Cyprus Mail: News Articles in English, 02-10-23

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From: The Cyprus Mail at <http://www.cyprus-mail.com/>

Wednesday, October 23, 2002

CONTENTS

[01] Growing concern on political impact of Denktash illness

[02] Our cucumbers are just fine

[03] Billboard legislation due before house

[04] CSE council set to rule on controversial merger

[05] Hellenic Petroleum mum on cost of BP deal

[06] Police under the spotlight over phone tapping claims

[07] Hasikos: Nikiforos may be postponed

[01] Growing concern on political impact of Denktash illness

THERE was growing concern on the Greek Cypriot side yesterday for the fate of the political talks, after Turkish Cypriot leader Rauf Denktash underwent a second operation on Sunday, further sidelining him from key negotiations.

Denktash had heart surgery on October 7 in New York, but was operated on again last Sunday after rupturing stitches on his chest, requiring a second bout of invasive surgery. Latest reports say he will remain in his hospital room for another week after spending the last two days in intensive care, and would need at least eight weeks fully to recover.

In addition, speculation is rife in the Greek Cypriot press that Denktash may be advised by his doctors not to resume his duties.

Government Spokesman Michalis Papapetrou said yesterday the Turkish Cypriot leader's illness was causing complications in the talks, which the international community hoped would produce some results by December, when the EU summit in Copenhagen is expected to endorse Cyprus' accession to the bloc.

Papapetrou added, however, that if it became clear that Denktash was not be able to return to the direct talks, it would be easy enough for the Turkish Cypriot side to appoint another interlocutor.

"But we owe it to respect the fact that despite the disagreements and differences we have with our interlocutor (Denktash), health wise he is in a very difficult situation," Papapetrou said.

He said the Greek Cypriot side had not been sounded out on a different or new procedure. "We are not given the impression by the UN that they are suspending their effort and their activity," Papapetrou said, adding that from contacts held by UN special envoy Alvaro de Soto in Ankara and Athens, "one can draw the conclusion that they are preparing the new setting which we will have to face after Turkey's elections".

The Turkish election will take place on November 3.

Papapetrou also said the Turkish side was not giving the impression that the process to solve the Cyprus problem was being postponed due to the Turkish Cypriot leader's poor health.

Reports from New York yesterday said Denktash was stable after the second operation and was expected to be out of intensive care in a few days.

Adviser Ergun Olgun said Denktash had woken up and started to talk to people around him. The new operation would delay his departure from hospital, he said, but added his blood pressure and hear rate were normal.

"He said he was comfortable and his morale was high and he was asking when he could return to Cyprus," Olgun was quoted as saying, adding Denktash would remain in his hospital room for at least another week, after which he would be assessed again. It was not likely he would be able to take up any duties for at least eight weeks, Olgun added.

The Turkish Cypriot leader's son Serdar said Denktash had experienced respiratory problems after the initial surgery, due to pressure on his chest from the stitches. He said his father's health problems were age and weight-related. "We were not expecting a second intervention. We were shocked," he said. "We are praying for his quick recovery." He added that doctors had told him there was no need to worry or to go to New York himself.

But government sources told the Cyprus Mail yesterday that it was obvious Denktash was not going to be in a position to return to work for some months. "But we feel the talks will continue with more attention from Ankara, which may at some stage appoint someone else to replace him," the source said. "Having Ankara appoint someone would be the most practical thing and my feeling is that it would not be one of the names we hear from time to time but some name we would be hearing about for the first time. Everything is open at the moment and even the route we were following was problematic."

However, diplomatic sources said the Greek Cypriot side should not jump the gun too quickly.

"At one level we - all of us - bought this indestructibility of Denktash, giving credence to the idea that a 78-year-old could go in and have heart surgery, and none of us thought it unreasonable to say he would be back in a month," the source said. "At the same time, we have not seen anything other than in Greek Cypriot press that suggests he might not come back."

