Suphire borrowed shares from EAC

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Fresh information secured by the Financial Mirror from highly reliable sources indicates that Suphire had borrowed the shares from the EAC Staff Provident Fund with a guaranteed return pledge, as opposed to undertaking to manage the funds as the EAC is now portraying.

The reliable sources told the Financial Mirror that the EAC Staff Provident Fund lent the shares to Suphire for a 11% return on capital by the end of the period.

Being a recognised and approved financial services firm (EPEY), Suphire could not provide such guarantees, which is why Rea Andronicou, a principal shareholder in the group gave a personal guarantee for the performance.

“The contract signed between the EAC PF and Suphire is similar to any other Fund Management contract, but in essence they were engaged in lending shares that they would not be utilising and getting a return out of it,” said the reliable source, adding that major insurance companies and funds abroad routinely engage in such practises.

When in November 2004, the agreement expired and Suphire failed to provide the shares back to the EAC PF, the majority owner of Suphire, Yiannos Andronicou offered to give in exchange other shares, an offer which was rejected by the Management Committee of the EAC PF.

Insiders from both camps knew about the problem since November and were engaged in talks in order to solve the problem, but last week, somebody intentionally leaked the problem to Phileleftheros and Politis, forcing the issue out in the open.

People familiar with the issue say that probably the same thing also occurred with the Provident Funds of the Pilots and the Cyprus Forest Industries that claim to have shortfalls of CYP 780.000 and CYP 225.000 respectively.

As regards reports that Suphire owes about CYP 150.000 to the Ayios Neophytou Fund, other reliable sources told the Financial Mirror that the dispute is not for a funds management contract, but refers to the balance of CYP 500.000 that the Church fund had previously given to Suphire to purchase shares, which were done, but the balance of CYP 150.000 were never returned.