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ISSUE 64 JUly 17, 2016 PRICE €2.00

Gold ISSUE 64 | july 17, 2016 | brexit: crisis or opportunity for cyprus?

CRISIS OR OPPORTUNITY FOR CYPRUS? The impact of the UK’s decision to leave the EU on key sectors of the island’s economy

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INVESTMENT Natasa Pilides on her role as cipa d-g

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FIDUCIARY SERVICES cfa presidents Christos Michael & George Savvides

INTERVIEWS

borys humeniuk george mountis richard spencer

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ForexTime (FXTM) is an international online forex broker offering financial services in forex, spot metals and CFDs. ForexTime Limited is regulated by the Cyprus Securities and Exchange Commission (CySEC) under license number 185/12. There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose. It is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. It is the responsibility of the Client to ensure that the Client can accept the Services and/or enter into the Transactions in the country in which the Client is resident. If the risks involved seem unclear to you, please seek independent advice. 34 | GOLD | The Business Magazine of Cyprus @2016 FXTM

62 | GOLD | The Business Magazine of Cyprus

ISSUE 64 JULY 17, 2016

T H E

B U S I N E S S

| COVER STORY |

CRISIS OR OPPORTUNITY FOR CYPRUS? The impact of the UK’s decision to leave the EU on key sectors of the island’s economy By John Vickers

here can be few people in Europe who, upon learning the result of the UK referendum on EU membership on the morning of June 24, were not shocked and concerned. First and foremost was the British Prime Minister himself – David Cameron had called the referendum early, such was his confidence in a “Remain” vote – but it has been suggested that even those leading the “Leave” campaign were not actually expecting to win. If ever the saying “Be careful what you wish for” was appropriate, it was about what happened on June 23, 2016. or months, business leaders, economists, foreign heads of state and other high-profile figures had been warning the British people that a vote to leave the EU would have possibly disastrous short-term consequences for the country and an uncertain, quite likely negative long-term impact on their standard of living and the UK’s economic future. 52% of voters chose to ignore them but within days, the pound had fallen to a 30-year low, share prices were plummeting, the Conservatives were involved in replacing David Cameron and almost all the Parliamentary Labour Party had expressed the desire for their own leader, Jeremy Corbyn, to resign. Two of the Leave campaign’s most visible advocates

also found themselves out of the picture – Boris Johnson, previously expected to replace Cameron, was deserted by Michael Gove who stood for the post himself (and lost), and Nigel Farage, whose entire political life had been based on getting the UK to leave the European Union, announced that, having achieved his aim, “I want my life back”. Not surprisingly, they were both castigated by European Commission President JeanClaude Juncker, who described them as “retro-nationalists, not patriots”, adding that “A patriot would not leave the boat when the situation becomes difficult.” He also noted that the Leave campaigners “had no plan of where to go on from here.” ncertainty is the buzzword these days as it was not only those in the Leave camp who had not planned for the day after a win for their side; the Government had not drawn up any contingency plans either. David Cameron has said that Britain will not invoke

result on this country. There seems to be a consensus that, for the time being, little or nothing will change. The weaker pound sterling may dissuade some Britons from choosing Cyprus as their summer holiday destination in 2017 and thereafter and it may make them spend less than they might otherwise have done on the island in the coming months but they have already paid for their accommodation and, in many cases, have booked an “all-inclusive” package, which essentially means that they don’t need to spend a single euro if they don’t want to. ne area in which Cyprus may keenly feel the absence of the UK around the EU table concerns tax matters. Many of the big players in the EU are in favour of various forms of tax harmonisation, including a Common Corporate Tax Base (CCTB). This is not a development that Cyprus supports, not least because one of the island’s key selling points to investors is its low 12.5% rate of corporation tax. In this, Britain was w a strong wa ally allly and many observers have ob pointed to po the th he fact that, wit without its support, it will be harder for Cyprus to ‘stand up’ to pressure on the issue. It is noteworthy that, in one of his first comments after the referendum result, Chancellor George Osborne announced that he intended to propose a reduction in the UK’s corporation tax rate from 20% to 15%. n terms of trade, the UK and Cyprus have longstanding and close economic ties. Cypriot exports to the UK comprise 10% of the country’s total while trade in services between the two countries represents 20%. It is thought that the UK’s decision to leave the EU will certainly affect Cyprus’ exports in both the long and short term, although everything will ultimately depend on what kind of deal the UK concludes with the EU and

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Article 50, which will start the exit process, until it has a new Prime Minister, whose name will be announced on September 9 but the EU has responded by saying that no talks can begin until Article 50 is triggered. Until then, it would appear that market and currency chaos is going to be the norm, followed by two years of negotiations conducted in an atmosphere that cannot be predicted at this moment. s a member of the EU, Cyprus will be affected by Britain’s exit in the same way as its 26 partners but what, precisely, does that mean? On the following pages, you can see what two leading economists have told us, as well as the views of several others with a direct interest in the impact of the UK referendum

COVER

STORY

www.goldnews.com.cy | GOLD | 31

26 | Brexit: Crisis or Opportunity for Cyprus? The possible impact of the UK’s decision to leave the European Union on key sectors of the island’s economy.

M A G A Z I N E

O F

C Y P R U S

CONTENTS 6 | EDITORIAL 8 | BUSINESS BRIEFING

Economic & Business Highlights of the past month.

12 | MY WAY

Petros Livanios’s management style.

13 | FIVE MINUTES WITH… Charalambos Samir

16 | THEY SAID WHAT?

A selection of the month’s more memorable utterances by Cypriots in the public eye.

OPINION 40 | Brexit: The Aftermath By Michalis Economides

FEATURES 18 | Cyprus Fiduciary Association I

Interview with outgoing President George Savvides.

22 | Cyprus Fiduciary Association II

Interview with incoming President Christos Michael.

34 | Getting Used to the New Normal

Interview with Borys Humeniuk, Ukraine’s Ambassador to Cyprus.

40 | AntiCIPAting Investment Opportunities

Natasa Pilides on her new role as DirectorGeneral of the Cyprus Investment Promotion Agency.

44 | No Retirement Plan

Ninos Hadjirousos FCA has no intention of stopping work yet.

46 | Interesting Times

Interview with George Mountis, Managing 7HY[ULY VM +LSÄ 7HY[ULYZ *V

50 | Wishful Thinking or Real Potential? Cyprus needs to do more if it is to become a major player in the global fund Industry, says Christopher Stuart-Sinclair.

52 | €21 Trillion and Counting...

EFAMA Director-General Peter De Proft on Europe’s thriving fund industry.

54 | International Funds Summit Photos from the event.

58 | One Year On

62 | Reinventing the

Accounting Profession Interview with Richard Spencer, Head of Sustainability, ICAEW.

65 | The Importance of

Substance Dr. Christoforos Hadjikyprianou, CEO of By Constantinos ,\YVWLHU <UP]LYZP[` *`WY\Z VU [OL ÄYZ[ Katchamis year of the Microsoft Innovation Centre. 68 | IN GOOD COMPANY 60 | Learning never Ends Fuelling the talent engine CIM Deputy Director-General Yangos at Staroil. Hadjiyiannis on two new courses. 4 | GOLD | The Business Magazine of Cyprus

71 | BUSINESS CLASS Natalia Rudakova

72 | MY COLLECTION

Roger White and his ‘self WYVWLSSLK ÅV^LYZ»

75 | BOOKSHELF

Five of the best new business titles.

76 | LUNCH WITH GOLD Fiona Mullen, Director, Sapienta Economics.

80 | WHAT’S ON

Gold’s guide to the best cultural events of the coming month.

82 | A DAY IN THE LIFE Stelios Anastasiades.

6 | GOLD | The Business Magazine of Cyprus

| EDITORIAL |

GOLD

Going…Going…Gone

ISSUE 64 JULY 17, 2016 PPRICE PR RICE €2.00 €

CRISIS OR OPPORTUNITY FOR CYPRUS? The impact of the UK’s decision to leave the EU on key sectors of the island’s economy

INVESTMENT Natasa Pilides on her role as CIPA D-G

FIDUCIARY SERVICES CFA presidents Christos Michael & George Savvides

INTERVIEWS

Borys Humeniuk George Mountis Richard Spencer

PLUS

Business BYPLÄUN WOH[»Z 6U BVVRZ Opinion & More

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PUBLISHED BY IMH ISSN 1986 - 3543

MANAGING DIRECTOR

George Michail

GENERAL MANAGER

Daphne Roditou Tang

hen 17,410,742 people state that they want something, it would be foolish to ignore their wishes. On the other hand, what should be done about the 16,141,241 who have stated the opposite view? In a democracy, the size of the majority does not matter and, in theory, a single vote would still have won the day for the Leave campaign in the UK’s June 23 referendum on whether to remain in the European Union or to leave it. It is probably just as well that the difference was more than a million votes, though a recent poll has already suggested that 1.7 million people now regret their decision to support Leave. Following the unexpected turn of events regarding the successor to David Cameron and a new Prime Minister being installed in 10, Downing Street on July 13 instead of the planned September 9, Theresa May has made it clear that she is determined to make the best of the situation created by the vote to leave the EU and that there is, essentially, no turning back. The result of the referendum was of considerable interest to Cyprus, given the island’s historical, cultural and commercial ties with the UK and the fact that a sizeable British expatriate community exists here (you may even belong to it). It was, therefore, perhaps inevitable that this issue’s cover story would deal with the so-called Brexit, despite the fact that any ideas about its potential effect on Cyprus are obviously premature. We sought the views of two economists, as well as those of others with links to both countries, and we present them on pages 26-33. You will also see that, in several of this month’s interviews, we could not resist asking the subjects for their opinion about the vote, which appears to have taken everyone by surprise. It’s not all Brexit in this issue of Gold. Indeed, there is far more about Limassol in the extra publication that you will have received with the magazine. But in addition to interviews there with Mayor Andreas Christou and LCCI President Costas Galatariotis, the main part features an extensive discussion with Ukrainian Ambassador Borys Humeniuk (page 34), the outgoing and incoming Presidents of the Cyprus Fiduciary Association, George Savvides and Christos Michael respectively (pages 18-24), with Natasa Pilides, the newly appointed Director-General of the Cyprus Investment Promotion Agency (page 40), veteran accountant and parliamentarian Ninos Hadjirousos (page 44), the Managing Partner of Delfi Partners, George Mountis (page 46) and many more. Plus, you have two magazines for the price of one – and a new John Vickers, lower price at that. And it has nothing to do with Brexit! Enjoy your Chief Editor summer. john@imhbusiness.com

6 | GOLD | The Business Magazine of Cyprus

MEDIA MANAGER

Elena Leontiou EDITOR-IN-CHIEF

John Vickers JOURNALISTS

Artemis Constantinidou, Voula Loizou CONTRIBUTORS TO THIS ISSUE

Michalis Economides, Christos Karaolis, Constantinos Katchamis, Fiona Mullen, Savvas Savouri, ART DIRECTION

Anna Theodosiou

SENIOR DESIGNER

Alexia Petrou

ASSISTANT DESIGNER

Stephanie Andreou PHOTOGRAPHY

Emma Louise Charalambous, Jo Michaelides, Andreas Loucaides MARKETING EXECUTIVE

Kevi Chishios

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Irene Georgiou

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BUSINESS BRIEFING

NPLS ARISTO REPAYS â&#x201A;Ź283 MILLION

â&#x201A;Ź32 Million Loan for UCY Campus Extension

EDUCATIO N

The University of Cyprus has been granted a â&#x201A;Ź32 million loan by the Council of the Europe +L]LSVWTLU[ )HUR *,) [V Ă&#x201E;UHUJL [OL ZLJVUK HUK Ă&#x201E;UHS WOHZL VM P[Z KL]LSVWTLU[ -YVT to 2023, the university will be expanded and modernised. The loan will enable upgrades to campus infrastructure. â&#x20AC;&#x153;The science and innovation centre will be designed, the energy centre for YLUL^HISLZ ^PSS IL Ă&#x201E;UHSPZLK HUK [OL HU[PZLPZTPJ Z`Z[LT ^PSS IL PTWYV]LK Âš 9LJ[VY *VUZ[HU[PUVZ *OYPZ[VĂ&#x201E;KLZ L_WSHPULK HKKPUN [OH[ Z[\KLU[ HJJVTTVKH[PVU ^PSS HSZV IL L_WHUKLK ;OPZ PZ [OL ZLJVUK *,) SVHU [V [OL <UP]LYZP[` VM *`WY\Z ;OL Ă&#x201E;YZ[ VM Ă TPSSPVU ^HZ NYHU[LK PU MVY [OL previous phase of the campus development.

Aristo Developers Ltd has announced the completion of an agreement with the Bank of Cyprus for the full repayment of all the Groupâ&#x20AC;&#x2122;s loans to the Bank, amounting to â&#x201A;Ź283 million. Through a debt-for-assets swap arrangement, Aristo Developers has transferred properties to the Bank, which amounted to at least Ă TPSSPVU ZPNUPĂ&#x201E;JHU[S` V]LY JV]LYPUN [OL KLI[ ( ZPNUPĂ&#x201E;JHU[ WHY[ VM [OL SHYNL scale Venus Rock Golf Resort project has been included in the exchange, the implementation potential of which is now increased and accelerated.

,<96-(:; (5+ *004 1605 -69*,: Eurofast and the Cyprus International Institute of Management (CIIM) recently signed a Memorandum of Understanding to seal their cooperation. Both organisations have agreed to develop a relationship, helping CIIM students and graduates develop their employability skills by gaining experience. CIIMâ&#x20AC;&#x2122;s Undergraduate and Graduate Programmes include an internship as an option to help

students gain relevant work experience and have a realistic opportunity for on-going employment. Eurofast will host CIIM students for a period of three to six months. Over the years, Eurofast has been cooperating with educational institutions in Cyprus and in other countries creating a network of future job candidates who have experience working with the company.

ONEWORLD Acquires Freemont Group

Ceremony Postponed C P d The 5th CIPA International Investment Awards ceremony hosted by Gold, which was due to be held on 23 June 2016, was postponed by the Cyprus Investment Promotion Agency (CIPA) and Gold magazine due to that weekâ&#x20AC;&#x2122;s tragic events caused by forest fires in Cyprus, The event will now take place at the Presidential Palace, Nicosia, on Wednesday. 7 September 2016.

FIDUCIAR Y

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CO-OP CO OP NPLS BELOW â&#x201A;Ź6 BILLION

The Cooperative Credit Institutions (Coops) have stepped up the pace of restructurings, reducing their non-performing loans to below â&#x201A;Ź6 billion, some six months before the target date. Cooperative Central Bank CEO Nicolas Hadjiyiannis said, â&#x20AC;&#x153;We are well within our targets for a loan restructuring of over â&#x201A;Ź1 billion in 2016 and we are very pleased with the huge progress achieved,â&#x20AC;? he said, adding that the Co-op sector has achieved restructurings totalling â&#x201A;Ź1.4 billion or 13,000 accounts in the past 12 months.

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TOURISM

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The returning British High Commissioner, Matthew Kidd, presented his credentials to President Anastasiades VU 1\UL /L ZHPK! ¸([ the heart of my second mission will be support MVY [OL LɈVY[ [V HJOPL]L a settlement of Cyprus’ own division.” Kidd served as BHC from 2010-2014.

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The Maritime Academy Cyprus has appointed Capt. Eberhard Koch, Chairman of the ÖL Shipping Group, as its Chairman. Capt. Koch is a dedicated advocate of Cyprus and enthusiastic about “giving back” to the island that has been his home for almost 20 years.