On the possibility that the international community had a Plan B in the event Denktash did not resume his duties, the diplomatic source said there was no back-up scenario.

"In the circumstances, it is really for the sides, and in this instance the one side, to make pronouncements as to how they will proceed," the source said.

Copyright Cyprus Mail 2002

[02] Our cucumbers are just fine

THE AGRICULTURE Ministry yesterday firmly dismissed reports that Cypriot farmers were falling short of European Union standards for cucumbers and that claims of 'special coaching' for farmers were in fact part of a long running education programme that had been implemented many years ago for producers of all fruits and vegetables.

"I have read the article in Politis," said Kyriacos Patsalos, Head of Vegetables, "and it is simply inaccurate." Patsalos clarified that the standards for exporting cucumbers from Cyprus had been around since the 1950s and that there were no problems with the produce.

"The Agriculture Ministry has offered an educational programme for producers of all varieties of fruits and vegetables to help them keep abreast of the latest developments in techniques and methods. It would be wrong to single out cucumber producers as requiring schooling in methods or standards. Cucumbers of the longer variety, more readily found in central and northern Europe, are given one of three classifications extra, class I and class II, which reflect quality. The top ranking is given to cucumbers that have the clearest skin, with a consistent dark green colour, and are straight, thin and symmetrical. Those that fall outside the criteria fall into the other two categories."

Patsalos also dismissed any suggestions that there were problems with the smaller 'mini-cucumber' popular in the Mediterranean. "The mini-cucumber is a viewed as a different vegetable to the longer ones, which are often found sealed in film. It would be wrong to compare the two."

He admitted that as Cyprus's accession to the Europe Union drew closer, some newer methods and practices had been introduced into the overall education programme provided as a service for producers, but that they applied to the full range of fruit and vegetable produce on the island, not just cucumbers.

Copyright Cyprus Mail 2002

[03] Billboard legislation due before house

CONTROVERSIAL legislation banning billboards from roadsides is due to be presented to the House plenum next Thursday, after being discussed yesterday in a closed-door joint meeting of the House Communications and Interior Affairs Committees.

Interior Committee chairman Nicos Katsourides told state radio after the meeting that the parties would be prepared to take a definitive stance on the matter by Friday, once Attorney-general Alecos Markides had clarified certain issues.

He said that the Attorney-general had answered four specific questions asked by deputies in the joint meeting, but would not comment on their content, given that the session had been held behind closed doors.

The four main issues that concern the two committees are the placing of billboards on pavements, next to traffic lights, next to pedestrian crossings and on highways.

Communications Minister Averoff Neophytou - the driving force behind the bill -was also present at the meeting, but refused to make any comments.

Billboard tension has been rising steadily between the government and advertising companies over the bill that could see the removal of hundreds of billboards from roadsides. The latter have stepped up efforts recently through their own advertising campaign to persuade deputies not to approve the new bill, which will be put to vote at the plenum next Thursday. If the bill is passed to remove the boards, municipalities and advertising companies are set to lose huge amounts in revenue. The government argues that the safety of drivers and pedestrians is of paramount importance.

Copyright Cyprus Mail 2002

[04] CSE council set to rule on controversial merger

THE COUNCIL of the Cyprus Stock Exchange is expected to make a decision tomorrow about the proposed merger of Sharelink Financial Services (SFS) and White Knight Holdings (WKH), which has sparked a storm of protest from small shareholders of the latter.

Independent shareholders have been arguing the move will lead to the swallowing up of White Knight and its capital by the CSE-listed Sharelink, and have appealed to the authorities to reject the proposal for the merger.

"The authorities need to put an end to this blatant mockery and the usurping of the investors' capital," said a shareholder who asked not to be named. Before making a decision, the authorities should investigate all the complaints surrounding the move, the same shareholder said.

