Five former non-executive members of the Bank of Cyprus board fined by the Cyprus Securities and Exchange Commission for mispresenting the value the lender’s Russian unit Uniastrum will contest the decision at the next instance, their lawyers said.
“The CySEC decision is manifestly wrong and is in our opinion imbued by an attempt to impress public opinion in an unjustified and unfounded manner,” the Limassol-based Chrysses Demetriades law firm and Nicosia-based lawyer Chris Triantafyllides said in a joint statement.
“The CySEC decision is in conflict with the opinion (and) assurances given by Ernst & Young, the bank’s independent external auditors, who had to, and did certify to the board of directors, that the financial statements in question had been prepared according to international accounting standards. Moreover, and more importantly, the external auditors provided the board with their opinion in writing, that no impairment on the value of Uniastrum was needed”.
The lawyers said their clients went ahead to approve the financial statements together with other directors only after receiving the assurances in question.
CySEC opted to ignore this evidence and impose administrative fines on their clients who did their duty by relying on the opinion of the bank’s independent auditors, they said, adding that CySEC “did not act objectively, impartially, and on the basis of established principles of justice”.
On Monday, CySEC fined eight former Bank of Cyprus directors and managers €420,000 for not presenting the real value of the bank’s loss-making unit before mid-2012, and imposed a “token fine” of €25,000 on Bank of Cyprus, citing the circumstances of its recapitalisation.
A Bank of Cyprus source said that the lender will also contest the fine “as a matter of principle”.
Cyprus’s largest lender acquired Uniastrum in 2008 for $576m and sold it last year for €7m. In 2014 alone, Uniastrum generated a €299m loss.