LARNACA AIRPORT HONOURS GLAFCOS CLERIDES

n the occasion of the celebrations for the tenth anniversary of Hermes Airports President Nicos Anastasiades unveiled a plaque in the terminal building in honour of the late President Glafcos Clerides. Meanwhile, Larnaca Airport was highly commended as the Best European airport in providing services for people with disabilities, during the 12th General Assembly of the Airports Council International (ACI) – EuYVWL OVZ[LK PU ([OLUZ VU 1\UL ;OL OPNOS` commended airport for the Accessible Airport

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CYPRUS EXPECTS 3 MILLION TOURISTS THIS YEAR

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Qualco Group, a leader in the development of software and the provision of services for the Credit and Debt Portfolio Management, has appointed Andreas *OY`ZHÄZ HZ *V\U[Y` Manager for Cyprus. He will be responsible for developing and implementing commercial strategies for the local market.

Close to 3 million tourists are expected to visit Cyprus in 2016, according Yiorgos Lakkotrypis, Minister of Energy, Commerce, Industry and Tourism who noted that, although occupancy OHK YLHJOLK PU ZVTL OV[LSZ PU 1\UL [OL [V\YPZ[ ZLHZVU ULLKLK [V IL prolonged gradually by a few weeks in March and November, in order to maintain the momentum. He was speaking before the result of the UK referendum, which many observers ILSPL]L ^PSS HɈLJ[ )YP[PZO ]PZP[VY U\Tbers from next year.

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Award was also recognised for “the positive travelling experience it gives to people with disHIPSP[PLZ HZ ^LSS HZ MVY P[Z NYLH[ LɈVY[Z [V JVTWS` with accessibility standards”.

Cyprus raised €120 million in revenue this year from civil marriages that took place on the island, with couples mainly arriving from the UK, Israel, Lebanon, Russia, and other Eastern European countries. According to (U[PNVUL 2HWVKPZ[YPH H ZLUPVY VɉJPHS of the Cyprus Tourism Organisation (CTO), it is a market that has not been taken seriously in the past. The number of civil marriages is around 8,000 year, with anything between 10 and 60 additional guests staying on the island for the wedding celebrations.

ECONOMIDES KRANOS CHAMBERSFIELD IN ISRAEL

he International Law firm Economides Kranos Chambersfield has announced its global expansion through a new physical presence in Israel. The firm now has offices in Cyprus, the UK, Singapore, Albania, Bahrain and Israel. Founder and CEO, lawyer Michalis Economides,

a member of the Cyprus Bar Association and a Barrister of the United Kingdom, said that the objective of Economides Kranos Chambersfield law firm is to form a global presence that will provide a full range of integrated litigation and corporate solutions, tailor-made to each customer, that will enable them to perform

effectively in any jurisdiction.” The firm, through its subsidiary corporate provider company, KnightsWorth, now offers corporate and fiduciary services in more than 20 jurisdictions. Economides Kranos Chambersfield follows a customer-driven philosophy, based on the notion “Think globally but act locally”.

www.goldnews.com.cy | GOLD | 9

BUSINESS BRIEFING IN THE NEWS

AVIATION *OHYSPL (PYSPULZ

Charlie Airlines, the Cyprusbased subsidiary of Russiaâ&#x20AC;&#x2122;s : HPYSPUL OHZ WHPK [OL .V]ernment â&#x201A;Ź1.2 million to use the brand name and logo of Cyprus Airways, which suspended operations at the ILNPUUPUN VM HM[LY years of existence. Charlie (PYSPULZ OHZ Ă&#x201E;SLK HU HWplication for a domestic air VWLYH[VY JLY[PĂ&#x201E;JH[L

BEST TALL BUILDING IN EUROPE

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Orion Airways is in the WYVJLZZ VM VI[HPUPUN Ă&#x2026;PNO[ and commercial licences with a view to starting Ă&#x2026;PNO[Z MYVT 3HYUHJH I` December 2016. Orion Airways is a Cypriot airline, VM ^OPJO PZ V^ULK I` an international investment fund based in Switzerland, HUK OHZ VÉ&#x2030;JLZ PU 5PJVZPH and Larnaca.

ARCHITECTURE

ean Nouvelâ&#x20AC;&#x2122;s White Walls, home to EY Cyprusâ&#x20AC;&#x2122; Nicosia Office since November 2014, has been named the Best Tall Building in Europe 2016, by the Council on Tall Buildings and Urban Habitat (CTBUH). It was selected among 132 buildings due to its distinctive characteristics, including the natural flow of light, perforated walls, lofty balconies and the internal espaliered gardens. The 67metre-high building is one of the tallest structures in Cyprus. White Walls will now compete for the title Best Tall Building Worldwide, which will be announced in November 2016. The striking building was chosen in 2014 to house the new Nicosia head office of EY Cyprus, which occupies all eight floors of its office space. A company statement notes that the choice of Jean Nouvelâ&#x20AC;&#x2122;s tower was â&#x20AC;&#x153;in line with EYâ&#x20AC;&#x2122;s global operating model and the broader concept of a â&#x20AC;&#x2DC;Workplace of the Futureâ&#x20AC;&#x2122;, based on both its unique aesthetic and its enhanced functionality that encourages teaming, flexibility and collaboration.â&#x20AC;?

10 | GOLD | The Business Magazine of Cyprus

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Etihad Airways recently celLIYH[LK [OL [O HUUP]LYZHY` of its non-stop Larnaca-Abu +OHIP Ă&#x2026;PNO[Z SH\UJOLK PU 1\UL -SPNO[Z VWLYH[L every Monday, Wednesday HUK -YPKH` KLWHY[PUN MYVT (I\ +OHIP H[ ! HUK HYYP]PUN PU 3HYUHJH H[ ! ;OL YL[\YU Ă&#x2026;PNO[ KLWHY[Z MYVT 3HYUHJH H[ ! HYYP]PUN PU (I\ +OHIP H[ !

House Resolution on EU Russia :HUJ[PVUZ

he House of Representatives approved a resolution on July 7 calling for the lifting of the sanctions imposed by the European Union on the Russian Federation. The resolution was approved by 33 votes in favour. The ruling Democratic Rally party DISY abstained. The resolution noted that â&#x20AC;&#x153;the sanctions imposed by the European Union against the Russian Federation have proved counterproductive and in no way have helped to solve the crisis in Ukraine.â&#x20AC;? Following the vote, a statement issued by the Embassy of Ukraine in Nicosia described the resolution as â&#x20AC;&#x153;definitely not favourable to the promotion of traditionally friendly and constructive Ukraine-Cyprus relations.â&#x20AC;?

NEW IN CYPRUS 0*7(* )VHYK VM +PYLJ[VYZ

VSSV^PUN [OL [O (UU\HS .LULYHS TLL[PUN VM [OL 0UZ[P[\[L VM *LY[PĂ&#x201E;LK 7\ISPJ Accountants of Cyprus (ICPAC) on 1\UL H UL^ )VHYK VM +PYLJ[VYZ ^HZ LSLJ[LK HZ MVSSV^Z! Â&#x2039; +LTL[YPZ =HRPZ *OHPYTHU Â&#x2039; 4HYPVZ :RHUKHSPZ =PJL *OHPYTHU Â&#x2039; 4HYPH 7HZ[LSSVWV\SV\ :LJYL[HY` Â&#x2039; (UKYLHZ (UKYLV\ 4LTILY Â&#x2039; 5PJVZ *OPTHYPKLZ 4LTILY Â&#x2039; 6K`ZZLHZ *OYPZ[VKV\SV\ 4LTILY Â&#x2039; 7PLYPZ 4HYRV\ 4LTILY Â&#x2039; :[H]YVZ 7HU[aHYPZ 4LTILY Â&#x2039; 7OPSPWWVZ 9HW[VWV\SVZ 4LTILY Â&#x2039; :W`YVZ :W`YV\ 4LTILY Â&#x2039; +LTL[YPZ ;H_P[HYPZ 4LTILY Â&#x2039; (U[VUPZ =HZPSPV\ 4LTILY Â&#x2039; *OYPZ[VZ =HZPSPV\ 4LTILY Â&#x2039; 2`YPHJVZ AHUNV\SVZ 4LTILY

,ULYN`5L^Z JVT J` ULYN`5L^Z JVT J` ^HZ VÉ&#x2030;JPHSS` SH\UJOLK VU 1\S` WYLZLU[PUN \W [V date energy-related news from Cyprus

and the rest of the world. The portal, which is the result of cooperation between the Cyprus ,TWSV`LYZ 0UK\Z[YPHSPZ[Z -LKLYH[PVU 6,) and IMH, aims to present well-rounded and objective information on all energy-related issues for businesses, professionals and consumers in Cyprus and to promote all the organizations, bodies and companies active in the broader energy sector. In addition to daily rolling news, EnergyNews. com.cy sends out a weekly newsletter to thousands of recipients keeping them fully updated on energy-related developments.

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PUBLICATION

Our professional team provide local insight and a full range of management, trust and director services. All services are regulated by the Financial Services Authority (FSA) in the Seychelles. Close links between all our -k!#1 ', 2&# -0" ,1 %0-3.A mean you have easy access to our services through our Cyprus -k!# ', '!-1' @ -,2 !2 -30 '!-1' 2# + 2-" 7@

he first issue of the quarterly magazine Accountancy Cyprus to be published under a new collaboration between the Institute of Certified Public Accountants of Cyprus (ICPAC) and IMH will be available shortly. Accountancy Cyprus is arguably the oldest magazine in Cyprus, having been published continuously by ICPAC since 1982 with the objective of keeping its members up to date with the latest developments in the accounting profession. ICPAC remains the publisher of the magazine while IMH is responsible for its editorial content, design, printing, distribution and commercial management. The cover story of the July issue of the magazine is â&#x20AC;&#x153;The Future of Cyprus as an International Business Centre.â&#x20AC;?

Jordans Trust Company (Cyprus) Limited T +357 22 767 294 E info@jordans.com.cy

www.jordanstrustcompany.com www.goldnews.com.cy | GOLD | 11

MY WAY

Petros Livanios

Managing Director of Trident Trust Company (Cyprus) Limited

AS SOMEONE WHO LIKES TO SPEND SOME TIME EACH DAY WITH EVERY MEMBER OF STAFF, HE ADMIRES THOSE WHO ARE NOT AFRAID TO SHARE THEIR KNOWLEDGE AND EXPERIENCE WITH OTHERS. HONESTY AND PERSISTENCE ARE AMONG THE KEY QUALITIES HE CITES AS BEING RESPONSIBLE FOR HIS SUCCESS IN CREATING AND MAINTAINING LONGSTANDING RELATIONSHIPS WITH CLIENTS AND STAFF.

“I

think that one’s own self- respect leads to the respect of others. It makes interaction with others much easier and eliminates misunderstandings.”

“W

hat has been my greatest professional achievement? That’s difficult to say. What is an achievement? Is it determined objectively or subjectively? If longstanding relationships with clients and staff can be considered as an achievement, then that is my greatest one.”

“W “I

hat has helped me most throughout the course of my career is being honest with myself, persistence, delivering quality and never forgetting that God is in the detail!” would describe my management style as Management by Wandering Around (MBWA). I meet with the staff twice a day and spend at least a few minutes with each of them. Even if the time spent is not significant, the outcome and benefit to the organisation is.”

“T

he biggest/ most frequent mistake that managers make is hiding behind closed doors and living in their own reality, which, in most cases, is far from real life.”

“I

have always admired – and I always will –successful people who are not afraid to share their knowledge and experience with others, those who dare to take a risk and introduce new ideas, which may lead to the further success of their business.”

“A

“I am not sure if I can ever really relax but I usually try by reading books, meeting with friends for dinner and wine, or travelling with family and friends to places I have visited in the past and feel “at home” there.”

chieving a healthy balance between life at work and at home is a matter of using the most basic instinct – the instinct of preservation. If you let this prevail, then you will find ways to draw the line and live your life with a balance between the two.”

12 | GOLD | The Business Magazine of Cyprus

PETROS LIVANIOS OBTAINED A DIPLOMA IN POLITICAL SCIENCE & PUBLIC LAW FROM ATHENS UNIVERSITY AND HAS WORKED IN THE FIDUCIARY SECTOR SINCE 1980. HE WAS APPOINTED AS MANAGING DIRECTOR OF TRIDENT TRUST COMPANY (CYPRUS) LIMITED’S MANAGING DIRECTOR IN 1996.

FIVE

MINUTES

onnectedSky started operations five years ago. How would you describe the company’s progress so far? When ConnectedSky commenced operations in 2011, we had little more than determination, honesty, hard work and a passion for what we do. Five years later, we have grown to become a truly international leading provider of legal, corporate, mergers and acquisitions, international tax planning, trust, fiduciary, risk management, compliance advisory, accounting and other professional and consulting services. Today, ConnectedSky operates from its headquarters in Nicosia and subsidiaries in Russia, UK and Malta. Our presence in more than 20 locations worldwide enables clients to benefit globally from the expertise of our professionals. The demand for tailor-made and high-quality professional services continues to increase, and ConnectedSky is at the forefront developing new services and improving or adjusting existing ones in order to serve our present and new clients, partners and associates around the globe. How would you summarise the company’s values and what role have they played in its success? We have always aimed at maintaining strong corporate values and this has definitely con-

WITH CHARALAMBOS SAMIR

tributed greatly towards the firm’s success. We value our clients’ accomplishments in the same way as we value our own. We have great respect for their aims and ambitions and we never compromise on things such as safeguarding their interests and promoting what is best for them and their company. At ConnectedSky, we pay great attention to detail and, consequently, all of our clients receive specialized individual services, tailored to their particular needs. We value, in the exact same way, each and every individual

Founder & CEO, ConnectedSky relationship that we build with our clients, irrespective of their size. In order to ensure that each client receives the highest level of service at all times, we recruit only the best people, who meet the highest professional and ethical standards of ConnectedSky. As our clients’ needs continue to grow and evolve, we work in partnership with them, understanding their needs and delivering on

our commitments. In this way, we adhere to our firm’s motto: We Grow When You Grow. ConnectedSky collaborates with experts and specialists around the world. How important is this to you and your clients? The fact that we have a large network around the world is certainly something that our clients can benefit from. We choose the best specialists in every country where we do business in order to provide clients with top quality services. Today we provide profession sional services in over 65 jurisdictions and, as ssuch, we must maintain the same level of p professionalism and ethics in each and ever every one of those jurisdictions. Through a w well-designed and targeted approach, we are able to offer our clients a “one-stopshop” package of solutions and services. Our global network has been created on the understanding that each and every client must receive a tailor-made solution that adheres to the local legal, compliance and regulatory requirements of the specific jurisdiction in w which they wish to do business. Wh What are the company’s plans for the nex next 3-5 years? As p part of our strategy, we are seeking to expand into countries where we believe there will be a high demand for our services. At the moment we are working on strengthening our position in the Middle East and, to this end, we have set up CYMEBA (Cyprus Middle East Business Association) which aims at attracting foreign investors from the Middle East to invest in Cyprus. CYMEBA has already received interest from over 200 potential investors with whom we will soon start discussions to examine their specific needs. We believe that this will also be very positive for our local economy. www.goldnews.com.cy | GOLD | 13

SPECIAL PROMOTIONAL FEATURE

HORWATH DSP LIMITED

stablished in 1987, Horwath DSP Limited is an accountancy firm with offices in Nicosia and Limassol, offering audit, tax, risk and advisory solutions to a diverse clientele in the local market and abroad. Horwath DSP Limited is a member of Crowe Horwath International, one of the top 10 global accounting networks. The Crowe Horwath

network consists of more than 200 independent accounting and advisory services firms in over 120 countries around the world.

THE TEAM

With 6 partners, 90 professionals and over 2.500 clients, Horwath DSP is one of the leading accountancy firms in Cyprus. The firm employs some of the most highly trained, educated and experienced individuals in Cyprus who are able to pro-

vide the highest level of client service. All key members of the team are either qualified ACA or ACCA who fully appreciate the need of adding value to the service offered to the client as well as the importance of delivering on time.

