 | Lycourgos on the offensive
>Bulgarian key witnesses on the run - Prosecution case headed for collapse
The government’s much publicized case against Lycourgos Kyprianou, the chairman of Globalsoft, may collapse following reports that the two material witnesses on whose testimony the whole prosecution case had been based are on the run.
Kyprianou was arrested and later freed on charges of providing false information to the Central Bank when securing a permit to export foreign exchange to acquire two companies in Bulgaria.
The prosecution had built its case based on key testimony provided by Nikolay Nikolov and Lubomir Boyadjiev, two Bulgarian nationals who were the previous owners of Express Consult JSC, accusing Kyprianou of misstating the amount of the takeover and for not settling the agreed purchase consideration.
According to the authoritative Bulgarian daily, The Standart, the country’s Attorney General has opened a case against the two for fraud and for embezzlement of up to USD 2 mln from Consult.
According to the same reports, the whereabouts of Boyadjiev is not known since he has gone into hiding while Nikolov is already in custody, in the hands of the Bulgarian Ministry of Interior.
An upbeat Kyprianou described the whole events as further proof of a conspiracy against him, accusing local authorities of building a false case on unfounded from two suspicious Bulgarians.
The authorities in Sofia say Nikolov and Boyadjiev had formed more than 30 companies in the past five years, one of which was Express Consult. After Globalsoft purchased the company, Nikolov and Boyadjiev remained with the company in their capacity as resident managers. However, when GLC attempted to proceed with changes and restructure the company, both officials left taking about USD 2 mln with them.
The USD 2 mln embezzlement was, according to the Bulgarian sources, discovered by an audit made by the Cyprus office of PricewaterhouseCoopers.
Subsequently, Nikolov and Boyadjiev were brought to Cyprus and in their deposition to police, accused Lycourgos Kyprianou of misstating the takeover amount and for not settling the agreed amount. Based on this testimony, the Attorney General in Nicosia then pressed charges against Kyprianou and planned to use the Bulgarians as star witnesses.
Following the arrest of Nikolov and the unknown whereabouts of Boyadjiev, the whole case may now collapse.
PROSECUTORS CASE
In demanding the arrest of Lycourgos Kyprianou, the prosecutor had told the court that according to police investigations, GLC paid USD 8 mln to Southwood Management, Northside Trading and Vagula Investments between 14 March and 7 September, 2000.
The first is registered in the British Virgin Islands with a Cypriot director, the second is registered in the Isle of Man with Kyprianou its sole director and shareholder and the third is a Cyprus registered company, with Kyprianou again its sole owner and director.
On 16 September, 2000, GLC agreed to acquire the Bulgarian Express Consult JSC (Express) from its three previous owners, Nikolay Nikolov, Lubomir Boyadjiev and IT Soft K.F.T. for USD 8 mln. The sellers collected only USD 4.8 mln of which USD 3.6 mln was paid on 31.10.2000 through Rosato Finance, formed the same day and USD 1.2 mln was paid on 1.2.2001 through a transfer from Southwood. The remaining USD 3.2 mln were never paid.
Investigators also noted the acquisition on 31 October 2000 of the Bulgarian Comsyst AD for USD 4.6 mln, which ended up in the account of Rosato held with Bank of Cyprus. It appears that Rosato Finance is the main shareholder of Comsyst, while the shareholders of Express could not explain why the amount of USD 3.6 mln were transferred to them by Rosato.
In August 2000, GLC submitted an application with the Central Bank to export USD 8.2 mln to finalise the acquisition of Comsyst. The suspect and Globalsoft were engaged in numerous correspondence with the Central Bank to convince them that the Comsyst acquisition was valued at USD 8.2 mln and not USD 4.6 mln as was the case.
The investigators believe the second company's purchase was invented in order to justify the further transfer of funds abroad as a way of paying the first company.
Defence for Kyprianou, led by lawyer Loukis Papaphilippou, denied the allegations, and said the two sums of USD 8 mln and USD 4.6 mln were paid properly and legally.
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