged Lawyer Fraud, Forgery and Assault
A buyer alleges that she has been defrauded of Euros 200,000 as a result of her house having been sold twice.
She had appointed a well-known Cyprus law firm. She alleges that her contract of sale was withdrawn from the Land Registry using a forged power of attorney not even in her name. She further alleges that when she complained to her Cyprus lawyer about these matters he assaulted her by spitting in her face. This lawyer continues to practise unfettered.
Case 3: Alleged Lawyer Fraud
Following the death of a Cypriot woman in Cyprus in 2007, her son who had been living with her at the time of her death and who was co-executor to her will with a Paphos lawyer was puzzled by the unresolved probate.
He alleges that unbeknown to him the lawyer had submitted false affidavits to the court (and without a copy of her death certificate) that this woman had died in the UK some nine years previously and that he had been unable to locate her son! The affidavits also sought, and succeeded in, her son’s removal as an executor.
Her son, armed with her actual death certificate, eventually persuaded the court to overturn this errant decision and reinstate him as sole executor.
However, his subsequent attempts to persuade the Justice Minister and Ombudswoman to act on what was prima facie evidence of criminal fraud failed. The Disciplinary Board of Advocates of the Cyprus Bar Association after nine months also has yet to consider his complaint of serious professional misconduct against the lawyer, who continues to practise unfettered.
Case 4: Alleged Lawyer Negligence, Deception and Collusion
A buyer alleges that his Cyprus lawyer failed to advise him prior to contract of the presence of a CYP50k mortgage secured by the developer against the property. He also alleges that his sales contract was biased in favour of the developer and that there was probable collusion with the developer.
For example, he discovered that for a time the lawyer shared the services of an office secretary with the developer, thus raising a question of partiality and conflict of interest. Further, he alleges that the lawyer blatantly lied in a letter to him that the sales contract had been lodged with the Land Registry within the requisite period of 4-weeks, whereas subsequent investigations revealed the registration was not completed until 18-months later.
Case 5: Alleged Developer Fraud and Complicity of Others
A foreign couple were persuaded by their IFA (Independent Financial Adviser) who worked for a well-known firm based in Cyprus to buy as an investment four apartments off-plan at a new development from Sun Gain Estates in the Paphos area.
The buyers who were overseas relied on a well-known Cyprus lawyer appointed by the IFA. The contract was signed and the initial stage payments totalling CYP50k were made. After 18 months and no progress reports, the couple asked me to investigate. I discovered that the developers had never obtained planning permission and so the work had not started. Further, the IFA reported that as all the estate agents’ sales commissions had already been paid there was no longer enough money left to complete the job even if retrospective planning permission were granted!
The lawyer of record refused to respond to a request for assistance so he was replaced by a reputable Cyprus lawyer who soon discovered that in fact the Sun Gain directors had abruptly closed their Paphos offices and fled abroad with the money.
Where is it all heading?
HAVING highlighted the activities of rogue developers and lawyers in the inglorious Title Deeds/fraud mess in Cyprus, what about others in the cast of characters in this macabre theatre? Where is it all heading? Is there a way out?
The Attorney General
Although aspects of Cyprus property law are based in Ottoman law, the administration of justice and Cyprus law in general claims to follow English law and precedents.
Therefore, where there is prima facie evidence of criminal activity, then criminal procedures should take precedence over civil. Indeed, in English law it is standard for civil cases to await the outcome of related criminal cases so that a higher standard of proof (‘beyond reasonable doubt’) has been tested. Cyprus law references e.g. Neocleous (2000) state that in determining whether actions are fraudulent, the authorities ‘must concentrate on the acts committed and determine whether the taking was deliberate and intentional’.
The general ‘lack of intent’ exemption from criminal liability therefore does not apply if there is prima facie evidence that, for example, a developer has:
(a) received payment from one buyer, kept the money and then sold it again to a second buyer (or, in some cases, more than two!) and
(b) refused or failed to return the first buyer’s money.
However, as the Attorney General has repudiated all this in relation to property offences, the police cannot act. It is puzzling why property crime has been singled out for this special dispensation. Why not also for murder, rape, robbery or blackmail?
Why does the Cyprus property establishment use the quaint and trivializing word ‘cheating’ when they mean ‘fraud’? Why are long-winded civil cases forced on property victims before a criminal investigation is allowed, even when strong prima facie evidence of a crime exists?