MAIN SERVICES

Horwath DSP takes pride in providing a timely, comprehensive service of the highest standard. The firm specialises in international tax planning and structuring and 85% of

What can Cyprus do to ensure that it remains a competitive jurisdiction and continues to attract foreign companies and investors to the island? “All in all, Cyprus’ government, parliament, trade unions and the Central Bank, with the help of the private sector, need to seriously and urgently concentrate on government and semi-government organisational reform and on obtaining upgrades from the international rating agencies. Government departments must engage fully with the private sector. Moreover, there is a need to actively embrace coming international reforms in the areas of tax, anti-money laundering and others while, at the same time, THPU[HPUPUN [OL HK]HU[HNLZ [OH[ *`WY\Z OHZ [V VɈLY Cyprus should be open for business, but closed to outside threats.” IOANNIS DEMETRIADES, Managing Director

14 | GOLD | The Business Magazine of Cyprus

its clients are overseas clients. It offers its local and international clients the following services: • Audit and Assurance • International Tax Planning & Structuring • VAT Advice and Compliance • Corporate Consulting • Shipping Services • Provision of Business Services • Enterprise Risk Management • Set up and administration of funds

CONTACT INFORMATION: HORWATH DSP LIMITED Address: 8, Stassinos Avenue, 1st Floor, Photiades Business Center, 1060, Nicosia Postal Address: P. O. Box 22545, 1522 Nicosia Tel: (+357) 22755656 Fax: (+357) 22452055 e-mail: yiannisd@ crowehorwath.com.cy Website: www.crowehorwath.com.cy

www.goldnews.com.cy | GOLD | 15

QUOTES OF THE MONTH

They Said What? Some of the more interesting statements made by Cypriots in the public eye over the past month.

AVEROF NEOPHYTOU

“PEOPLE ARE ASKING – AND IT IS A VALID QUESTION – WHY A CONSTRUCTION WORKER SHOULD RETIRE AT 65 WHILE MEMBERS OF PARLIAMENT AND MINISTERS RETIRE AT 60.”

DISY Chairman Averof Neophytou YLJVNUPZLZ [OH[ Z[H[L VɉJPHSZ HYL UV[ SPRL [OVZL OL JHSSZ [OL ¸YLZ[ VM [OL WLVWSL ¹

“A UNILATERAL, AUTHORITARIAN DECISION BY THE ANASTASIADES-DISY GOVERNMENT WHICH ATTEMPTS TO MAKE THE HISTORIC LEADER OF THE DISY-AFFILIATED RIGHT WING IN CYPRUS, A NATIONAL LEADER OF THE CYPRIOT PEOPLE”. /V^ (2,3 ZWVRLZTHU .LVYNL 3V\RHPKLZ ZLLZ [OL TV]L [V UHTL 3HYUHJH 0U[LYUH[PVUHS (PYWVY[ HM[LY MVYTLY 7YLZPKLU[ .SHMJVZ *SLYPKLZ ^OV P[ ZLLTZ ^HZ UV[ H UH[PVUHS SLHKLY

GEORGE LOUKAIDES

16 | GOLD | The Business Magazine of Cyprus

“IT IS NEI NEITHER HASIKOS NOR HASIKOS’ KOUYIA KOUYIALIS’ JOB TO PUT OUT FIR FIRES. R RESPONSIB RESPONSIBILITY, IF ANY, FOR THE FIRES SHOULD BE SOUGHT FROM OFFICIALS ON THE GROUND, NOT MINISTERS.” Interior Minister :VJYH[PZ /HZPRVZ L_WSHPUZ ^O` OL TH` OH]L Y\ZOLK [V [OL ZP[L VM [OL TV\U[HPU ISHaL I\[ ^HZU»[ HJ[\HSS` OVSKPUN H OVZL WPWL

SOKRATIS HASIKOS

“WE ARE ABSOLUTELY OPPOSED TO THIS KIND OF BLACKMAIL.” EDEK MP Costis Efstathiou does not like the fact that President Anastasiades wants Presiden party leaders to promise not to lleak National Council documents.

“WITH REGARD TO HIS LETTER TO POLITICAL PARTIES, THE PRESIDENT IS BEHAVING LIKE AN ARSONIST, BURNING ALL BRIDGES OF COOPERATION.” Green Party leader Giorgos Perdikis GRHVQ·W OLNH LW HLWKHU EXW KH VD\V VR LQ D PXFK PRUH ¶WRSLFDO· ZD\

GIORGOS PERDIKIS CHRISTOPHOROS FOKAIDS

“THE FACT THAT A PERSON JJOINS A PROFESSIONAL ARMY DOES NOT NECESSARILY D MEAN HE HAS THE INTENTION INT T TO FOLLOW AN ARMY CAREER.” Defence Minister Christophoros Fokaides shows that his concept F of a professional army is rather GLIIHUHQW IURP PRVW SHRSOH·V

“CORRUPTION IN THE FORCE IS ALSO DUE TO THE LACK OF MERITOCRACY, TRANSPARENCY AND PROPER ADMINISTRATION THAT HAS TYPIFIED THE FUNCTIONING OF THE POLICE FOR MANY DECADES. THESE ASPECTS ALONE ARE SYNONYMS FOR CORRUPTION, FOR WHICH THE POLITICAL AND SOCIAL ESTABLISHMENT BEARS A GREAT AND LONG-TERM RESPONSIBILITY.” Police Chief Zacharias Chrysostomou tells LW OLNH LW LV DQG KH·V ULJKW

ZACHARIAS CHRYSOSTOMOU

“WE EXPECT THAT, WHEN YOU SEE THE NEGATIVE PICTURE OF THE SITUATION ODYSSEAS IN CYPRUS – WHERE SECONDARY MICHAELIDES SCHOOL TEACHERS HAVE 450-500 TEACHING PERIODS COMPARED TO THE GLOBAL AVERAGE OF 700 – YOU WILL AGREE THAT YOU NEED TO LOOK INTO THE MATTER.”

Auditor-General Odysseas Michaelides tells Education Minister Costas Kadis that Cypriot WHDFKHUV GRQ·W NQRZ KRZ JRRG WKH\ KDYH LW

| CYPRUS FIDUCIARY ASSOCIATION |

The Cyprus Fiduciary Association recently elected a new President. On the following pages we speak to the Associationâ&#x20AC;&#x2122;s first President and his successor.

OUTGOING: GEORGE SAVVIDES 18 | GOL 18 GOLD OLD | The OL Th he Bu Business usin si ess ess Magazine Maga Ma gaz g azzin a ine ne of n of Cy Cyprus ypru prus rus

old: How would you describe the state of the fiduciary sector as it was five years ago? George Savvides: Five years ago, the fiduciary sector lacked organisation in all respects. The idea of setting up an association came to me on my return from a promotional trip abroad in April 2011, as I was fed up with the reaction of existing and prospective clients every time I had to answer “Not yet” to the question of whether the fiduciary sector in Cyprus was regulated. I decided to contact some colleagues from the industry to propose the idea of setting up a body with the ultimate aim of raising standards in terms of quality of service, common representation, education, promotion and other factors. Gold: How did your colleagues react to the idea? G.S.: They were enthusiastic and we all worked together to establish the association. It was not easy and it would not be an exaggeration to say that, in the last five years, we have had perhaps more changes than over the previous 40 or so years of existence of the industry in Cyprus. Nonetheless, I think we have managed to establish the Cyprus Fiduciary Association as the primary representative of the Administrative Services Providers. Gold: Back then, you were one of the most active proponents of the idea of common regulation… G.S.: And I still am because I think it is the only way the sector can be monitored in an effective and uniform manner. Unfortunately, the CFA joined the discussion on what was then the bill for regulating the sector at a late stage and our voice was not so strong back then, so we didn’t manage to change the tide towards having three regulatory regimes. We have always been con-

fident, however, that sooner or later we will end up with a common regulatory regime and I believe we are getting closer to it, through practice and because of the various developments in or related to the sector in Cyprus and internationally. Legal and regulatory requirements are gradually becoming aligned between the three regimes, both on paper but, more importantly, in practice and the presence of the Troika (especially its quarterly monitoring reviews) played a very significant role in that. Gold: Once established, and with yourself as its first President, what did the CFA set out to do? G.S.: Besides getting organised in all respects, our main aims at the time were related to the regulatory issue and, of course, to attracting more members in order to strengthen our voice and to make the Association viable from a financial point of view. Naturally, in order to attract members, we had to work on other aspects as well such as education, recognition by the public and other bodies, the setting up of committees, etc. Gold: How essential was the need for regulation? G.S.: As mentioned before, it was something foreign clients and intermediaries were looking for. It was a missing piece in the effort to get rid of the image of the tax haven, which was a result of the regime we used to have for offshore companies but also of various bad practices followed by service providers. If a client is going to entrust you with his estate, his venture, his family fortune, he needs to feel safe that you abide by certain standards as prescribed in your regulatory framework and that, in case something goes wrong, you will face consequences

and, indeed, severe ones! Furthermore, at a time when money laundering and the financing of terrorism are becoming major concerns all over the world, the regulatory framework should act both as a guiding and a disciplinary force, in order to ensure that the risk of becoming involved in any ‘dodgy’ situations is effectively managed. Gold: New legislation was eventually passed in 2012, following pressure by the Troika. Was it the law you wanted? G.S.: I have already mentioned that, in our opinion, there should only be one regulatory authority. The other major point, in my view, is that the law should also cover operational aspects and not just focus on anti-money laundering and “know your client” implications. Issues such as adequate insurance coverage and a correlation between capacity in terms of human capital and otherwise vs the number of managed entities should be covered by the regulatory framework as well, as these issues have a clear impact on the quality of service provided, including client protection. Gold: For all its shortcomings, has it made a difference to the industry? G.S.: It certainly has, both on paper and in practice. On paper because the sector has finally been placed under regulation and in practice as everyone is getting more “serious” about how they deal with many aspects, especially with what concerns the identification of clients and the continuous monitoring of operations and transactions. Gold: How does Cyprus now compare with other jurisdictions in the provision of Administrative Services? G.S.: We can proudly claim that our country currently presents one of the most attractive proposals to businessmen, investors and their professional advisors for setting up

In our opinion, there should only be one regulatory authority

www.goldnews.com.cy | GOLD | 19

| CYPRUS FIDUCIARY ASSOCIATION |

and running a business, transferring operations, relocating people, obtaining permanent residency and citizenship and much more. Furthermore, the quality of service offered in Cyprus can be found in hardly any other international business centre, mainly due to the highly educated and experienced professionals and the client-oriented approach that characterises the Cypriots. Yet, whereas we have a story – and, indeed, a very attractive one – we are missing a plan, which will define how, where and when we tell it, what we expect to make out of it in terms of targets and how to measure its success. Taking a look at what competing jurisdictions are doing proves the importance of promoting and creating a brand for a country. For example, Luxembourg has appointed a Secretary of State to be in charge of national branding, while the Isle of Man has created the position of Business Development Manager – High Net Worth Individuals, to promote the island’s incentives for affluent persons. Similarly, Jersey Finance, the promotional agency for Jersey’s financial services industry, has increased its targeted promotional activities in Asia. What we can offer, the quality of services we can provide and all the other advantages we have as a country will at best be appreciated to only a minor extent if they are not promoted and communicated effectively and appropriately. Why do competing jurisdictions, which do not even come close to Cyprus on most issues, receive a resounding vote of confidence and a mere mention of their name is enough to dispel any suspicions or negative references?

sector for the country and we have helped explain, even to the people directly involved in it, what we do and how we do it, our concerns, our thoughts for future development, etc. We have also fought, not so much for the benefit of our members and the association but for the good of the industry and the country. Furthermore, we have come up with a complete education plan for our members and everyone else involved in the industry so that we can

what it means to the country in terms of its contribution to GDP, employment, other sectors, etc., and what its prospects are. This would have helped in making our voice “louder” on issues related to our sector but also in attracting talented individuals. For example, it is a shame to have so many young people studying to become teachers only to wait for years if not decades, to get a place in a state school while, at the same time, the country faces a serious shortage of people adequately skilled and experienced in compliance, investment fund administration and other roles.

The quality of service offered in Cyprus can be found in hardly any other international business centre

Gold: Looking back over your five years as President of the CFA, what are the things that you are most proud of? G.S.: First of all, the fact that we have finally given a voice to this very important

20 | GOLD | The Business Magazine of Cyprus

stay up to date with international developments, expand our knowledge and improve our expertise so as to raise standards in terms of the quality of service offered, compliance with laws and regulations and other factors. Gold: Are there many things that you regret being unable to achieve? G.S.: If there is one thing besides common regulation which I would have liked the Association to focus more on, it is the promotion of Cyprus as a reputable international business centre. This was one of the factors for which the association was established and, unfortunately, due to other priorities and unexpected developments such as the events of March 2013, we have been unable to put the right emphasis on it so far. I think we have a very clear message to send to the international business community and this is that Cyprus today is one of the most attractive, efficient, compliant and diligent places in which to invest, set up and operate a business and have a life of varied interests and tastes. We could also have done more in terms of educating the politicians and the people of Cyprus in general about what our industry is about,

Gold: Are you leaving with a sense of “job well done” or “thank goodness someone else is taking over” or perhaps both? G.S.: I am leaving with a clear conscience that I did my best to help not only the Association but the industry and, through that, the country as well. I am a strong believer that such a position should not be held indefinitely by the same person and that is why I decided that it was a good time to step down. One sure thing is that I will definitely make good use of the extra time! Gold: What would be one piece of advice from you to your successor as President? G.S.: To always keep in mind the ultimate aim for which the Association was created: to raise standards. My last statement as President of the Cyprus Fiduciary Association at the AGM held in June was that I think the ultimate aim of raising standards should guide all our efforts in our professional and personal lives. I closed that address by quoting Joel Brown: “We only get what we believe that we deserve. Raise the bar, raise your standards and you will receive a better outcome”.

