This week’s revelations by former Omonia chairman on the links between Akel and Omonia were damning, but why has the response of other parties been so muted?
Revelations of Akel’s stranglehold over popular football club Omonia, former president Demetris Christofias’ testing the boundaries of propriety – or even legality – through his instructions for imprudent bank lending and zoning relaxations, and, perhaps above all, the political establishment’s lukewarm political reaction, could be deemed telltale signs of a broken country and raise serious questions of the checks and balances of our system of governance.
Earlier this week, contractor Miltiades Neophytou took the witness stand in a lawsuit he filed against Christofias in October 2013, asking that the former president pay him for costs incurred by the contractor at his behest.
In court on Wednesday, Neophytou, who served as Omonia’s board chairman from 2008 to 2012, made claims that Christofias refused to pay him for construction work carried out on the former president’s Makedonitissa home, as well as his Kellaki holiday home.
He also claimed that he poured tens of millions in Omonia, one of the most popular football clubs in Cyprus, on Christofias’ assurances that the club would pay him back in full, through Akel, the party he headed from 1988 to 2009.
The contractor is now seeking more than €22 million in compensation, most of which relates to his time at the helm of Omonia, a club persistently rumoured to be controlled by Akel.
Despite repeated denials by both party and club, Neophytou’s testimony in court, in which he described how Christofias placed individuals of his preference to the club’s board, and then ordered the resignation of the club’s chairman in 2008 so that a reluctant Neophytou could replace him, appears to corroborate the claims.
He had been wary of taking over Omonia, he said, as his football expertise had been poor, but in the end relented after Christofias explained how important the club was to him.
“In March 2008, at the presidential palace, he stressed that it was imperative for Omonia to do well and win trophies during his presidential term,” the contractor recounted in court.
“He told me that Omonia’s success was necessary for him to secure re-election in 2013.”
And when Neophytou finally agreed, Omonia’s general assembly elected a new board in March 2008 and voted him chairman, per Christofias’ stated desires.
That the former president is not a brilliant political strategist could have been inferred from a host of other incidents, but trying to build a re-election campaign on how a football club performs seems downright silly. A more serious question, however, strikes at the heart of Christofias’ public pre- and post-election proclamations of a commitment to talks for a speedy solution to the Cyprus problem. Planning re-election in the 2013 presidential elections as early as 2008 hardly spells out such commitment.
“From March 26, 2008, to September 3, 2012, when I finally resigned my post as club chairman, I and my [construction] company had paid the sum of €21,606,123.26 on behalf of the club,” Neophytou said.
“The sum of €678,332.39 was returned to my firm by Omonia. The rest of the money returned thus far, a total €5,900,000, came from a company called New Winner Investments Ltd, which is controlled by Akel.”
Following a search of the company at the Registrar of Companies, Neophytou discovered that its shareholders were Charalambos Agrotis, a relative of former Akel MP Nicos Katsourides, and Marios Efthimiou, an employee at Laiko Kafekoptio – another of Akel’s companies.
At an earlier stage, then-Akel deputy (from 2001 to 2006) Agis Agapiou had also served as company director, he noted, further pointing to ties with the party.
“Every time a payment was made by this company, on [Christofias’] instructions, Akel top official and financial director Venizelos Zannetos called me and said, for instance, ‘we paid you €250,000’,” the contractor said.
“Mr Zannetos personally confirmed to me that this company is owned and controlled by Akel.”
Neophytou’s claim was that Akel – through affiliated companies – made payments on Omonia’s behalf to third parties, raising questions with regard to the official justification for these payments, as well as the origin of the funds. In a statement on Friday, the state audit service pointed out that these matters are the remit of the tax department – Auditor-General Odysseas Michaelides might as well have winked a ‘you’re up’ wink at tax czar Yiannis Tsangaris.
Meanwhile, Neophytou said, he realised that the running of his construction company suffered because of his role as Omonia’s chairman.
“For instance, due to the extremely large overdrafts for Omonia, [my company’s] borrowing costs skyrocketed,” he claimed, also citing fatigue and time-allocation issues.
“As a result, after the first two or three years in charge of Omonia, I repeatedly expressed my desire to resign the post. But [Christofias] always pressured me to stay on, telling me not to worry.”
The contractor gave details of one incident involving Omonia’s “extremely large overdrafts” and the personal cost he claims to have subsequently suffered as a result.
“Near the end of 2011, Omonia desperately needed €2 million so that it could pass UEFA’s December licensing criteria,” he said.
“Christofias told me to go to Limassol to find Kiril Zimarin, senior executive at Russian Commercial Bank (RCB), who would give me the money Omonia needed. Indeed, I met with Mr Zimarin, whom I did not know, and his bank agreed to lend Omonia €2 million, with only my personal guarantee as collateral.”
However, because time was running out fast, Neophytou added, Christofias “arranged with the Bank of Cyprus for the overdraft on my company account to be extended by this sum”, with the understanding that when the RCB loan came through, it would be paid into Neophytou’s account.
“But, although the loan money was transferred directly into my company’s account, as agreed, the loan was never repaid, and RCB has now sued me as the guarantor,” he said.
Neophytou did not say why he thought the banks were so eager to take on such risk in order to satisfy Christofias’ demand, at a time when trouble was already brewing in the Cyprus banking sector. Attorney-general Costas Clerides, who said on Friday that he plans to ask for the transcript of the trial when the hearing is over, might have a chance to ask.
Christofias had commissioned Neophytou for some construction work, firstly at his holiday home in Kellaki – “at the time an old house in bad shape”, according to Neophytou – at a cost of €280,000, and subsequently, on his Makedonitissa home – including the construction of an additional floor over it, intended as a home for the former president’s second daughter and her husband – which ended up costing just over €1 million.