A perverse parody of English law is being acted out, which has not gone unnoticed in legal circles in other countries that actually do follow the English legal system.
The Cyprus Bar Association
Ostensibly, the Cyprus Bar Association is the professional body for lawyers and to practise as a lawyer in Cyprus requires CBA membership.
The CBA supposedly sets professional standards and a Disciplinary Board exists. However, beyond the window dressing there is precious little evidence that it takes its disciplinary role seriously.
With such a growing number of allegations of professional misconduct, including fraud, against its members, especially in property-related cases, many are asking whether the CBA controllers have even a basic understanding of the purpose, function and duties of a professional body.
Early in my career, the Deputy Director General of a UK law enforcement body advised me that a professional body exists primarily to protect the public from the activities of rogues, quacks and charlatans and should never allow itself to fall into the trap of becoming a trade union protecting the interests of its members at the expense of its duties to the public. The contrast between the behaviour of the CBA and the UK’s Law Society, for example, on matters of client allegations of fraud or other misconduct is startling.
Recently Antonis Loizou, a high profile member of the Cyprus property establishment and a regular commentator on property matters, asked in the media why there appeared to be such a disproportionately high number of cases of allegations of fraud and misconduct against Paphos lawyers. The implication of an alleged cabal of rogue lawyers operating in Paphos is disturbing enough in itself.
The deafening silence from the CBA on the matter is even more disturbing. One would expect a professional body to act swiftly and publicly at the merest hint of impropriety.
The Banks
There is also the question of the banks’ role in the whole sorry property mess in Cyprus.
As the recent Toscafund Asset Management report on Cyprus emphasized, Cyprus banks are vulnerable to the continuing further slide in property values which may involve a sharp correction. The banks would then be forced to either liquidate immovable property at fire-sale prices or extend loans but with the risk of creating a massive toxic debt bubble already thought to be in excess of €7bn.
However, just as they were only too happy to grant developers further mortgages on properties already sold, banks are still willing to extend developer loans even those that are clearly distressed or delinquent. Such loan extensions are encouraging greedy developers to maintain artificially high prices (at least 30% too high). 90-day foreclosure procedures are supposed to kick-in on defaulters but rarely do in Cyprus.
Even establishment figures in the property market such as Antonis Loizou have been calling for developer foreclosures by the banks so as to bring Cyprus into line with the rest of the developed world.
Where Are the ‘Honest but Silent’?
IT IS OFTEN said that the only thing necessary for the triumph of evil is for good men to do nothing.
From what I know, there are decent developers, lawyers and agents in Cyprus who hate what they see going on among the ‘bad guys’ and the conspiracy of convenience with a grossly inefficient government administration; but they are scared to go public. Many of them tell me how much they admire what the Cyprus Property Action Group has done. We need to hear more public statements of support from the ‘honest but silent’ so as to publicly identify and isolate the wrongdoers.
If a cabal of dishonest lawyers exists, for example, why does a cabal of honest lawyers not stand up and denounce the ‘bad apples’ and insist that the CBA throws them out?
Without unequivocal action from those developers, lawyers and agents who do have integrity, I fear that Cyprus will continue to carry a general stigma that will continue to harm the economy.
A Way Forward?
THE DAMAGE to the property market inflicted collectively by bad developers and their lawyer cronies and the weak and flaccid authorities can only be countered by sustained action on the whole ‘system’. That includes the government stopping the banks in Cyprus from extending developer loans when they clearly have no means to repay.
CPAG has already advised the Interior Minister of a tried-and-tested formula to save developers from bankruptcy and all the terrible effects on buyers and the economy.
The Irish government, with full EU backing, has instituted a compulsory developer debt purchase scheme. A National Agency (using existing civil servants) to supervise the Cyprus property developer debt bubble and loosen the constipation of the market and tax revenues would also be a positive step in the gathering crisis.
The longer-term culture change at the population and industry levels will require time and persuasion. Bringing individual rogues to account in specific cases, however, warrants more immediate action and of a different kind. Unfortunately, the current attitude of the Bar Association and the Attorney General makes redress, both criminal and civil, that is normal in other EU countries hard to attain in Cyprus.