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| CYPRUS FIDUCIARY ASSOCIATION |

old: How would you describe the state of the fiduciary sector today, compared to how it was five years ago? Christos Michael: The sector has changed significantly, especially taking international developments into account, mainly to do with new regulation enacted over the last five years but for Cyprus and the business that we service here, we haven’t seen significant changes, in the sense that we don’t have new markets and the same people continue to invest through Cyprus. Regulation has not had the anticipated impact on the way we do business and I feel that we have not absorbed these changes in a constructive way. We always talk about being proactive and trying to stay ahead of our competitors and other markets but the reality is that we are behind developments and always reactive, late in implementing change and adopting regulation. We tend to blame the Government but it is our responsibility to educate the Government and make sure it understands the impact and real benefits of implementing change and regulation. Unfortunately, low-quality providers still make up a large proportion of the market. By any standards, the number of fiduciary service providers on the island is huge. In Jersey, for example, they have about 350 companies and they want to reduce that number to 200. In Cyprus we have 170 under CySEC, 350 under ICPAC and possibly another 300 under the CBA. It doesn’t make sense for the size of the market. Gold: Wasn’t the law of 2012 supposed to help you rid the market of the so-called “cowboys”? C.M.: Yes but unfortunately we haven’t seen that happening. We hear about regulatory visits from all three regulators and the fact that they issue reports but we haven’t seen any change. In Cyprus we have the

habit of voting in state-of-the-art laws and then having huge difficulty implementing them. If you compare Cypriot regulations with those of more advanced financial markets like the UK or Jersey, I would say that ours are more strict but we can’t implement them properly, so what are we actually achieving in the end? Nothing. Gold: Would you say that the CFA has made a notable contribution to improving the sector? C.M.: Yes. It has been one of the strong voices supporting regulation and we have been recognized by other stakeholders, including the Government and other regulatory bodies, as a significant player in the market. We have made our contribution to the drawing up of regulations and been involved in consultations and committees over the past three years. Our problem is that we are supported only by a small number of members. Our efforts to increase the membership have not been very successful in the last two years, mainly because we are regarded as an Association mainly representing companies regulated by CySEC. As a result, those regulated by the CBA or ICPAC have not been very keen to join us, which is why, right now, our efforts are focused on joining forces with ICPAC to find a way of making the CFA the representative body of the whole of the fiduciary sector in Cyprus. Later we shall try to convince the lawyers that, by joining, they will also benefit. Gold: Do you foresee a time when the industry will be under a single regulatory authority? C.M.: I believe that, at present, there are obstacles to promoting a single regulatory body but what we want to achieve as CFA is the single representation of the interests of the business, which is huge. If

we divide the professional services sector into legal, accounting, audit, tax and fiduciary, fiduciary is by far the largest, and I believe that it has to be represented by a common voice and this is what we want the CFA to be. Ultimately we hope to achieve common regulation but right now there is very little willingness on the part of the three authorities to achieve this objective, although but I am sure there are huge benefits to be gained from this. Due to the inconsistency in the regulation, the whole market is under huge threat. It will only take one fiduciary company to mess things up for the whole industry. I feel certain that our members represent the industry in a very professional manner and we would like all the others to join us. We can contribute to the improvement and development of the market. Gold: You’ve taken over from George Savvides as President of the CFA. What is your personal vision for the Association? C.R.: One problem is that we haven’t been able to convince the stakeholders about the true impact of this industry on the economy and the associated risks. Even if some people have a vague idea of its overall contribution to the economy, they have a much smaller understanding of the potential impact if something goes wrong. The regulators also have limitations in their understanding of the real risks to the industry and we have a responsibility to educate them and make them understand, otherwise we will continue to walk along parallel paths leading nowhere, promoting different objectives and different priorities. As an Association, we have set ourselves the objective of establishing a strategic framework and to pursue certain aims each year with the Government but the response has not been very positive. So we need to try harder and perhaps be more specific on certain critical aspects. It’s no use presenting 100 objectives, however important we may

The Central Bank is a bureaucratic organisation that lacks vision and leadership

22 | GOLD | The Business Magazine of Cyprus

INCOMING: CHRISTOS MICHAEL www.goldnews.com.cy | GOLD | 23

| CYPRUS FIDUCIARY ASSOCIATION |

consider them to be, because they will never be achieved so we need to focus on certain short-term, achievable objectives that create some momentum. Gold: What is top of the list? C.M.: My major concern right now is that we don’t have an alignment of objectives as stakeholders in the industry, so this is critical. The financial services industry, like the tourism and property sectors, suffers from a lack of strategy, a lack of direction, a lack of understanding and a lack of coordination of efforts to achieve certain aims. We all need to act together. To give you one example, legislation governing issues such as FATCA and common reporting standards was enacted last year. Twelve months later, we’re still waiting to receive guidelines from the authorities. Everyone is implementing it in the way they understand it but without any official guidance.

now are the same as those we offer in Cyprus but in Jersey they charge three times as much as we do. We cannot offer them at that price from Cyprus because we are still rebuilding our reputation after what happened in 2013. Another example: our banks are still very competitive compared to other institutions abroad so if we can improve the island’s reputation, the banking system will gain. I’m disappointed that Barclays is leaving the island. It was perceived by many as a vote of confidence in the economy. And frankly, the Central Bank of Cyprus is not living up to the expectations of the industry. It’s a bureaucratic organisation that lacks vision and leadership. And as

legislation and adopted the offshore tax regime; they had the right vision for the country. Where is today’s vision? Our problem is that we not have set out a clear strategy in the last decade, during which so many changes have taken place. We have more competition than we did 10 years ago but we are still utilizing our competitive advantages in an opportunistic manner. The time has come for some good management, which will determine the future success of the country and the economy. This is the challenge we face. We have good quality people who can make a difference but all the initiatives up to now have been either individual ones or by small groups, with no coordination and no alignment with the Government’s efforts.

If you take the quality providers on the island, we compare very favourably with the more advanced jurisdictions

Gold: You’ve pointed to various problems so are you able to be optimistic about the future of the sector? How does Cyprus now compare with other jurisdictions in the provision of Administrative Services? C.M.: I’m always positive and optimistic. I speak about the problems because I want to be realistic. If you take the quality providers on the island – who probably represent one third of the market – I would say that we compare very favourably with the more advanced jurisdictions. In certain areas we provide an even better level of service. In terms of skilled labour and value for money, Cyprus is at the top of the list but we face difficulties in convincing the outside world about this because of the reputational aspect. Since we lack the reputation, we are not able to market or price our services correctly. The services offered in Jersey right

24 | GOLD | The Business Magazine of Cyprus

long as the appointments to the Board are from the political parties, it’s obvious that the political agenda will be driving the decisions of an independent organisation. This is no longer acceptable. We need better leadership and a clear vision Gold: So you are saying that the whole sector needs to be aligned and work to restore the country’s image? C.M.: Yes. We may argue that the financial crisis we went through here had nothing to do with problems in the fiduciary industry, the accounting or legal professions and it’s true but we have to be honest with ourselves and deal with the realties and the problems that exist. One of them concerns vision. Thirty years ago, President George Vassiliou and his government decided that the services industry was the future of the country and they implemented changes to the

Gold: How can the CFA play a role in improving things? C.M.: I believe that growing the association and thus representing a much larger part of the industry will make us a stronger stakeholder. And we need to make all the other stakeholders realise that we all have to be on the same page. Malta was behind Cyprus until it decided 10 years ago that it wasn’t necessary to reinvent the wheel every time it wanted to make a change. The Maltese realized that they could copy someone else well and then ensure that there was little or no conflict in the way the various stakeholders interacted to promote their objectives. We need to do the same thing. We have plenty of knowledgeable people offering expert advice, based on what they have experienced elsewhere, but we don’t do anything about it. We always try to build our own expertise from scratch. It doesn’t work! We will always be running to catch up with developments. Let’s see what our competitors do and improve on it.

6 | GOLD | The Business Magazine of Cyprus

| COVER STORY |

CRISIS OR OPPORTUNITY FOR CYPRUS? The impact of the UK’s decision to leave the EU on key sectors of the island’s economy By John Vickers

here can be few people in Europe who, upon learning the result of the UK referendum on EU membership on the morning of June 24, were not shocked and concerned. First and foremost was the British Prime Minister himself – David Cameron had called the referendum early, such was his confidence in a “Remain” vote – but it has been suggested that even those leading the “Leave” campaign were not actually expecting to win. If ever the saying “Be careful what you wish for” was appropriate, it was about what happened on June 23, 2016. or months, business leaders, economists, foreign heads of state and other high-profile figures had been warning the British people that a vote to leave the EU would have possibly disastrous short-term consequences for the country and an uncertain, quite likely negative long-term impact on their standard of living and the UK’s economic future. some 52% of voters chose to ignore them but within days, the pound had fallen to a 30-year low, share prices were plummeting, the Conservatives were involved in replacing David Cameron and almost all the Parliamentary Labour Party had expressed the desire for their own leader, Jeremy Corbyn, to resign. Two of the Leave campaign’s most visible advocates

be a consensus that, for the time being, little or nothing will change. The weaker pound sterling may dissuade some Britons from choosing Cyprus as their summer holiday destination in 2017 and thereafter and it may make them spend less than they might otherwise have done on the island in the coming months but they have already paid for their accommodation and, in many cases, have booked an “all-inclusive” package, which essentially means that they don’t need to spend a single euro if they don’t want to. ne area in which Cyprus may keenly feel the absence of the UK around the EU table concerns tax matters. Many of the big players in the EU are in favour of various forms of tax harmonisation, including a Common Corporate Tax Base (CCTB). This is not a development that Cyprus supports, not least because one of the island’s key selling points to investors is its low 12.5% rate of corporation tax. In this, Britain was a strong ally and many observers have pointed to the fact that, without its support, it will be harder for Cyprus to ‘stand up’ to pressure on the issue. It is noteworthy that, in one of his first comments after the referendum result, Chancellor George Osborne announced that he intended to propose a reduction in the UK’s corporation tax rate from 20% to 15%. n terms of trade, the UK and Cyprus have longstanding and close economic ties. Cypriot exports to the UK comprise 10% of the country’s total while trade in services between the two countries represents 20%. It is thought that the UK’s decision to leave the EU will certainly affect Cyprus’ exports in both the long and short term, although everything will ultimately depend on what kind of deal the UK concludes with the EU and what kind of bilateral agreements are signed.

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Article 50, which will start the exit process, until it had a new Prime Minister, (Theresa May has now succeeded him) but the EU has responded by saying that no talks can begin until Article 50 is triggered. Until then, it would appear that market and currency chaos is going to be the norm, followed by two years of negotiations conducted in an atmosphere that cannot be predicted at this moment. s a member of the EU, Cyprus will be affected by Britain’s exit in the same way as its 26 partners but what, precisely, does that mean? On the following pages, you can see what two leading economists have told us, as well as the views of several others with a direct interest in the impact of the UK referendum result on this country. There seems to

www.goldnews.com.cy | GOLD | 27

| COVER STORY |

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here is some concern being expressed about study in the UK ffor Cypriot students. Although Cyprus has seen a boom in its own prip vvate universities, more than 10,000 Cypriot students are currently enC rrolled in British universities. Once a new relationship between Britain aand the EU comes into force, Cyprioot students in the UK will doubtless bbe asked to pay increased tuition fees, as was the case before Cyprus joined the EU, something that will have a direct impact in each case on their familyâ&#x20AC;&#x2122;s and their own financial situation. o, are there any clear positive effects that the UKâ&#x20AC;&#x2122;s decision to go it alone outside the EU may have on Cyprus? We believe that there are, mainly because many businesses currently based in the UK want an English-influenced environment and, at the same time, access to the 500-million European market. As billionaire investor Wilbur L. Ross (who knows a thing or two about these matters) has stated, Cyprus has an opportunity to â&#x20AC;&#x153;take advantage of the inevitable relocations that will occur during the period of confusionâ&#x20AC;?. We can be sure that our counterparts in Malta are thinking the same thing. Essentially, the coming months should be used by stakeholders in all areas of the economy to intensify their promotional efforts aimed at attracting companies and individuals to the island. As Ross noted, â&#x20AC;&#x153;This is a God-given opportunity but a brief one.â&#x20AC;? t has become something of a clichĂŠ to say that Cyprus has a knack of making its best efforts during a crisis and while the Brexit vote may not deserve to be described as a crisis for the island (though it may well be for the UK), it is a big enough event to warrant the extra effort to look for new markets and forge new alliances. Russia, of course, is an obvious example of where cooperation can be expanded, although ongoing EU sanctions mean that Cyprus is constrained in what it can achieve. However, there are many markets in Eastern Europe where we have not yet created strong commercial ties and, of course, several commentators (including economist and regular contributor to Gold, Dr. Savvas Savouri) have noted that this is a chance to make greater use of our Commonwealth partners, including major economies such as India, Canada and Australia, while at the same time maintaining strong relations with the UK within the Commonwealth framework. t is evident that the negative effects of Brexit are likely to be more immediate and easier to predict, whereas the positive ones require some effort by the Government, the House of Representatives, the broader public sector and, of course, private enterprise, if Cyprus is to take advantage of Britainâ&#x20AC;&#x2122;s crisis and turn it into a Cypriot opportunity. This will be the challenge over the coming months and it is encouraging that the Cyprus Chamber of Commerce & Industry will be holding broadbased meetings to discuss and monitor the effects of the UK referendum result on Cyprus. There is no reason why the island cannot continue to thrive within a UKless European Union and it is our conviction that it can and will.

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28 | GOLD | The Business Magazine of Cyprus

HOW DID BREXIT

HAPPEN?

n 1975, the British people voted to stay in what was then the European Economic Community (EEC). In the intervening 40 years, Europe has changed considerably. Then, the so-called â&#x20AC;&#x153;Common Marketâ&#x20AC;? consisted of nine member states with a total population of 250 million. Today, the EU has 28 member states (19 of which share a single currency) and a population of more than 500 million. Successive treaties since 1975 have seen the European Union transformed from a mere trading arrangement to a M\SS` Ă&#x2026;LKNLK WVSP[PJHS \UPVU NP]PUN )Y\ZZLSZ PUĂ&#x2026;\LUJL V]LY THU` V[OLY areas of policy. Ever since the Maastricht Treaty of 1992, which created the modern EU, there had been voices in the UK, and especially within the Conservative Party, calling for a new referendum, given the way things had changed. The â&#x20AC;&#x153;Euroscepticsâ&#x20AC;? argued that because of EU membership, power had been transferred from London to Brussels. When David Cameron became Prime Minister in 2010, he hoped to put an end to debate within his party about EU membership and so, in January 2013, despite warnings from several colleagues, including Chancellor George Osborne, he promised an in/ out referendum if the Conservatives won the 2015 election. They did and so Cameron began his â&#x20AC;&#x153;EU renegotiationâ&#x20AC;? with Brussels, telling British voters that he had struck a new deal for the UK and that they should back his campaign to remain in the EU. /L ^HZ JVUĂ&#x201E;KLU[ LUV\NO [V ZL[ HU early date for the referendum â&#x20AC;&#x201C; June 23 â&#x20AC;&#x201C; when he could have waited until next year. To his, and almost everyoneâ&#x20AC;&#x2122;s surprise and shock, on June 23, 52% of the electorate voted to leave the European Union. Despite statements by lawyers and constitutional experts about the fact that the vote is non-binding, it is inconceivable that the UK parliament would refuse to accept the result.

OUTLOOK

UNCERTAIN By Christos Karaolis Info: Christos Karaolis is President, Nationa National Federat Federation of Cypr Cypriots, UK

s the National Federation of Cypriots in the UK, we mobilised UK Cypriots to vote remain. The community listened. The referendum results show a high turnout and remain vote in areas where Cypriots live. Therefore, the outcome has deeply saddened our community as it is likely to adversely impact both UK Cypriots and also Cyprus. Cyprus and the UK have strong bilateral relations that were enhanced by Cyprus’ EU accession. Whilst it is difficult to forecast the consequences, Brexit will likely affect the 300,000 UK Cypriots in both the short term, if the UK economy weakens and the British pound continues to devalue, and the long term, depending on the final ‘exit agreement’.

n the short term, if the shock to the UK economy that we have witnessed continues, it will impact UK Cypriots in similar ways to the rest of the UK. People are worried about their jobs and the effect of market turbulence on their incomes, investments and businesses. Cypriot students in the UK (10,000), who usually stay on to work after their studies, are also likely to find it harder to secure jobs given the economic uncertainty. Cypriot students currently pay the same tuition fees as British nationals and although it is unlikely that the referendum result will impact the fee arrangements of current students, future students may be impacted. n the long term, the outlook is uncertain. The exit agreement will take up to 2 years from the point that Article 50 is triggered. Therefore people should remain calm because until then, the status quo (e.g. freedom of movement, trade) still prevails. In relation to immigration and trade, there may be an impact on the freedom of movement, rights and protections and mutual recognition of qualifications of British Cypriots as well as tariffs/ restrictions on UK exports and imports. Obviously, one way for UK Cypriots to retain the freedom of movement is to apply for a Cypriot passport.

