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Cypriot report
by Euro Reporter
2014-03-03 11:08:30
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Cyprus bailout hit as privatisation bill fails

International efforts to bail out Cyprus' debt-laden economy have been thrown into doubt after its parliament rejected a key part of the plan. As part of the 10bn-euro (£8.25bn; $13.7bn) deal with the EU and International Monetary Fund, lawmakers have until 5 March to pass a bill allowing state firms to be privatised. But on Thursday, they threw it out, jeopardising the next tranche of cash.

The government says it will re-submit the bill with some amendments. The deal was agreed in March last year in an attempt to stave off the collapse of Cyprus's banking sector and the wider economy. It included moves to restructure the banks, along with other measures such as tax rises and privatisations.

Late on Thursday, the privatisation bill was narrowly defeated after parliament split 25-25 on the vote, with five abstentions. This meant the legislation failed to pass. The vote took place as hundreds of people opposed to privatisation staged a protest outside the parliament building. A government spokesman, Christos Stylanides, said the bill would be amended to reflect concerns over workers' rights after privatisation.


Cyprus parliament rejects state sell-offs required for aid

cyprus_400International aid to cash-starved Cyprus was thrown into turmoil on Thursday after its parliament rejected a privatisation plan, throwing into disarray the disbursement of a new tranche of financial assistance next month. The rejection dealt an unexpected setback to an administration that has gained plaudits in three reviews from its borrowers, the International Monetary Fund and the European Union, for meeting bailout commitments. In a cliffhanger vote on a roadmap for mandatory privatisations demanded by lenders, 25 lawmakers turned down the motion, 25 approved it and there were five abstentions, rendering the bill null under parliamentary regulations.

Earlier, hundreds of workers at corporations facing privatisation staged an angry protest outside parliament. Thursday's vote carried overtones of a chaotic bailout almost a year ago, when the parliament rejected terms for international aid, rendering the loan conditions significantly worse days later.

It was not immediately clear if the government would try to call a new session of parliament to debate modified proposals. The eastern Mediterranean island's government had warned lawmakers that the roadmap must be in place by March 5 for Cyprus to be eligible for a new aid instalment. "We are determined to maintain the course towards recovery and stability," a senior finance ministry source told Reuters, adding the cabinet would review the situation on Friday.


Russian billionaire’s former wife detained in Cyprus over $25m ring

Elena Rybolovleva,  the former wife of Russian billionaire Dmitry Rybolovlev who, pre-bailout, had almost a 10 per cent stake in Bank of Cyprus, was detained in Cyprus on Monday in connection with the alleged theft of a diamond ring believed to be worth $25 million, police said. The case was reported to Limassol CID yesterday morning by a lawyer from Bolton Trustees who filed the complaint on behalf of the Domus Trust, a Cypriot International Trust. “Pursuant to a criminal complaint filed, Elena Rybolovleva was today detained by the police authorities of Cyprus upon her arrival to Cyprus. The complaint filed relates, inter alia, to the theft of trust property (a rare item of an extremely high value) by Rybolovleva,” a written statement from Bolton Trustees said.

The statement said the company had no intention of commenting on the substance of the complaint filed with the police but a police spokesman confirmed that the rare and valuable item was a diamond ring worth some $25 million which the 48-year-old Rybolovleva had allegedly borrowed and given to her 25-year-old daughter in Switzerland back in 2009 but never returned to the trust. “The trustee of a Cypriot International Trust has a legal duty and obligation to preserve and protect the trust property. The discharge of the trustee’s fiduciary duties commands that all steps are taken to protect the title and legal ownership of the trust property in the most efficient way possible and always in accordance with applicable laws,” Bolton Trustees said. Rybolovleva arrived in Cyprus on a flight from Switzerland yesterday morning and was stopped by police who will question her and determine the need to remand her in custody, the police spokesman said. He said legal services were consulted on the matter and the police would act diligently to make sure the law was upheld.

Bolton Trustees, in their statement, added that they were obliged to proceed accordingly to protect the trust property. “It is very important for Cyprus, as a jurisdiction and an international financial centre, to protect the companies and trusts which have shown confidence in its economy, financial and legal system,” the Trustees said. Dmitry Rybolovlev made much of his fortune from the 2010 sale of his stake in fertiliser company Uralkali for $6.5 billion. In the Cyprus bailout he is estimated to have been left with, along with Bank of Cyprus and other ‘old shareholders’, one 20th of his total stake in the bank. As a depositor, losing 47 per cent of his money in the haircut, he will however be compensated with new shares in lieu of the lost deposits. Rybolovlev’s Limassol-based lawyer in Cyprus, Andreas Neocleous told the Cyprus Mail on Monday, the issue with the ring had nothing to do with his client and declined to comment further. The couple’s divorce – they were married 23 years – has been acrimonious with several lawsuits involving expensive properties in places like New York. Rybolovleva filed for a divorce in 2008, accusing her husband of cheating. There were also accusations that Rybolovlev had moved his art collection, valued at between $500 million and $1 billion, to London and Singapore by using trusts in various countries ostensibly to hide assets from his wife.


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