The Cyprus General Auditor Calls the State's deal with Altamira a Major Scandal

Генаудитор Кипра назвал сделку государства с компанией "Альтамира" крупным скандалом
19 March 2021 Liza Medvetskaya

Another property scandal is brewing in Cyprus. This time because of Altamira.

A recent meeting of the House watchdog committee was held in Cyprus, where the Auditor General Odysseas Michaelides exposed another problem of the government.

According to Michaelides, the now defunct Cooperative Bank, which was managed by the government of Cyprus at the time, signed in 2017 a contract with the Altamira collection agency, which, as it turned out, was created by its former employee. As a result the lender's €7 billion portfolio of non-performing loans was transferred to one person.

At the same time, the Auditor General stressed that there is no office in Spain, the contract was drawn up by lawyers from Altamira, and by the government, as required by law. Moreover, the red credits were transferred to Altamira without any relevant bidding.

“It’s a major scandal…an agreement involving the state being drafted by a private entity rather than the state,” he asserted.

In turn, the deputies got acquainted with the details of how the Cooperative Bank entered into a deal with the Spanish office of Altamira, as well as the details this agreement entailed.

A finance ministry spokesman noted that the organization's staff are now in close contact with the Auditor General's Office on this issue and that 24 complaints have already been filed with the police regarding potential criminal offenses in connection with the Cooperative Bank and Altamira case.

Attorney at the Tassos Papadopoulos & Associateslaw firm Nicos Papaesftathiou said during the meeting that the only connection the firm had with the Altamira case was providing a legal opinion as to whether the Cooperative Bank is a publicly regulated body.

Papaesftathiou noted that Tassos Papadopoulos & Associates expressed the view that the Cooperative Bank is not legally regulated by public law and, more broadly, it is not obliged to comply with the public procurement law, which requires tenders to conclude contracts for a certain amount.

Генаудитор Кипра назвал сделку государства с компанией

During the investigation of the Auditor General, it turned out that the Cooperative Bank had never announced tenders, but had only negotiated with Altamira, which eventually received the contract.

According to Papaesftathiou, the Cooperative Bank, however, was a state-owned business and had to implement the general principles of administrative law and public tenders in general.

'We were never Altamira’s lawyers. Altamira’s lawyers in Cyprus were in fact Koushos, Korfiotis and Papacharalambous LLC – where current government spokesman Kyriacos Koushos was a partner,' - he told the MPs.

By the way, the same law firm registered Altamira Cyprus with the Registrar of Companies. Altamira Cyprus was an offshoot of the Spanish parent company.

Returning to the contract without a tender, the Auditor General said that the Cooperative Bank and Altamira (Spain) signed the first deal in November 2017. Later, on January 23, 2018, an updated agreement was signed between the Cooperative Bank and Altamira Cyprus.

The Auditor General stressed that the illegal schemses were managed by Varnavas Kourounas, who at that time was the senior manager of the asset management company.

It is noteworthy that earlier Kourounas held the post of head of a division of the Cooperative Bank and was responsible for managing overdue loans.

“Mr Kournounas, who was judge, jury and executioner along with [former cooperative general manager] Nicolas Hadjiyiannis, in the preparation of this agreement, acted on behalf of the cooperative one day, only to switch hats the next day and end up with Altamira,” Michaelides said.

Souzana Poyiadzi, who previously headed the Cooperative Bank, told the meeting how one of the officials of the EU's Single Supervisory Mechanism once told her with alarm that for the first time 'the organization sees a practice in which a portfolio of red loans worth EUR 7 billion is transferred to one company without participation bidding.

The Attorney General finally noted that in the course of its operations Altamira received a fixed administrative fee of €20.4 million annually, plus a 4% commission on the sale of the property, as well as other fees.

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