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“Cyprus and the UK have a vibrant bilateral relationship which has expanded in strength especially since Cyprus’ EU accession. Our common EU partnership was transformative and a driver in taking our relations to a new level. We are also partners in the Commonwealth. Brexit has

the potential to upset the existing cooperation between the two countries, both in the EU and in the Commonwealth. Even with a Brexit, relations will continue to be good, I have no doubt. But we will cooperate based on mutual interests under a different framework. One of the major

problems could be a shift in the balance of power within the EU regarding decision-making processes and economic issues, which would prove unfavourable to small member states. For example, the UK and Cyprus cooperate closely within the EU PU LJVUVTPJ HɈHPYZ such as tax harmo-

UPZH[PVU HUK ÄUHUJPHS services. Brexit thus means the loss of a ZPNUPÄJHU[ WHY[ULY MVY Cyprus. It is almost certain that Cyprus stands to lose from a British exit.” EURIPIDES EVRIVIADES CYPRUS HIGH COMMISSIONER TO THE UK

www.goldnews.com.cy | GOLD | 29

| COVER STORY |

THE IMPACT

ON CYPRUS

By Fiona Mullen Director, Sapienta Economics

yprus and the UK have long and deep ties that stretch back for centuries. Clearly, these will not disappear because of the UK referendum decision on 23 June to leave the European Union. The main short-impact will be via the uncertainty caused. It remains unclear what the final outcome of the referendum result will be: Complete withdrawal from any EU trading relations, which would have the most damaging impact? A much closer Norway-style relationship within the European Economic Area (EEA)? Or, as some have suggested, an attempt to hold a second referendum or otherwise reverse the vote through parliament? It is likely to take several months, and potentially a general election, before there is any clarity on which option will be chosen. On the other hand, I believe that market pressures will make it impossible for the vacuum to continue for years.

30 | GOLD | The Business Magazine of Cyprus

TOURISM

he primary short-term impact on Cyprus will be via the effects of a weaker sterling-euro exchange rate on UK-Cyprus trade. As a services-based economy, trade in services is far more important for Cyprus than trade in goods. The UK vies with Russia to be the first or second largest market for exports of services from Cyprus. In 2013 (the latest data for services by country), exports of services to the UK reached €1.4 billion, or 18.9% of the €7.7 billion total, compared with €1.6 billion (20.5%) for Russia, according to statistics from the Ministry of Commerce. Exports of services to the UK accounted for 8% of GDP while exports to Russia accounted for 8.7% of GDP. Around half of the services exports to the UK come from tourism, while the other half come mainly from professional services. Eurostat data (which is not strictly comparable) shows that exports to the UK amounted to more than 30% of exports in the years immediately preceding the global financial crisis in 2008. he UK also remains by far the largest source for tourists, accounting for 39.2% of the total in 2015, compared with 19.7% for Russia, the second largest market. Based on the latest available data on spending per capita (2013), I estimate that UK tourism spending reached €836 million, or 4.8% of GDP in 2015, compared with €716 million (actual data), or 4% of GDP in 2013 – a year in which UK tourism was weak. So far this year, the British market has been strong, with tourism arrivals rising by 13.9% year on year in January-May. However, there was a sharp slowdown to 4.5% in May, which may suggest that a weaker sterling has already had an impact.

Exchange Rate will be Key

s regards the future of UK tourism, much will depend on the direction of the exchange rate of sterling against the euro in the coming months and years. The longer uncertainty about the UK’s future in the single market prevails, the more volatile the exchange rate will be, with a likelihood that sterling will weaken considerably. A simple regression analysis for arrivals since 1995 suggests that for every 0.97% annual increase in the value of the euro against sterling, arrivals from the UK drop by 1.2%. The R-squared (explanatory power) of this regression is only 44%, however, which suggests that other factors are also at play.

n June 24, the day after the referendum, the exchange rate was €1.23:£1, compared with €1.36:£1 on 1 January. Sterling was therefore 8.2% lower than the average for the whole of 2015. If we assume that the average exchange rate for the rest of the year will be €1.21:£1, this yields an average for the whole of 2016 of just under €1.25:£1. Based on the sharp slowdown in May, we assume that tourism arrivals for the whole of 2016 will rise by 10% (lower than the 13.9% recorded in the first half of the year).

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f we then assume that the pound slides back to €1.15:£1 in 2017 (the same as the average rate in 2011), then this 7.8% annual drop in value implies a potential loss in UK arrivals of about 9.6% in 2017. ranslated into lost tourism revenue, this amounts to an estimated €121m (0.7% of forecast GDP) over 18 months: €33m in the second half of 2016 and €88m in 2017. This does not mean a 0.7 percentage point drop in real GDP growth, however, since the decline in revenue represents gross spending at current prices, whereas real GDP growth is measured on a value-added basis and at constant prices. he broader impact will be more widespread. While accommodation and food services accounted for just 6.6% of GDP in 2015, the impact of 2.5 million tourists per year in a population of 850,000 is much larger via its effect on wholesale and retail trade (13.5% of GDP). I therefore estimate that an exchange rate of €1.15:£1 could directly shave 0.3 percentage points off real GDP growth in 2017.

T T

PROFESSIONAL SERVICES

believe that the impact on professional services will be mild in the short term, assuming membership of the EEA, but potentially larger in the longer term. Membership of the EEA would entail the lowest Brexit impact for professional services. It implies free movement of people, which is important for non-EU citizens, especially Russians, who have taken advantage of the “Citizenship through Investment” scheme to gain EU passports. It also means a limited impact on financial services as UK firms would retain access to EU financial services via the “passporting” scheme. For example, there are approximately 1,400 UK-regulated cross-border funds listed by the Cyprus Securities and Ex-

“Any two countries, which ÄUK [OH[ [OL` ]V[L [VNL[OLY VU 90% of the business of the EuYVWLHU <UPVU JHU IL JVUÄKLU[ that they are to a high degree like-minded, and not just on the EU’s agenda.

I hope that we can take forward our engagement in the ÄLSKZ VM LJVUVTPJ NYV^[O HUK prosperity; our collaboration in many aspects of security and defence; our shared Commonwealth membership; and our

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~ ELOOLRQ HFRQRP\ VHQWLPHQW RI XQFHUWDLQW\ change Commission (CySEC) that are able to offer services on a cross-border basis. ome professional services firms hope to pick up business from funds or financial services firms fleeing London. However, the most likely destination will be Dublin and Luxembourg, where they have the established record and the infrastructure to handle additional clients. It is true that Cyprus would only need to absorb a small amount to make a big difference to this €17 billion economy. However, the network effects of professional services, at 7.1% of GDP in 2015, are smaller than tourism, therefore the impact on overall GDP would be milder.

Assuming that the UK does maintain access to the EEA, the main short-term impact on professional services will be the general effect on global investor sentiment of uncertainty. This will reduce the number of mergers and acquisitions, for example, and therefore also affect the positive knock-on effects on Cyprus. he longer-term impact will come from the loss of an ally in the EU on issues such as intellectual property taxation and the attempts to introduce a common EU tax base. A common tax base is more likely to be pushed through with the UK out of the EU.

ZOHYLK LɈVY[Z [V L_[LUK [OL huge range of personal links tying Cypriots to Britain and British people to Cyprus. The excellent bilateral relations and close ties that exist between the Republic of Cyprus

and the United Kingdom were in place before the accession of the two countries to the EU and will continue to bind us.”

MATTHEW KIDD BRITISH HIGH COMMISSIONER

www.goldnews.com.cy | GOLD | 31

| COVER STORY |

HOPE AFTER

By Savvas Savouri Partner, Chief Economist, Toscafund

he decision by a majority, however slim, of the UK electorate on June 23 to disengage from the European Union has since that date had a profound effect on all Britons, most notably through the marked decline in the pound, which has lowered the foreign purchasing power of those spending in pounds. The uncertainty of what comes next after such an unprecedented event has also made Britons unsure as to the ‘true’ value of their home (for those who own one) as well as their job security or work prospects for both those in work and those looking for it. The flip side of all this is that UK goods, services and assets have become more affordable to those looking to buy in a foreign currency.

Another positive is that any business looking to invest in the UK and hire workers will find a non-confrontational, indeed a very grateful labour force. Just as the momentous event of June 23rd has had a profound, and I believe positive economic impact on the UK, it has had considerable consequences beyond. It is from the perspective of the Republic of Cyprus that I wish to focus in the words which follow. t is no exaggeration to claim that tourism from the UK remains a fundamentally important foreign currency generator and employment driver for the economy of Cyprus. Neither would it be an exaggeration to argue that the slide in sterling since June 23 will have a very unwelcome impact on how many Britons travel to Cyprus, and how much those who do make the journey choose to spend. Confidence concerning their decision to go on vacation and their spending if they do may also be adversely affected by the mood of uncertainty over the price of British homes and job-security in the wake of the referendum (for my part, I consider such concerns totally unwarranted). These, however, are not the only negative aspects of how the vote for Brexit and its real or perceived consequences will hit Cyprus. Another shock to the Cypriot economy is more esoteric. s speculation grows as to what stance the UK will have towards the Single Labour Market, many across it who were contemplating relocating to our shores may well opt to do early so as to avoid the risk of being ‘gated-out’. For the UK, this means that far from immigrant numbers from the EU falling, they could easily rise. And I have little doubt that Cypriots will be amongst those choosing to get to the UK sooner rather than later. After all, we have seen the numbers climbing over recent years with 2,500 being granted National Insurance numbers in 2015, up from 2,400 in 2014. Whilst their arrival in the UK will lift demand for living space, their departure from Cyprus can only cause economic harm. Those leaving will, after all, be relatively young and, for the most part, well-trained. nother negative for Cyprus from Brexit is the likelihood that it will create general currency turmoil across Europe, whereby eurozone nations become ever less competitive. Having seen it fall by a one third over the past five years, I am convinced that the Turkish Lira will weaken still further against the euro, a decline not entirely explained by the UK referendum but hardly helped by it. My reasoning is that Turkish interest rates, currently at 7.5%, will be reduced in the months ahead as its Central Bank responds to, amongst other things, the sterling fallout from Brexit and the negative impact on UK tourism to Turkey. And crucially, if Turkey becomes even more competitive than Cyprus, then so too does the occupied north.

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32 | GOLD | The Business Magazine of Cyprus

â&#x20AC;&#x153;I recommend that Cyprus should adopt and immediately announce even more liberal Ă&#x201E;UHUJPHS ZLY]PJL WVSPJPLZ [OHU P[ already has so that it can try to take advantage of the inevitable relocations that will occur during the period of confusion . This is a God-given opportunity, but a brief one.â&#x20AC;?

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with the authorities in Cyprus to use their position in the EU to support the UK in being a very good leaver. I also encourage

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aving i tried i d to explain l i why h the h outcome of the UK referendum vote threatens to hit Cyprus with a series of economic negatives, I will now present some positives, albeit ones which will take time to come through but come through they will. utside the EU, the UK has the ability to develop its connections across the 53- nation Commonwealth, one of whose members is, of course, the Republic of Cyprus. Given that others include India, Singapore, Australia, Canada â&#x20AC;&#x201C; in fact, nations across all continents â&#x20AC;&#x201C; the Government in Nicosia should do what the Government in London will do and engage economically with some of the worldâ&#x20AC;&#x2122;s fastest-growing nations, whose combined population is over 2.25 billion. Of course, Cyprus will continue within the EU and the decision by a majority of those who voted to extract the UK from the EU cannot fail to have considerable consequences for those who remain. From my perspective, Brexit will hasten a less severe attitude towards those eurozone nations currently being bludgeoned economically by the austerity demanded of them from the EU centre. ll told, then, I am saddened to say that the near-term fallout from Brexit will be a considerable negative shock to the Cypriot economy. Accepting this reality, I will end by pleading

the Government in Nicosia and businesses across the Republic to look beyond the EU to its Commonwealth best interests.

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www.goldnews.com.cy | GOLD | 33

| INTERVIEW |

GETTING USED TO THE NEW NORMAL

34 | GOLD | The Business Magazine of Cyprus

Ask most people in Cyprus what they know about Ukraine and they’ll probably tell you that it won the Eurovision Song Contest in May. They may even add that the result was all to do with Europe’s dislike of Russia. Borys Humeniuk, Ukraine’s Ambassador to Cyprus, does not deal in such trivial conspiracy theories, especially given the much more serious reality of his country having to spend $6 million per day on what he describes as “combating Russian aggression in Eastern Ukraine” and dealing with the fact that the Crimean Peninsula was annexed by Russia in 2014. In an exclusive and extensive Gold interview, Ambassador ,YQIRMYO XEPOW EFSYX VIPEXMSRW [MXL 6YWWME ERH XLI )9 XLI ÁKLX EKEMRWX corruption and the promotion of privatisation, and explains why he believes that, after their 1974 experience, Cypriots should be especially sensitive to Ukraine’s current plight. By John Vickers, Photo by Andreas Loucaides

ore than two years have now passed since Russia annexed Crimea. How do the people of the region feel today and how does the rest of Ukraine feel about this situation? Borys Humeniuk: The occupation of Crimea is considered a tragedy, not only by local Ukrainians, who are 24% of the population of Crimea, but by the whole population of Ukraine and the democratic international community as a whole. Many Crimean Russians understand that this annexation is a dangerous, destructive gamble. The Black Sea peninsula, which only two years ago was a favourite holiday destination for people from all over the former Soviet Union and abroad, was turned in the blink of an eye into a Russian military base. According to international human

rights organisations, increasingly grave civil, political and human rights violations have taken place in Crimea since Russia occupied it. Ukrainian flags and symbols are prohibited, the Ukrainian language is no longer taught in schools, Ukrainian libraries are closed and there is no Ukrainian TV at all. Moreover, the creation of the so called “Luhansk People’s Republic (LPR)” and “Donetsk People’s Republic (DPR)” pseudostates with repressive political regimes has led to numerous gross and systemic violations of human rights as well, including the right to life, the right to be free from torture and cruel treatment, the right to liberty and personal security, and the right to a fair trial in different spheres on the territory of the certain areas of the Donetsk and Luhansk regions, which are currently outside the control of the Ukrainian authorities. So the feelings of all Ukrainians are predictable: there is a great need to restore international order by the way of the de-occupation of the above-mentioned territories of Ukraine and to stop Russian aggression against Ukraine and its people. Gold: In recent years, long before 2014, relations between Ukraine and Russia had been quite strained. What,

in your view, were the reasons for this? B.H.: Allow me to disagree with you a little. Ukraine and Russia have enjoyed different kinds of relations throughout their history, which were not always strained. For instance, after the dissolution of the USSR in 1991, more than 350 bilateral treaties were signed between Ukraine and the Russian Federation in order to develop mutually beneficial relations. In 1997 a basic agreement – the Treaty on Friendship, Cooperation, and Partnership – between Ukraine and the Russian Federation was signed and it is still in force. This treaty fixed the principle of a strategic partnership between the two countries, the recognition of the inviolability of existing state borders, respect for territorial integrity and a mutual commitment not to use their territory to harm each other’s security. Using its military force and, particularly, the Russian military base in the Ukrainian city of Sevastopol, Russia brutally violated these provisions of the treaty by temporarily occupying the territory of the Autonomous Republic of Crimea and the city of Sevastopol, as well as by destabilizing the situation in certain areas of the Donetsk and Luhansk regions of Ukraine. Naturally, these developments cannot be ignored by the Ukrainian Government and

www.goldnews.com.cy | GOLD | 35

| INTERVIEW |

people and the international community. Russia’s illegal activities in Ukraine have been strongly condemned by the vast majority of international organisations, including the UN, the Council of Europe and the OSCE. Russia has become an unpredictable, aggressive and dangerous neighbour for the whole region. The EU, the USA and many other countries imposed sanctions and restrictive measures against Russia in response to the occupation of Crimea and the deliberate destabilization of Ukraine with the main objective of restoring international law and order on the European continent.

thermore, the people of Ukraine not only wish to develop relations with the European Union but also to obtain full membership of the EU. Ukraine is a traditionally peaceful nation that believes in promoting mutually beneficial political, economic and cultural relations based on the well-known international principles of the rule of law, democracy and peaceful coexistence with all the countries of the world, including its neighbours. Ukraine’s desire to join the European institutions dates back to 1994 when the Government declared that EU membership was a main foreign policy objective. The political dialogue between the EU and Ukraine started in 1994 with the signing of the Partnership and Cooperation Agreement. The ‘Orange Revolution’ of late 2004 improved Ukraine’s European prospects. The EU-Ukraine Association Agreement was initialled in Brussels on 30 March 2012. The Ukrainian people’s strong desire to be closer to the EU was shown again during the ‘EuroMaidan’ Revolution of Dignity in late 2013. The political part of the Association Agreement was signed on 21 March 2014 and the economic part on 27 June 2014. On 16 September 2014 the Parliament of Ukraine and the European Parliament simultaneously ratified the EU-Ukraine Association Agreement. To date, it has been ratified by Ukraine and all the EU member states except the Netherlands, which is looking for an opportunity to speed up the process after this April’s referendum. Finally, according to the latest opinion poll conducted by the Kiev International Institute of Sociology between May 20 and June 2, 2016, the overwhelming majority of Ukrainian citizens believe that Ukraine should join the EU, which clearly shows their pro-European choice.