For this work, Neophytou claimed, he received about €270,000 from Christofias in January 2013, as well as “some money” from his daughters.
The contractor also referred to an emailed request by Christofias’ accountant, Pola Kyprianidou, to have the first two instalments paid by the former president – €100,000 each – back-dated so they could be included in his capital statement for the previous year, a request the company declined on legal advice.
“We were advised that doing so would be illegal,” Neophytou said.
Illegal or not, it is safe to assume that the president’s capital statement did not include unjustified expenditure, so it remains to be seen where the – ostensibly ‘missing’ – €200,000 was found after Neophytou’s refusal to accommodate the request.
But it was the money he spent on Omonia – over €21 million – that had Neophytou most concerned.
Christofias’ repeated promise that he would make sure all the club’s debts to Neophytou and his company would be repaid turned out to have been based on a shaky plan to sell a plot in Pera Chorio-Nisou, Nicosia, owned by an Akel-controlled company, following a convenient zoning upgrade that would have seen its value appreciate substantially. In the latest revision of zoning designations of southern Nicosia, finalised in May 2015, the area’s zoning designation was changed from agricultural, with a building coefficient of zero, to suburban, with a building coefficient of 10 per cent.
“The plot is owned by Lockwood Properties Ltd – which is 100 per cent owned by New Winner Investments Ltd,” Neophytou testified.
Why a political party needs a property-management company is a legitimate question in and of itself, and would explain parties’ resistance to include “affiliated companies” in a bill forcing them to disclose their finances each year. But that it managed a property originally intended for the construction of Omonia’s home pitch lends credence to Neophytou’s claims of the inextricable connection between club and party. Of course, it also raises obvious questions, like how many other companies no one knows about Akel runs, how many companies other parties run, and whether any of them are in a position to justify the payments and revenue streams in each of their accounts (and, if they can, why they don’t).
The property, which apparently comprises 10 plots in the Halepianes area, has been put up as collateral for three separate loans taken out by Lockwood from the Bank of Cyprus in 2004, 2011, and 2014, for a total of around €10 million. Post-upgrade, the plot was estimated to be worth €40 to €50 million.
“This money would be enough to pay off Omonia’s debt in full, and leave some money for Akel, too,” Neophytou said.
“As a result, the defendant in 2010 issued instructions to then-interior minister Neoclis Sylikiotis to start the process of effecting the zoning upgrade. I was present at this meeting at the presidential palace, because [at the same meeting] the defendant instructed me to start a parallel process of having the area’s local community leaders stir up the issue of the upgrade. To this end, I met with the community leader of Pera Chorio Nisou.”
In a statement, Sylikiotis denied any wrongdoing, but – regardless of whether he eventually interfered with the zoning decisions – he did not explicitly address whether at any point Christofias instructed him to “start the process”.
Pera Chorio community leader Yiannakis Georgiou confirmed the meeting cited by Neophytou, but said he could not recall the meeting’s agenda.
“This is nonsense – we have been asking for zoning upgrades for decades, even before the Halepianes plot was bought for Omonia,” he told the Sunday Mail.
“Also, back then we had some issues with Mr Neophytou, because he owned some agricultural land in the area, which he turned into storage space, so it’s entirely possible that we talked about that, too.”
In the end, for all the accusations voiced and allegations made, it was what was left unsaid that caused the most unease. A president abusing his post might be tolerable – our system of governance relies way too much on a president’s moral compass and sense of personal integrity, affording him the freedom and power to do pretty much anything unchecked – but the deafening silence that followed Neophytou’s allegations is extremely discouraging. Political parties, usually exhibiting feline-like reflexes at an opportunity to criticise an opponent and claim the moral high-ground, issued tired statements that said nothing at all. It may point to collegiate solidarity – that unspoken code that does not allow attacks on a fallen fellow soldier, even if he is the enemy – or it may suggest a nervous political establishment, wary of seeing one of its own taken down by an outsider, for fear of who might be next.
Following the money trail
Miltiades Neophytou and his construction firm – Miltiades Neophytou Civil Engineering Contractors & Developers Ltd – seek close to €23 million from former president Demetris Christofias.
For the money he spent in his four years Neophytou at the wheel of Omonia football club (2008 to 2012), he is asking for a grand total of €22,087,519.54.
According to the contractor, his expenditure per year for the football club was as follows: €2,565,778.13 in 2008; €6,851,918.00 in 2009; €7,052,110.00 in 2010; €997,962.00 in 2011; and €4,138,355.13 in 2012 – for a total €21,606,123.26.
Of this sum, Neophytou said, Christofias arranged for the return of a total €8,578,332.39 from Omonia, of which €5,9 million was paid by New Winner Investments Ltd, €2 million from the RCB loan, and €678,332.30 from the club itself.
This left a balance owed to Neophytou of €13,647,217.46, but, due to the account overdrafts drawn on at Christofias’ urging, Neophytou is also seeking the amount of €8,440,302.08 for interest charged.
With regard to the restoration of Christofias’ Makedonitissa residence and Kellaki holiday home, Neophytou claims he is owed a total €421,154.92.
The cost of the work, he explained, totalled €691,440, and Christofias paid only €270,285.08 in three instalments: €100,000 on January 2, 2013, €100,000 on January 31, 2013, and €70,285.08 on July 25, 2013.
Additionally, Neophytou’s company was asked to renovate the first floor of the Makedonitissa building, which is the home of Christofias’ older daughter, at a cost of €77,226.87, and build a second-floor home for his younger daughter at a cost of €457,544.49, for which he said he received “some money” from the two women.
A third claim by Neophytou relates to the renting of premises and payment for utilities for Christofias’ 2008 campaign for president, which the contractor said ran up a cost of €241,485.85.