"There can be no justification for approving the merger before there is a full and conclusive investigation into the allegations of irregular dealings and the misleading of investors," he added. "Not only was half of White Knight bought ridiculously cheaply, the main shareholder (SFS) is now trying to take over the rest at a discount, paying again with worthless pieces of paper."

White Knight Holdings was set up in November 1999, at the time when share prices were at their peak, by the main shareholders of SFS, who sit on both boards. According to their plans, the new company would invest in existing businesses, restructure them and make them profitable. By June of the following year, WKH had managed to raise £76 million from investors who were paying between 50 and 75 cents per share.

SFS gradually deployed a number of methods to take a 42 per cent stake in the company - a big 'source' of cash - which gave it absolute control. Initially it took a 26 per cent stake, which it paid with SFS shares, the price of which was a staggering £20 per share at the time. Bank loans were then used for the purchase of WKH shares representing an additional 11.5 per cent of the capital. Three companies, which were subsidiaries of WKH, provided the collateral and guarantees for the above-mentioned loans (amounting to £12.5 million).

At a later stage, SFS increased its holding with the takeover of the Kyknos investment company, which also held WKH shares. Small shareholders claim that for every pound they invested in White Knight, SFS benefited by 30 to 35 cents, not to mention the fact that the company's cash reserves were used as an 'internal pocket' of SFS.

Strangely, the companies that White Knight bought to restructure and make profitable ended up incurring more losses than before. The companies were run by SFS, which was charging White Knight £2 million per year to provide management and administration services. To make matters worse, White Knight, found itself saddled with 30,000,000 SFS shares which had lost 95.5 per cent of their value - they are now trading at 7 cents. This meant losses of £28 million pounds for the ordinary White Knight shareholders who, unlike SFS, had paid for their shares in cash.

These shareholders consider the board of SFS responsible for these huge losses. As a result of bad management, White Knight saw 30 per cent of its assets wiped out.

Last April, the boards of the two companies announced the proposal for a merger, whereby White Knight shares would be traded for SFS shares, based on their respective internal value. If the Stock Exchange Council approves the prospectus for the merger, SFS will take control of 93 per cent of WKH and thus take ownership of immovable property worth £40 million and a fleet of six ships, leased for 12 years. In exchange, independent shareholders will be given 12 cents worth of SFS shares for every WKH share (which has an internal value of 30 cents) they hold. In other words, the exchange will allow SFS to take ownership of the WKH assets, which are of substantial value.

One independent shareholder claimed that the WKH board, was not pushing the company's application for a CSE listing, repeatedly requesting postponements from the CSE Council, so that SFS could take over the company with a merger.

He said: "The merger proposal is the last chapter of a story of deviousness and greed, which began three years ago." He pointed out how, between August and September 1999, SFS, in its market reports published in the press, had been warning that the situation of rocketing prices on the CSE was "out of control" and heading "for a certain, total collapse". Yet the SFS board had no qualms about using the grossly overpriced SFS share (which was certain to tumble) to get its hands on the cash that ordinary people had invested in White Knight Holdings. And the irony, he concluded, was that this cash was used by SFS, which was running WKH, to increase its stake in the latter at the expense of all other shareholders.

Copyright Cyprus Mail 2002

[05] Hellenic Petroleum mum on cost of BP deal

HELLENIC Petroleum yesterday remained tight-lipped about how much they had paid BP Cyprus, more than a week after a deal was reached between the two companies for the sale of BP's retail and inland fuel businesses on the island.

Speaking at their first news conference at Nicosia's Hilton Hotel, Hellenic Petroleum executives would only say that "the price satisfied both parties, " and that they "were not at liberty to disclose such information at this moment in time."

Hellenic Petroleum's acquisition of BP Cyprus Limited followed the company's recent acquisition of Montenegro's oil company, Jugopetrol, and forms part of their overall strategy, which focuses on the expansion in south eastern Europe.