Gold: Would you say that the people of Ukraine genuinely wish to have closer relations with the European Union? B.H.: The answer is definitely yes. Fur-

Gold: In the light of what has happened recently in the UK, isn’t it ironic that, at the same time as one country wishes to leave the EU, other countries like yours are seeking membership?

THE PEOPLE OF UKRAINE NOT ONLY WISH TO DEVELOP RELATIONS WITH THE EUROPEAN UNION BUT ALSO TO OBTAIN FULL MEMBERSHIP OF THE EU

36 | GOLD | The Business Magazine of Cyprus

B.H.: No, it is not ironic. It is the result of democratic transformations on the European continent. Ukraine regrets but respects Britain’s decision to leave the EU but the Ukrainian people still believe that their country should join the EU, which will be even more powerful, united and successful after the Brexit. Gold: People all over the world know about Viktor Yushenko, Yulia Tymoshenko and Viktor Yanukovych and, of course, the case of the latter was described by Transparency International earlier this year as “one of the most symbolic cases of grand corruption” However, it also said that “little has been done in Ukraine to investigate the serious and numerous allegations of grand corruption against him.” Is this true? B.H.: Fighting corruption is a priority of the Government of Ukraine, which is trying to implement the principles of transparency, efficiency and public disclosure – anything to reduce the opportunities for corruption. By abolishing every unnecessary license, certificate, monitoring, examination and regulation, the Government is removing the possibility for corruption and giving businesses the chance to work fairly and openly. On 7 October 2014, the Ukrainian Parliament approved a package of anti-corruption bills, by which three state anti-corruption bodies were created (the National Anti-Corruption Bureau, the Anti-Corruption Unit of the Prosecutor-General’s Office and the National Agency for the Prevention of Corruption). On 15 March 2016, Ukrainian lawmakers approved an anti-corruption bill establishing public oversight over the assets of both senior and lower-level officials and their relatives. Under the legislation, they now have to file electronic declarations of their income and holdings, and face criminal liability for any inaccurate or falsified information. Of course, it is not enough but the Government will proceed with this process in order to fi-

nally combat this phenomenon. Ukraine, at least, does not hide the problem. The Russian authorities do the opposite. Gold: Despite the many difficulties of the last few years, how is the Ukrainian economy holding up? B.H.: Russia’s longstanding aggression against Ukraine and its support of illegal, terrorist, military separatist formations in Donbas from the very beginning of the conflict have severely damaged the Ukrainian economy. It is enough to say that the Government spends approximately $6 million per day on combating Russian aggression in Eastern Ukraine. Any temporary economic losses are not so high as to compare with the cost of dealing with this direct aggression. The political pressure and economic sanctions imposed by the EU should be reinforced until Russia stops undermining Ukraine’s territorial integrity, sovereignty and independence and promotes a peaceful settlement of the crisis. I would like to stress that the Government is doing its utmost to improve the country’s economic situation. As a result, since 2014, Ukraine has risen by 29 points in the Doing Business ranking and by 40 points in the area of business registration. Leading international credit rating agencies such as Fitch, Moody’s, and Standard & Poor’s have all upgraded Ukraine’s sovereign ratings while the World Bank has forecast 1% GDP growth this year, 2% in 2017 and 3% in 2018. I am quite sure that it is only beginning of Ukraine’s new economic growth cycle. Gold: How has the country changed its economic model over the past 25 years (since independence in 1991) and is it still evolving? B.H.: Europe’s second largest country by area, with a population of 46.6 million people, Ukraine is a land of agriculture and heavy industry. It is an emerging free market and is well integrated into the global economy. The EU officially recognized Ukraine as a market economy

in 2005 and the USA granted Ukraine market economy status the following year. In 2008, Ukraine gained WTO membership, which opened up new prospects for development of the national economy. The Deep and Comprehensive Free Trade Agreement between the EU and Ukraine, which entered into force on 1 January 2016, aims at boosting bilateral trade in goods and services by progressively cutting tariffs and by aligning Ukraine’s rules with the EU’s in selected industrial sectors and for agricultural products. Ukraine is currently harmonizing a large number of rules, norms and standards in a number of trade-related areas with those of the EU. Gold: I understand that the present government has an ambitious privatisation programme. What can you tell us about it? B.H.: You are quite right; we are working on a large-scale privatisation in Ukraine in 2016. A total of 450 companies are expected to be put up for sale this year, among them 20 large companies, 50 medium-sized businesses and 380 smaller

THE GOVERNMENT SPENDS APPROXIMATELY $6 MILLION PER DAY ON COMBATING RUSSIAN AGGRESSION IN EASTERN UKRAINE

bodies. The planned starting point of the large-scale privatisation will be the Odessa Portside Chemical Plant. In addition to improving its image, Ukraine expects to gain a considerable amount of money (the Governor of the National Bank of Ukraine has predicted $1 billion in revenue from privatisation in 2016). This will help stabilize the hryvnia and increase social payments. Cypriot businessmen who are interested in taking part in the privatization processes in Ukraine are advised to contact the Embassy in Nicosia in order to get a full list of the companies as well as any other assistance they may need. Gold: As Ambassador to Cyprus since 2012, you have observed Cyprus’ own economic difficulties and seen the popular reaction against privatisation. Can you understand this? Has there been a similar movement against it in Ukraine? B.H.: It is no secret that we are closely following developments in Cyprus. Without any doubt, the Cypriot Government should remain committed to structural reforms and fiscal consolidation, even after the recent completion of the adjustment programme agreed in 2013. It is a policy that has been delivering visible results. Of course, there will always be a section of the population that does not agree with certain aspects of the Government’s privatisation policy but such adjustments will eventually bring stability, prosperity and further development for all. Gold: Although Cyprus is a member of the EU, it is also a country that has traditionally supported the positions of Russia and, you will doubtless have been told, Russia has always expressed support for Cyprus. Does this cause you problems and are you ever tempted to compare the annexation of Crimea with the occupation of the north of Cyprus? B.H.: I am not in a position to comment on Cyprus-Russia relations, which, to my mind, cannot harm the friendly rela-

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| INTERVIEW |

tions between Ukraine and Cyprus. To answer the second part of your question, let me agree with you that, from some points of view, the case of Crimea is comparable with the Turkish invasion and the unilateral illegal proclamation of the socalled “Turkish Republic of Northern Cyprus”. The Cypriots, unfortunately, know first-hand all about the atrocities committed during the illegal annexation of territory in their homeland, so no-one in Cyprus should believe the Russian propaganda myth of the “democratic” separation of Crimea from Ukraine and its accession to the Russian Federation after the illegal “referendum” held on 16 March 2014. Everybody knows that it was held under pressure from the Russian military forces in contravention of all provisions of international law and the Constitutions of Ukraine and the Autonomous Republic of Crimea.

THE NORMALISATION OF UKRAINERUSSIA RELATIONS IS IMPOSSIBLE WITHOUT THE RESTORATION OF THE SOVEREIGNTY AND TERRITORIAL INTEGRITY OF UKRAINE 38 | GOLD | The Business Magazine of Cyprus

Russians like to say that “Crimea has always been Russian” but it’s the same as if someone says that “Cyprus has always been Turkish”. If such statements are enough to justify the occupation of Crimea by Russia and the occupation of one third of Cyprus’ territory by Turkey, then the entire order of global security could collapse as many more countries and nations emerge to reshape the world political map. To dissolve the Kremlin-imposed myth about “Russian Crimea,” I would like to draw attention to some historical facts. In ancient times, the Crimean peninsula was inhabited by various ethnic groups. Later on, it was the site of Greek colonies. In the 13th century, the Crimean Tatars came from the East, creating the state of Crimean Khanate. It was not until 1783 that the Russian Empire conquered Crimea and in 1954, that very same Moscow returned Crimea to Ukraine. It should be emphasized that the transfer of Crimea from the Russian Soviet Federative Socialist Republic (RSFSR) to the Ukrainian Soviet Socialist Republic (UkrSSR) was conducted with the strict observance of all Soviet legal provisions of the time and approved by the parliaments of the RSFSR, the UkrSSR and the USSR. Considering all the above, it is natural that Ukraine was surprised by the resolution of the Parliament of Cyprus, adopted on July 7, 2016, aiming at lifting EU sanctions against the Russian Federation, which was condemned by our Ministry of Foreign Affairs. We believe that the political forces that initiated the discussion in the Cypriot Parliament ignored basic principles of interstate relations that are based on international law. This decision by the House of Representatives is definitely not favourable to the promotion of traditionally friendly and constructive Ukraine-Cyprus relations. Gold: How hopeful are you of a normalisation of Russia-Ukraine relations? B.H.: We should not be speaking only about the normalisation of Ukraine-Russia relations. We have to see the issue from a much wider standpoint and consider the

normalization of relations between Russia and the EU, Russia and the USA, Russia and many other states as well. It is very important to prevent Russia from continuing its aggressive policy and violations of international law. Therefore, the normalisation of Ukraine-Russia relations is impossible without the restoration of the sovereignty and territorial integrity of Ukraine, without the de-occupation of the temporarily occupied territories of my country and without the withdrawal of Russian military forces from Ukraine. So, when Russia starts to conduct its foreign policy – in general but particularly towards its neighbours (Ukraine, the Baltic states, etc.) – strictly in line with international law, we will be ready to normalise our relations with Moscow and transform them into a vitally important factor of stability and safety in the region. The ball is in the Kremlin’s court. In this context, I would like to note the position of the Government of Cyprus on the issue, which stands firmly for the respect of the sovereignty, territorial integrity and political independence of Ukraine. In particular, the Republic of Cyprus was among that vast majority of countries which voted in favour of the UN General Assembly resolution on the “Territorial Integrity of Ukraine” on 27 March 2014. Gold: Are you hopeful of a settlement of the Cyprus Problem in the near future? B.H.: Ukraine welcomes the recent decision of President Anastasiades and the Turkish Cypriot leader, Mr. Akinci, to start twice-weekly meetings as they work to resolve the remaining outstanding issues in an agreed structured manner. Let me reassure you that Ukraine fully respects the sovereignty and territorial integrity of the Republic of Cyprus and supports the negotiation process between the two communities aimed at the reunification of Cyprus as a bizonal, bicommunal federation. As a non-permanent member of the UN Security Council, Ukraine will promote such a settlement of the Cyprus Issue in the future, too.

Magazine The official magazine of the Institute of Certified Public Accountants of Cyprus (ICPAC) The Institute of Certified Public Accountants of Cyprus (ICPAC) and IMH are collaborating on the publication and distribution of the quarterly magazine Accountancy Cyprus, which deals with issues pertaining to economics & finance, business, accounting, taxation, audit, compliance, news of the Institute and much more. The magazine is being redesigned and upgraded with additional content to ensure that it remains a point of reference as the most reliable source of information for news of the sector. Accountancy Cyprus will now provide a modern and dynamic information platform for members of ICPAC, the business world, the political leadership and government officials. Accountancy Cypus is published 4 times a year and mailed free of charge to more than 9,000 subscribers in Cyprus and abroad.

The ﬁrst issue of the magazine to be published under the new ICPAC-IMH arrangement will be available in July. Collaboration For further information contact: IMH, 5 Aigaleo Str., 2057 Strovolos, P.O.Box 21185, 1503, Nicosia, Cyprus Tel.+357 22505555 Fax. + 357 22679820, E-mail: events@imhbusiness.com, website: www.imhbusiness.com

| PROFILE |

ANTICIPATING

INVESTMENT

OPPORTUNITIES on writing. She currently has three novels in It is always a pleasant surprise to meet someone search of a publisher. from the world of business and investment whose The second difficulty lay in the fact that, at the academic background does not fit the usual pattern time, the CEO of PwC Cyprus was none other of a degree in accounting and an MBA. This is than her father. “It was tough at first,” she explains. only one of the ways in which Natasa Pilides, who “I felt that, in my academic life, I had done a lot was appointed three months ago as Director-Gento prove myself and then, suddenly, it was not aperal of the Cyprus Investment Promotion Agency, preciated and people assumed that I was only there stands out among her professional peers. How HE NEWLY because my Dad had pulled some strings. I soon many people in business anywhere, let alone in APPOINTED got used to people thinking negatively about me Cyprus, have a First Class Degree with distinction DIRECTORbefore eventually changing their mind. I’m glad to from Oxford University in French and Italian GENERAL OF say that it was wonderful in the end and I made a Literature? THE CYPRUS lot of friends but it wasn’t easy in the beginning. I “I actually wanted to study English literature,” INVESTMENT have to say, however, that PwC doesn’t allow anshe recalls, “but I loved languages and although I PROMOTION yone to act any differently from the rest and that’s viewed the choice of French and Italian as a comAGENCY IS what I wanted. I had no interaction with my Dad promise, I‘m glad I accepted it.” ENTHUSIASTIC who worked in a different building so my life was She was encouraged by her parents to study a ABOUT HER NEW just like everyone else’s.” subject she enjoyed but it was understood that she ROLE, ESPECIALLY In the end she qualified as a Chartered Acwould later make a second compromise. WHEN IT COMES countant and worked for more than eight years “It was part of the deal that I would do what I TO FACING THE with PwC in Cyprus before spending a year in the wanted and then I would switch to something that firm’s London offices. When she left in order to would give me better career prospects and help me CHALLENGE OF have more free time for her writing, she worked earn a living in the private sector,” she explains. ATTRACTING as an ICAEW/ACCA tutor before rejoining the Secretly, she was intending to do a PhD if she obINTERNATIONAL profession as Regional COO for Baker Tilly in tained a First in her final exams but, unsure of the INTEREST IN South-East Europe. outcome, she applied to a number of accountancy NEW SECTORS So what made her apply for the post of Direcfirms with a view to training and qualifying as a OF THE ISLAND’S tor-General of the Cyprus Investment Promotion Chartered Accountant. “I didn’t really expect to ECONOMY. Agency (CIPA)? “Because I love the subject that be accepted but PwC made me an offer and even By John Vickers though I got my First, I decided that I couldn’t Photo by Jo Michaelides it deals with,” she replies at once. “I’ve always been passionate about business development, especially really tell the firm that I had changed my mind, so when it has to do with Cyprus. It’s something that accountancy it was!” I had worked on and enjoyed a lot in Cyprus and when I went Her new choice of career was not easy for two reasons. to PwC in London, in addition to my day-to-day work I was also Firstly, Natasa Pilides had no prior knowledge of accountbusy trying to do some promotional work for Cyprus, which was ing whatsoever and, when she started her studies in a class interesting and fun. I was able to continue that sort of work at comprising mainly graduates in the subject or a related field, she initially regretted what she had done. “Every day I would Baker Tilly and I really liked it. So I applied.” Given the importance that everyone gives to foreign investment despair of the decision I’d taken but the next day I’d go to regarding the economy, doesn’t Natasa Pilides feel a great burden class again,” she says, concluding that she was perhaps “not of responsibility to be running the agency whose mandate is to rebellious enough to give up once I’d started,” although she attract such investment? notes that some ten years later, she did quit her job to focus 40 | GOLD | The Business Magazine of Cyprus