The ‘appeasement of wrong-doers’ argument favoured by some apologists is without merit and will only encourage bad developers and crooked lawyers to continue to ride roughshod over their luckless clients. Throughout history, appeasement of power-abusers and bullies of any kind has rarely worked. They can only be contained or crushed, not bought off or negotiated with.
Pressure and persuasion of the right kind do work. ‘Naming and shaming’ is one tactic against individual wrong-doers, which eventually hits them in the pocket if they fail to remedy the wrongs or to change for the good. If the professional bodies and the justice system fail to identify and root out dishonesty, it is likely that an angry and emboldened public will do it themselves.
A number of developers and lawyers who are alleged to be ‘bad apples’ have been identified on a variety of websites and blogs. Ultimately, there is no hiding place.
Apart from culling the ‘bad apples’, what is also needed, in effect, is an embedded cultural change in the property industry and the wider population. This will take many years. It can’t be bludgeoned into people.
Changing deep-seated attitudes and behaviours in a whole population can only come about if the population sees clear benefits from the change i.e. enlightened self-interest. Remember, the problem of rusfeti, ‘cheating’ i.e. fraud, cigar-cigar and laissez-faire does not just involve neatly packaged groups such as ‘bad developers’, ‘dodgy lawyers’, ‘low integrity bankers’ and ‘incompetent and inefficient civil servants’. These entities exist and flourish in a wider society that nourishes them.
The carrot is Cyprus’s return to economic prosperity and a respected status as a high integrity/high reputation investment location. The stick is economic decline and a low reputation among foreign buyers and investors.
A twin-track approach is needed involving the faster-paced pressure from CPAG, the EU, foreign governments, international media etc plus pro-active peer pressure from the honest but thus far silent individuals within the industry itself.
Conclusion
ONE MIGHT imagine that the Cyprus property market’s current Ice Age might have already concentrated minds and galvanized action to attract foreign buyers back by the industry cleaning up its own mess.
It was not compulsory that mastodons and dinosaurs should survive a sudden and lengthy change in climate. It is not compulsory that the Cyprus property market should survive a sustained loss of customers.
(This article first appeared in the Financial Mirror)
To read comments on this article from expats in Cyprus see the Cyprus Property News
Dr Alan Waring is an international risk management consultant with extensive experience in Europe, Asia and the Middle East with industrial, commercial and governmental clients. He is a Fellow of the Institute of Risk Management and is a founding member of the IRM Cyprus Regional Group. Contact info@dralanwaring-riskconsultants.com.
Corporate Risk and Governance: An End to Mismanagement, Tunnel Vision and Quackery
A letter to the editor published Cyprus Mail – Monday, June 7th 2010
Sir,
The Attorney-general’s decision not to prosecute the developers in the O’Dwyer house case (December 21) is both astonishing and disturbing. Your article quotes his decision as stating that “It has been ascertained that no criminal offence has been committed”. His Counsel stated that “it was not a case of fraud” until such time as a civil court could decide who the real owner of the house is and whether Mr O’Dwyer had been wrongfully and intentionally deprived of his money and his house.
It seems that the Attorney-general has decided that in Cyprus criminal law is now subordinate to civil law, whereas the long-standing position has been the reverse, as in English law. Where there is prima facie evidence of criminal activity, then criminal procedures should take precedence over civil. Indeed, it is standard for civil cases to await the outcome of related criminal cases so that a higher standard of proof (beyond reasonable doubt) has been tested. In the O’Dwyer case, there is the prima facie evidence of intentional fraud in that allegedly his house has been sold again to a third party without his prior knowledge or permission and his £75,000 sterling has not been returned to him.
Cyprus law references e.g. Neocleous (2000) state that in determining whether actions are fraudulent, the authorities ‘must concentrate on the acts committed and determine whether the taking was deliberate and intentional’. The general ‘lack of intent’ exemption from criminal liability therefore does not apply in this case since the developers allegedly (a) sold O’Dwyer’s property again after he had already paid, and (b) appear to be arguing that they have deliberately hung on to his money for all this time partly in order to punish him for daring to argue about terms in the contract. They have not, as far as we know, indicated any intention of returning his money.
An Attorney-general is supposed to ensure an unbiased administration and delivery of justice. Why this Attorney-general made this particular decision we will never know. However, this latest twist in the O’Dwyer case has not improved Cyprus’s bad reputation as an unsafe and insecure destination for investment, immovable property or otherwise.