"We are delighted to acquire BP's retail and other inland fuels businesses in Cyprus. It is a strategic opportunity for our company," said Athanasios Karachalios, Managing Director of Hellenic Petroleum, adding, "This move is seen as a platform to launch into Cyprus and the surrounding areas and allows us to better serve our existing customer base here in Cyprus and in Lebanon."

Karachalios was quick to dismiss any suggestions that the company would face any operational problems during the transition period it faced. "We don't envisage any problems because BY Cyprus Limited is an efficient and well managed company that has long been established here."

In addition to the share transfer, 40 staff from BP Cyprus Limited will become employees of the Greek petroleum company. The operation it acquired sells approximately 500 million litres of fuel per annum and is the leading motor gasoline marketer (with 35 per cent market share). Included in the deal is a network of 70 retail stations, an inland direct/wholesale fuels business, an LPG storage and bottling plant and a 65 per cent shareholding in the Superlube lubricants blending plant. Of the 70 staff in BP Cyprus, one third will transfer with the retained business to BP Eastern Mediterranean Ltd.

Asked if the deal had been made with any provision to facilitate Cyprus's petroleum storage requirements, Hellenic Petroleum pointed to a recent meeting been Greece and Cyprus's respective industry ministers where the matter had been addressed, adding that if asked and was able to, it would do all it could to support the government in its efforts to satisfy EU requirements for fuel storage.

Copyright Cyprus Mail 2002

[06] Police under the spotlight over phone tapping claims

HOUSE Human Rights Committee president Aristos Chrysostomou yesterday called on police to come clean on allegations they had been illegally tapping telephone conversations.

Speaking after a meeting of the committee, during which the issue of phone tapping was discussed behind closed doors, Chrysostomou said deputies had asked for answers to a number of specific questions.

"The intention of the Human Rights Committee is fully to investigate the matter so that we can re-establish the protection of citizens' civil rights and to punish those who have broken the law," he said.

The committee discussed whether two personal computers and other telephone surveillance equipment recently discovered at Police HQ in Nicosia had been used to monitor telephone conversations.

Last week, police presented the committee with copies of two reports from an internal investigation they had carried out after the allegations.

Yesterday, the Justice Ministry Permanent Secretary Lazaros Savvides, as well as Deputy Attorney-general Petros Klerides, Deputy Police Chief Charalambos Koulendis and CyTA Supervisor Charalambos Pericleous were all asked to answer specific questions from deputies on the issue.

Asked how the two personal computers came to Cyprus from Israel, Koulendis said the government had an agreement with Israel, as well as 17 other countries, for exchanging information between police authorities in order to combat organised crime and the transport of illegal immigrants.

Koulendis said it was unclear whether the computers were a gift from Israel, but noted they were brought without the knowledge of the Attorney-general and that they were not listed as government property.

The deputy chief said the police were not equipped to carry out telephone surveillance operations and that, according to experts, it was impossible to monitor telephone conversations through a standard modem

"The equipment needed for telephone surveillance costs approximately £2 million," he said.

"That and the fact that it was available from an Israeli company meant it was impossible for the equipment to be brought here undetected,"

However, Koulendis admitted the police were equipped with standard telephone surveillance equipment that had not been used for a long time.

"The cases in which those devices were used have been well documented," he said.

Deputy Attorney-general Klerides said there had not been any specific complaints that phones were being tapped, and that there was no proof that telephone surveillance operations were being carried out.

Copyright Cyprus Mail 2002

[07] Hasikos: Nikiforos may be postponed

Speaking after a meeting at the presidential palace, Hasikos left open for the first time the possibility of its postponement, saying: "Nikiforos is scheduled to begin on November 1. However, if new developments dictate the need for a postponement, then it will be done," indicating that the government would be prepared to take such action as a measure of good will.

A number of mediators are currently shuttling between Athens, Ankara and Nicosia in an effort to postpone the upcoming military exercises of Toxotis, Tavros and Nikiforos, underlying the need for a stable climate during current negotiations for a solution to the Cyprus problem.

Copyright Cyprus Mail 2002

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