IF WE WANT A BIGGER BUDGET, WE HAVE TO PROVE THAT WHAT WE ALREADY HAVE IS BEING USED IN THE MOST EFFECTIVE WAY www.goldnews.com.cy | GOLD | 41

| PROFILE |

THE EU HAS TO TAKE A CRITICAL LOOK AT ITSELF AND FIGURE OUT HOW TO BECOME MORE ATTRACTIVE TO ITS MEMBERS “Yes, of course,” she says, admitting that she is by nature “quite a worrier” and spends a great deal of time thinking about what she and her colleagues need to be doing. She notes that, in reality, the burden of responsibility is, of course, shared. “I don’t take policy decisions. We have a wonderful Board of Directors who do that and it’s then up to me to implement their decisions, which, in some ways, is easier than actually setting the strategy.” She describes her role as “very exciting” and is keen to find herself in a position to have “something of substance to sell” to potential investors. So, what’s at the top of her list of priorities? In terms of CIPA’s promotional work, she says, the easy part is to improve on everything that is already working. “We have a lot to offer in the shipping sector, for example, and we need to build on that by identifying the companies that may be interested, approaching them and trying to build the maritime cluster even further.” The same applies to tourism, for which a strategic plan is in the process of being drawn up, and other traditional areas such as real estate and professional services are also being developed. “The new sectors are the more challenging ones,” she says, and her eyes light up when she mentions the film industry as an example. “It’s long overdue but a lot of work has been done in examining the legislative changes that can be put into an incentive package,” she says. “Tax breaks are often cited as the key but there are already lots of things available, which people don’t know about, such as the country’s Intellectual Property regime, notional interest deduction or personal tax benefits, which film companies can take advantage of. But it’s not all about taxes. There is a great deal of logistics involved and a huge amount of coordination required.” Fortunately, she says, Cyprus does not have to start from scratch when it comes to welcoming the global film industry. “We can look at what other countries do and then try to do it better. And that applies to other areas such as such as renewable energy, education, medical tourism and so on.” Is the new General Manager optimistic that, in its present form and with its current budget, CIPA can carry out its stated mission? In a word, yes. “People complain about the budget in both ways,“ she says, “with some saying that’s it’s too big and others that it’s too small. I believe that the right approach is to make the best use of the budget that we have – if we want a bigger budget we have to prove that what we already have is being used in the most effective way. This year we’re going to be involved in some high-profile events abroad, such as one organised by Bloomberg in the US, where we will be able to showcase Cyprus, what has already been achieved and what we hope to do in the future. But there are also targeted things that can be done with very little money, carefully tailored to, and targeted at, specific investors and sectors.” Promotion is, of course, only one aspect of CIPA’s threefold mandate. The other two – investor care and reform – are being looked at in a very targeted way, Pilides says. I remind her that, throughout its eight years of operation, the Agency has been pleading with successive governments and parliaments to act in order to make Cyprus more investor-friendly and yet everyone in the professional services sector still says that bureaucracy is causing problems. Why is this? 42 | GOLD | The Business Magazine of Cyprus

“The main reason is that we don’t have a coordinating body with the power to implement the changes that are needed,” she says. “The presidency is trying to implement measures and the promised Under-secretariat for Development is a step in the right direction but we need a centralized body with the authority to align all the various bodies and government departments. As an independent organisation, CIPA does not have the authority to say, ‘This is an important investment. We need to finish it by that date and implement these procedures’. That’s what our counterparts in other countries do. And it’s also a question of changing our mentality. Believe it or not, there are still people asking why we should help foreign investors!” In such a case, Cyprus still has a major problem but Natasa Pilides is determined to do everything in her power to convey the right messages to those inside the country as well as those outside. Finally, given that the big talking point here and around the world is the result of the British referendum on UK membership of the EU, I ask her if she believes that Cyprus stands to gain or lose from the UK’s decision to leave the EU. “In terms of investment,” she replies, “I believe that we can definitely gain from the new situation, which is an opportunity that Cyprus should take advantage of.” CIPA will be taking part in a broad-based meeting of organisations, bodies and associations, at which each will offer insights into its own particular area of expertise in relation to the UK’s decision to leave the EU. “Certain points will then be incorporated into an action plan and we’ll try to implement it in the coming months,” she says. Beyond the investment sphere, Natasa Pilides thinks that the island may be adversely affected, noting that the UK Chancellor has already stated his wish to reduce the rate of corporation tax to 15% and that there is a move within the EU towards tax harmonization, which Cyprus is against. “The UK has always been an ally of Cyprus on this subject,” she explains, and goes on to say that, “If these two things happen, it will make things difficult for us but I’m hopeful that they won’t. Following the outcome of the referendum, the EU has to take a critical look at itself and figure out how to become more attractive to its members. Closer union is a good principle, and it definitely works in terms of human rights, fair treatment, freedom of establishment etc. but when it comes to the things that make each economy competitive, I don’t think the EU can eliminate all differentiating factors and say that everyone has to move in the same direction because that will destroy competition.” On the other hand, she notes that other opportunities may arise. “A lot of UK-based Russians may be interested in having another seat within Europe,” she suggests, “so the development of their Family Offices could be a big opportunity for us here. What’s more, they are mostly entrepreneurs so there could be a great deal to be gained. I also see shipping and technology as two areas for post-Brexit development.” If there are areas where CIPA can play a role for the benefit of Cyprus, it is clear that the Agency’s new General Manager is determined not to let any opportunity go to waste.

Opinion

BREXIT: THE AFTERMATH THE CURRENT SITUATION AND WHAT HAPPENS NEXT By Michalis Economides

n the unpredicted and to vote on it and transpose it into unprecedented result of legislation or an executive decision. the June 24 referendum,, From the referendum result, it d the people of the United is evident and clear that a majority Kingdom decided to exitt of the people of Northern Ireland he the European Union. The and Scotland are against leaving the immediate aftermath of the vote EU. If their respective Parliaments was a fall in the value of the pound refuse to approve the result, that 0 w sterling – the sharpest in the last 30 will possibly create deadlock and nyears – as well as freefall in the finanthe UK will not be able to trigger A cial markets and uncertainty across Article 50. the EU. The process to leave the EU canThe decision to exit the EU has not be initiated until and unless the already affected the UK and the British Government provides an broader European economy and official notice, subject to Article 50, sparked a chain of negative events informing the EU of its intention around the world. International to exit the Union. When and if companies and banking institutionss that happens, the UK will have two sare already working on plans to posyears to conclude the negotiations sibly move parts or even all of theirr and terms of its exit. If this is not operations and entities from the UK achieved within two years, the timeInfo: Michalis Economides, to other jurisdictions within the EU. frame can be extended but only by unanimous CEO,Economides Kranos The UK’s decision has also raised numerdecision by the other Member States of the Chambersfield Advocate/Legal Consultant ous concerns amongst the other EU member EU. states, since the result has already initiated A certain amount of panic has spread to talks and discussions in other countries, with proposals and Cyprus regarding the consequences of the UK referendum. arguments being put forward from some quarters for a simiIn the short term, it is true that uncertainty might create lar referendum on whether to stay in or leave the Union. certain issues regarding UK pensioners residing in Cyprus The EU needs to take into serious consideration the and British tourists to the island. But Cyprus is a comreasoning behind the British people’s decision. Even if the monwealth country and, as such, Cyprus and the UK have result of the vote had been to remain in the EU, European signed multiple bilateral treaties and, additionally, even if institutions and agencies should still consider their policies, the UK finally exits the EU, it will be able to enter into alwhich led a member state to proceed with a referendum to ternative arrangements with Cyprus and the EU, which will exit the EU, whose concept of unity and solidarity appears bypass any possible short-term negative effects. to have lost its value. Moreover, if it correctly manAt this moment, the UK is still ages the current situation in the a full EU member state and will Cyprus can actually benefit A CERTAIN AMOUNT OF UK, possibly continue to be so for from the uncertainty that has been PANIC HAS SPREAD TO created. Companies can relocate some years to come. In order for CYPRUS REGARDING THE to Cyprus, while banks and other the result of the referendum to take effect, all the parliaments of CONSEQUENCES OF THE financial institutions can choose the UK (in England, Wales, Scotthe island as the base for their UK REFERENDUM land, and Northern Ireland) have headquarters. www.goldnews.com.cy | GOLD | 43

| ACCOUNTING |

I HAVE LEARNED A LOT AND BENEFITED A GREAT DEAL FROM THE PROFESSION AND I STILL LOVE IT

Ninos Hadjirousos FCA, a former senior partner at Ernst & Young Cyprus and Ernst & Young South-East Europe, RIรฐFLDOO\ UHWLUHG LQ $V KH WHOOV *ROG WKH UHDOLW\ LV QRW TXLWH VR VLPSOH DQG KLV ORYH RI WKH SURIHVVLRQ KDV QRW IDGHG RQH ELW RYHU WKH \HDUV ZKLFK LV ZK\ KH KDV QR SODQV WR VWRS JRLQJ WR WKH RIรฐFH By John Vickers Photo by Andreas Loucaides

44 | GOLD | The Business Magazine of Cyprus

A lthough he qualified as an accountant almost half a century ago, that had never been Ninos Hadjirousos’ plan. Indeed, to this day he describes it as “a fluke” because when he went to London in the late ‘60s, his intention was to study medicine. His parents’ inability to send him sufficient money meant that he had to work and, after completing his first year, he was persuaded by a cousin to take up accountancy. “I didn’t need a degree and I could study for the diploma on the basis of my GCEs, which I did. I articled with a firm in the UK and four years later I passed my exams. In those days, we had two sets of exams, one consisting of four subjects and the other of six. If you failed in one subject, you had to take all four or six again. I think things are much easier now!” Hadjirousos says that he has no regrets over the forced decision to change his course of study and, indeed his life: “I have learned a lot and benefited a great deal from the profession and I still love it,” he says, though he admits that, at the time, he felt sorry because was something of an idealist and wanted to do something that was clearly all about helping others. He laughs when I suggest that the accounting profession’s contribution to mankind is not quite so obvious… In the UK, the now qualified accountant had been working for Russell & Co, which was a member firm of Arthur Young. “I was interviewed by Arthur Young in London and sent to Cyprus in 1970,” he recalls. “Russell & Co was the oldest accountancy and audit firm in Cyprus, having been registered in 1937. In 1976 I became a partner and, in 1989 following the mega-merger between Arthur Young and Ernst & Whinney worldwide, we joined forces in Cyprus to form Ernst & Young Cyprus. Putting aside the part-

nership of Russell & Co, I was a senior partner at Ernst & Young Cyprus and later Ernst & Young South-East Europe until 2000 when I retired at 65. Two years later I re-registered the old Russell & Co name as a new firm.” Ninos Hadjirousos may say that he retired 16 years ago but the truth is that he has never stopped working. “I love my work,” he says with genuine enthusiasm, “and what has kept me going all this time is the way I have been able to move through the various spheres of the profession, from audit and accounting to insolvency and restructuring practices and now I am involved in consultancy.” At his age and with all the experience gained over 40-50 years, he says modestly, advising people and corporations is a logical step and one he continues to enjoy. Not surprisingly, he has always played an active role in the Institute of Certified Public Accountants of Cyprus (ICPAC), including serving on the Council for 23 consecutive years, including stints as President and Treasurer. “This is impossible now and I doubt if anyone would have the stamina if it wasn’t!” he jokes. Not surprisingly, in 2012 he was honoured by ICPAC for his contribution and service to the profession, the Institute and society. He recalls that, in those early days, with no secretariat or its own offices, ICPAC’s main objective was to gain greater recognition for the profession, particularly on the part of the Government and the House of Representatives. “We were never consulted about bills before the House in those days,” he says, “and I am pleased to say that things have changed tremendously. The House, every Government department and the President not only believe in the profession but they seek the Institute’s advice as the voice of the profession.” Change, of course, is inevitable but although the profession is now viewed differently from how it used to be, Hadjirousos admits to having a certain nostalgia for the old days. “I must say that, in many ways, I prefer how things were in the past, before we had all this regulation, for example. Now everything has changed and we have to be more and more careful, especially since Cyprus joined the EU. Anti-money laundering, for example, means more and more additional work and of course more liability, more professional

indemnity and so on. Things were a lot simpler 30 years ago!” Thirty years ago, things were simpler enough to persuade Ninos Hadjirousos to represent the Maronite community in the House of Representatives, from 1981 to 1986. In the end he served just one five-year term because, he says regretfully, “If you are serving in two different posts, you’re bound to give more emphasis to one or the other and unfortunately my practice came second at the time. I was spending too much time in parliament and not enough on my profession.” However, he later became President of the Cyprus Former Parliamentarians and, in 2012, President of the European Former Parliamentarians and is the Honorary President of the organisation. “I learned a lot during that period and that’s why I’m still involved, not in active politics but in consultancy. As former parliamentarians we put our knowledge, experience and contacts at the disposal of others. Again, everything comes back to my old desire to help people.” As an active member of his community, Hadjirousos naturally takes a great interest in the ongoing talks for a solution of the Cyprus Problem. “I am definitely in favour of a solution, though it goes without saying that I don’t mean any solution,” he says. “We should decide precisely what it is that we want and then all come together and fight for a united cause. The longer the current situation continues, the harder it gets to change.” He states that he has always been an optimist by nature and he believes that something positive will come out of the present talks. “This is a belief and not just hope and wishful thinking,” he clarifies. “If not by the end of the year, then early next year a plan – hopefully the right one – will be placed before the people and we will vote on it. Let’s hope that my wish comes true.” We return to the idea of retirement, which Ninos Hadjirousos claims to have implemented in 2000, even though he has not given up work. “I’m a Cypriot,” he says with a broad smile. “We never retire! The truth is that I love what I’m doing and as long as I’m in good health and I can think OK, I will continue. You’ll definitely still be seeing me around for the next few years!”

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INTERESTING | CORPORATE ADVISORY |

TIMES By John Vickers

46 | GOLD | The Business Magazine of Cyprus

tell l l i w s t s y l Most antathe biggest you tha facing the problemeconomy Cyprus ays is that of these d ks’ high level the banperforming of non- any of them perty loans, m o r p o t g belonginers. Enter develop Mountis, Georgeing Partner at Manag Y[ULYZ *V +LSÄ 7Hspecialises which ing banks in advis to deal with on how stomers’ their cu atic assets. problemars to be a It appe match. perfect

hat exactly does Delfi Partners do? George Mountis: It essentially does two things: the first involves corporate finance, M&A advisory, business feasibility planning and debt restructuring, acting mainly on behalf of banks, corporates, insurance companies and big institutional players; and the second concerns real estate asset management services, by which we manage assets on behalf of banks and we help them optimise problematic assets with the main aim of disposing of them. We have maybe 3,000 assets under management in excess of €3 billion right now in Cyprus, Greece and South East Europe The specialised services we offer in this department range from evaluations, econometric studies, real estate investment advisory, lease advisory and real estate sector portfolio management. We are currently involved in the debt to equity process, mainly advising banks to help them conduct certain debt-to-asset swaps with various borrowers. What differentiates us is the fact that we combine financial banking advisory with real estate asset management. This mix is pretty much unique. Gold: Aren’t the banks dealing with those ‘problematic assets’ themselves? G.M.: Yes they are but they don’t have their own in-house dedicated real estate advisory services. We have created a groundbreaking real estate data bank of all the transactions that have been carried out in Cyprus and we know pretty much what deals have been made, at what values, in which zones and this helps us to provide added value services to the banks. It’s been very beneficial over the past few years in adding tangible value.

