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Cyprus

MPs bemoan ‘meagre’ legal aid to bondholders

By Angelos Anastasiou

The House legal affairs committee on Wednesday voiced serious reservations with regard to a government bill allowing legal aid of up to €2,000 payable to individuals who saw their investments in banks’ capital securities wiped out.

In Wednesday’s session, all committee members voiced disagreement with the proposed clause, and the committee decided to grant the justice ministry two weeks to review their reservations and propose the necessary amendments.

Committee chairman Sotiris Sampson said that, while the committee welcomed the government’s intent to support bondholders who claim they were duped into investing in unsafe financial products, it was doubtful whether €2,000 could suffice the complicated legal battles they have undertaken – or plan to undertake.

According to Sampson, the €2,000 is meant to cover legal administrative expenses VAT, and stamp and other fees, leaving a meagre sum for legal fees.

He explained that lawyers’ fees are set by scales based on the value of a lawsuit in terms of damages sought, and lawyers are by law banned from asking for additional fees.

All deputies expressed doubts as to whether the particularities of each case might be taken into consideration, such as complications that may lead to extended and more costly proceedings.

AKEL deputy Aristos Damianou said there had been political commitments for the restoration of bondholders, and the President had undertaken a mediation effort to resolve the problem with banks and co-operatives.

This proposal, he added, includes the positive element of financial support, but remains badly lacking.

According to Damianou, €2,000 for a lawsuit worth €200,000 is far too little, while issues arise in terms of what criteria might be used to decide on the amount of support to be granted.

He argued that reservations were also expressed in terms of lawyers’ impartialness, since some law firms represent banks and co-operatives in other cases.

The AKEL deputy noted that this proposal contradicts the fact that other groups of citizens are not afforded such government-funded financial support, and deemed caps on legal aid “unprecedented” as legal support should be unconditional and non-discriminatory.

The Greens’ leader Giorgos Perdikis said the bill is severely lacking and solves none of the problems and injustice bondholders have suffered.

He noted that his party has tabled a House resolution, which includes a detailed plan on how to reimburse those affected.

Perdikis argued that urging these people to resort to the courts essentially benefits lawyers, and called on the government to stop being a “state of lawyers and accountants”.

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