Fraud in Cyprus

“fraud in Cyprus does not exist as specific criminal offence”

When the Editor saw an article headed ” Shark hauled up off Paphos” in the Cyprus Mail, he immediately thought of the Cyprus Informer article Beware of Property Sharks.

But it was a real shark where Egyptian fishermen had caught a large shark, 2.5 metres, called ‘Pambakas’.  So we know what that shark must look like.

But what does a real estate shark look like?

A study by KPMG Forensic profiles a Fraudster by examining the characteristics of the perpetrators of fraud cases, and the circumstances in which the frauds were perpetrated. The survey covered 360 cases that have recently been investigated by KPMG Forensic in the Europe, Middle East and African region.

The key characteristics identified were as follows:

85% of fraudsters were male.
The typical fraudster was aged between 36 and 55 years.
The fraudster will continue to commit fraudulent acts until caught:
91% of profiled perpetrators acted multiple times, often over a period of several years

Maria Krambia-Kapardis in the Journal of Financial Crime says “that in Cyprus, despite the fact that most victim companies had not reported the crime, the estimated losses run into hundreds of millions of Cyprus pounds, and it took the forms of mismanagement of public funds, tax evasion, stolen cheques, bounced cheques, forged cheques, pensioner fraud, share price manipulation, deception and false documentation, pharmaceutical and accountancy fraud.” 

But Krambia-Kapardis also says “that fraud in Cyprus does not exist as specific criminal offence”.  In the UK however a reform of the criminal law has introduced the Fraud Act 2006 which creates a new general offence of fraud.  Perhaps the Cyprus Government needs to attend to this in Cyprus?  

Why does Cyprus seem to have so many sharks?

Attractiveness of the Cyprus domestic and corporate tax regimes is a possible reason as well as ranking high in the world’s list of the most free economies.

According to a another recent survey conducted by KPMG, Cyprus is one of the most attractive offshore tax havens in Europe. Together with Ireland and Switzerland, Cyprus enjoys relative transparency in its tax structures, suffers lower levels of taxation change and upset annually compared to other European countries.

For companies seeking a European base for international business transactions, Cyprus could just be the ideal offshore tax haven for incorporation. 

For a start the nation is in the EU, therefore companies enjoy the associated status by establishing operations therein.  Secondly, the country has managed to maintain a low level of corporation and even personal income tax as well as dividend and royalty tax despite gaining EU entry in 2004…and now, from the 1st of January 2008 Cyprus has adopted the Euro as its official currency which makes European based trading simpler for companies and gives businesses even greater confidence in the jurisdiction.

CYPRUS HAS the world’s 22nd freest economy according to an assessment by The Heritage Foundation in Washington and published in the Wall Street Journal yesterday.

Founded in 1973, The Heritage Foundation is a research and educational institute – a think tank – whose mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense.

More specifically, the island is characterised with a free market economy of 71.3 per cent and is ranked 11th out of 41 countries in the European region, with an overall score higher than the regional average and an above average score in nine of ten ‘economic freedom’ categories.

Coming out on top with 90 per cent are property rights, with the foundation reporting that, “contracts and property rights are enforced effectively.”

We don’t think that Conor O’Dywer would have thought that nor those who featured in the Channel 4 programme on Cyprus.

The Heritage Foundation in Washington is a world renowned organisation.  Has it been duped by Cyprus? Or is the number of property frauds in Cyprus proportionately low as compared against the total number of safely conducted property transactions across Cyprus?

The Cyprus Informer estimates that the annual figure could be 4000.

Perhaps that is why the Government of Cyprus is not moving fast with the reforms demanded by the Cyprus Property Action Group (CPAG)?  The Cyprus Informer suggests that CPAG needs to publish some figures on its web site to support its campaign.

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