Gold: You obviously got into this at an ideal time, proving that one person’s (or company’s) misfortune is another’s opportunity. G.M.: We did. Having been a banker in both the UK and Cyprus, I knew what was needed at the time and I knew what the banks needed. Gold: So are the banks progressing on the NPL issue? G.M.: They are making significant progress but there is a lot more to be done. The reduction so far is mainly due to the debt-to-asset swaps mentioned before rather than borrowers suddenly being able to repay their loans. But I can’t see any other way for the banks to reduce their non-performing loans. It’s the only way forward right now. The problem is how they optimise and organise these portfolios and take them to the market, and at what prices. They cannot suddenly flood the market with real estate. This is what we are helping the banks with and this is our core business. Gold: Is the idea of the ‘Bad Bank’ likely to materialise? G.M.: We’ve worked with an international management consulting firm to advise several banks on whether or not

IN IRELAND THE

they should set up a bad bank. In essence, they all have their little bad banks but right now I don’t think the concept will work. The only thing that might work with all these assets being bought in debt-to-asset swaps would be if all the banks would collectively put together all these assets to optimise them. Instead of companies like ours advising five different banks that each pay us the same fee, they would get a lot more for their money if all these assets were put together in a portfolio structure – not off the balance sheet – and managed collectively. But each bank has a different strategy and agenda and it’s very difficult to do this in Cyprus. In Ireland it worked quite well but I can’t see it happening here. Gold: Although some property developers are among those with the biggest outstanding loans, others are building new projects. Is the real estate sector really recovering? G.M.: That’s an interesting question. Some of them, especially those working with agencies that are promoting the Government’s ‘Citizenship and/or Residence through Investment’ schemes, are doing quite well. The scheme has worked, though I don’t know how long it will last – I understand from the Government that there is pressure from the EU to “stop selling passports”. However, even the big developers that are creating new projects are over-leveraged so they have to deleverage and the only way is if the banks take control of some of the assets. There are some healthy ones that haven’t got that kind of debt exposure and they are doing reasonably well. Paphos and Limassol are doing well for property and real estate investment, Famagusta has shown some improvement and Larnaca is a bit behind but there is appetite from the Middle East. Overall there

‘BAD BANK’ CONCEPT WORKED QUITE WELL BUT I CAN’T SEE IT

HAPPENING

HERE

www.goldnews.com.cy | GOLD | 47

| CORPORATE ADVISORY |

is a positive vibe and I believe that better days will come. I’m cautiously optimistic, I believe we have a lot more to offer and that casinos, marinas and high-rise buildings by the sea will take Cyprus to the next level. We should look at other jurisdictions like Dubai, Singapore or Monaco. We are never going to be the same as them but they should inspire us to leave aside our traditional way of thinking. Gold: Hasn’t the experience of the past three years brought about a change in our way of thinking? G.M.: In a way, yes. Things have begun to improve regarding bureaucracy, although there is still a great deal of room for improvement. I believe that even if things tend to move way too slow in Cyprus, they are at least not static. We may not be flying but we’re going in the right direction. A major problem we face in Cyprus is implementation – decisions, laws, rules and regulations – and we see it on a daily basis. We are not efficient like the British, especially in the public sector. Government bureaucracy needs to be removed and all departments should have a more pro-business attitude. In Cyprus we think we were the ones who invented the wheel and we’re the cleverest people in the world. Seen from the outside, we are nowhere near as important as we believe we are! I am tired of hearing that we want to become a financial centre when we have done nothing. It’s good that we have maybe 100 funds registered in Cyprus but go to Luxembourg where they have 1,000. CySEC says that it has streamlined some of its procedures but, on the other hand, it admits to being understaffed. We need to focus clearly on what we want to become and then act decisively. It all gets a bit lost in translation! Gold: What are your plans for the company? G.M.: We’ve established Delfi Partners Middle East and opened an office in Beirut. Before you tell me that it sounds like a strange move and ask why we didn’t choose Dubai, for example, we have been

48 | GOLD | The Business Magazine of Cyprus

JURISDICTIONS

LIKE DUBAI,

SHOULD SINGAPORE OR MONACO

INSPIRE US

TO LEAVE ASIDE OUR

TRADITIONAL WAY

OF THINKING to Dubai and absolutely everyone is there. The competition is huge. On the other hand, we have been involved in many transactions for Lebanese banks in the Middle East and Cyprus and we wanted to be able to provide our services in that area and also to bring investors here. In Beirut we don’t have so much competition. Our next move is Greece where, by the end of the year, we’ll have 10 people working exclusively on advising banks on how to optimise and manage their assets. Gold: Right place, right time again! G.M.: Correct! Over the next 5-7 years, we’re going to be very busy helping banks to dispose of assets in both Cyprus and Greece. Only a small percentage

of the investors will be from these two countries so we are in the process of organising an international network to bring investors from abroad. The Greek banks are now going through a phase of consolidation, so a lot of their south eastern subsidiaries will be sold as they focus on their core business activities – not only to lend money but to reduce their NPLs and dispose of non-core assets on their books. We already have a presence in Greece but we want to expand even more aggressively. The market is so much bigger so it makes sense for us. The team is growing and we have invested well in our staff. We have had offers by bigger firms to acquire us but, for now, I feel that it’s not the way for us to go. Gold: Do you see any opportunities for you in the UK, following the Brexit vote? G.M.: We have a small desk in the UK, focusing exclusively real estate investment advisory. I believe that there will be opportunities for us there for many reasons – there has always been great interest from the Middle East in UK property and we are planning to set up a Cypriot Real estate Alternative Investment Fund in early 2017 on behalf of one of our biggest clients, investing in Cyprus, Greece and UK, mainly commercial properties or tourism/leisure. Gold: Apart from expanding outside Cyprus, I understand you’ve also created something called Delfi Analytics. What’s that all about? G.M.: Delfi Analytics does three things: Data Analytics, Credit Analytics and Compliance Analytics. The third one in particular helps international business units and compliance departments in regulated companies. We have also created the first private corporate credit bureau to provide ratings on liquidity, trading assessments, creditworthiness, and financial standing in Cyprus. We aim to launch this on 1 September. We already have many international and local clients who are interested. These are interesting times!

ENERGY NEWS www.energynews.com.cy

New dedicated energy news portal in Cyprus EnergyNews.com.cy is the new online portal for up-to-date energy-related news from Cyprus and the rest of the world. The portal aims to present well-rounded and objective information on all energy-related issues for businesses, professionals and consumers in Cyprus and to promote all the organizations, bodies and companies active in the broader energy sector.

Categories 9`YWhf]W]hm C]` FYbYkUV`Y 9bYf[m GcifWYg d\chcjc`hU]W wind, hydro-electric and solar thermal power, biomass and geothermal energy)

BUhifU` ;Ug 9bYf[m 7cbgYfjUh]cb H\Y 9bj]fcbaYbh 6ig]bYgg GiVg]X]Yg#;fUbh GW\YaYg

For further information contact: IMH, 5 Aigaleo Str., 2057 Strovolos, P.O.Box 21185, 1503, Nicosia, Cyprus Tel.+357 22505555 Fax. + 357 22679820, E-mail: events@imhbusiness.com, website: www.imhbusiness.com

Collaboration

| INTERNATIONAL FUNDS SUMMIT |

WISHFUL THINKING OR REAL POTENTIAL? Cyprus C yp prus needs needs tto od do om more ore iff it it is is to to become beccome a major majo or player playyer in n the the global glo obal fund fund Industry Indu ustrry Byy Vo B Voula oulla L Loizou oizo zou zo u

50 | GOLD | The Business Magazine of Cyprus

C hristopher Stuart-Sinclair has almost 40 years of experience in various aspects of financial markets, much of it acquired in the international fund industry. He participated in the growth of the Luxembourg fund market from something almost anecdotal to its current status and dimension. Moreover, he set up and managed one of the first money market funds under the first UCITS Directive. Today he is Director of Compliance and Regulatory Services at IQ Solutions, Luxembourg. While in Cyprus to address the International Funds Summit, he offered some straight-talking advice about what the country needs to do if it wants to become a serious funds industry player.

Gold: It is claimed that the Cyprus investment fund sector has the potential to develop into a multi-billion euro industry. Do you believe that this is achievable, particularly in the current economic climate? Christopher Stuart-Sinclair: I don’t think the current economic climate differentiates things. The thing to bear in mind is that there is a lot of liquidity available and, at the same time, rates of return are quite low. Now, whether Cyprus could become a multi-billion industry in the short term depends how ambitious, how organised and how successful those in the industry can be. But certainly there is no reason why this country can’t have a part in that move from dormant savings to productive investment and make the most of being part of the EU and reap the benefits of Capital Market Union. Cyprus has to be able to define what makes it special and create the perception that it is also a competent, efficient, and cost-effective jurisdiction. Gold: The enactment of the new Alternative Investment Funds Law and the UCITS IV Directive are the latest in a long line of efforts aimed at transforming Cyprus into a true financial jurisdiction. What else can be done to establish Cyprus

as an Investment Fund Centre in Europe, and which markets should it target? C.S-S.: One thing is to look at what you have in terms of product or activity. Mention has been made in Cyprus of High Net Worth Individuals and private funds but there is a lack of clarity around some aspects, possibly a legal status for family offices, for instance, or Trusts. In addition, do you even regulate service providers who have additional cash to offer investors abroad? These are small details and they are not fundamental but I would say that it might be a good idea to look at the whole armoury of funds available and perhaps simplify it a bit and see if there is anything that needs to be added. Overall, Cyprus and its investment products need to be presented as a very simple, straightforward, easily understood and non-specific proposition. Gold: Does the new legal framework offer a competitive advantage to Cyprus? C.S-S.: Not specifically. I think Cyprus has to look elsewhere for its competitive advantage because, being part of European law anyway, the transposition in Cyprus was mandatory and inevitable, in a context where Europe is going to have a level playing field and similar rules for everybody. I think you need to look at what makes up the right combination of products and structures for you and your target markets in the region. Gold: What makes Cyprus an attractive funds jurisdiction to international investors? C.S-S.: At the moment? Not very much, because it is coming from a low base. However, Cyprus has very special relationships with certain countries that have been traditionally hard to develop. The Russian Federation may not be the flavour of the month at the moment and it may pose specific problems but ultimately Cyprus has 50 years of history of dealing with Russia. You don’t get that expertise over night. There are other cases in other regions – in the whole of the CIS region, in fact – that don’t necessarily all have the same problems. There is also the country’s proximity to the Levant and the Gulf. Those are the things that Cyprus can leverage and needs to leverage going forward. Private individuals who are looking for such proximity will see that Cyprus has a competitive advantage over other jurisdictions. And I have to add that, obviously, Cyprus does have a very well-educated workforce, reasonable prices and a very high level of technical competency and qualifications – I think it has one of the highest levels of trained accountants in Europe, and there is also a large Cypriot diaspora

CYPRUS C YPRUS H HAS AS T OB EA BLE T O TO BE ABLE TO D EFIN NE W HAT DEFINE WHAT M AKES MAKES SPECIAL IT TS PECIA AL f i l who h h i d experience i off professionals have gained in financial markets around the world and could be attracted back if the circumstances and growth of the Cyprus market were more attractive. So the building blocks are definitely there, including that all-important human capital and, of course, the language is English. Gold: How does Cyprus compare to other European countries with regard to attracting both professional and retail investors? C.S-S.: For individuals, I think it will take a long time because clearly we need to reach a stage where a UCITS in Cyprus is considered an advantage. For institutional investors, it compares well by being an efficient, flexible, business-friendly jurisdiction, with all the quality service offerings around it. Gold: What types of funds do you see as potentially being the most successful in Cyprus and why? C.S-S.: Private funds for High Net Worth Individuals and Family offices. I would think there is room for standard IFs in terms of private equity and real estate for investment in the region because your administrators understand these markets better and are more aware of bankruptcy laws, etc. Beyond that, one of my own obsessions is Asymmetric Funds where you can split assets into categories and different investors have different terms. That is something worth exploring because it will potentially allow you to sell solutions and not just investment plans. And once you start getting traction, you could offer an efficient, cost-effective, quick market solution with good distribution support mechanisms behind it in terms of administration. Gold: How can investment funds help speed up Cyprus’ economic recovery? C.S-S.: I think, basically, by what they can generate in terms of employment, secondary investment, revenue and also a positive image. If Cyprus is seen as being a Financial Centre, a lot of the restraints that may hold back other economic activity could fall away. I can see a lot of advantages that could be significant in helping Cyprus’ economy to recover and grow. www.goldnews.com.cy | GOLD | 51

| INTERNATIONAL FUNDS SUMMIT |

INVESTORS SHOULD BE AWARE THAT THERE IS NO SUCH THING AS ‘MARKET TIMING’ 52 | GOLD | The Business Magazine of Cyprus

€21 TRILLION and Counting...

Europe’s fund industry continues to thrive By Voula Loizou

he European Fund and Asset Management Association (EFAMA) represents through its 28 member associations and 62 corporate members, some €21 trillion in assets under management, of which €12.6 trillion was managed by 56,000 investment funds at the end of 2015. Just over 30,000 of these funds were UCITS (Undertakings for Collective Investments in Transferable Securities) funds, and the remaining 25,900 funds were AIFs (Alternative Investment Funds). EFAMA Director-General Peter De Proft, who was in Nicosia to address the International Funds Summit at the end of May, spoke to Gold about the Association and the industry it serves. Gold: How has EFAMA grown over the years and what are its plans for future development? Peter De Proft: Some 7-8 years ago, we had 32 corporate members and now we have 62 after all the mergers. Most of the European national associations are members and I would say that we represent the whole of the European asset management industry. Over the last six years we have started to accept associate members and

we still hope to include more corporate members so that there are more present around the table in discussions with European regulators and legislators. There has been quite an evolution in the sense that we are often asked to participate in open hearings now, which means that we are indeed seen to be the representative body of the industry. Of course, it is a challenge, too, because we have to keep coming up with opinions! Gold: How has the European fund industry evolved in recent years? P.D.P.: There has been tremendous growth and the industry has basically doubled in size over the last 7-8 years. It has grown in importance to represent more than €21 trillion in assets. That’s an impressive number! The US industry is about 50% of the world market and Europe is 35%, so it’s huge. Gold: With interest rates at all-time lows in many countries, how have investment strategies changed? P.D.P.: We have seen greater investment in equities in recent years and, at the same time, the development of passive funds but they still represent only a small part of the market. Gold: What are the other key challenges and trends in the asset management sector? P.D.P.: The key challenge is the implementation of all the legislation and the different measures. There are so many regulations and there are more than 300 technical standards, so putting all that into practice is a huge task.

Gold: Are there regulatory reforms that can be implemented to overcome these challenges? P.D.P.: There is an impact assessment that is currently being conducted by the European Commission and I think this is very important in the sense that it is trying to assess whether there are overlaps and how they can be dealt with. Personally, I think this is a very good reaction. What we’re seeing is a positive approach. Gold: What are the current risks and opportunities for investors in the current market environment? P.D.P.: There are always risks for investors and there are always opportunities. In my opinion, they should be aware that there is no such thing as ‘market timing’. An investor needs to be investing small amounts on a regular basis. This is something that people need to be aware of, especially those of the younger generation. To build up a buffer, they have to start very early and invest on a regular basis. That’s the only way to do it. They should not be trying to have ‘market timing’ – successful investing doesn’t work like that. Gold: What are your predictions and expectations for the European fund industry over the next 5 years? P.D.P.: We are now going through a phase of restructuring in the industry and, taking into account everything and the difficult market environment, my expectation is that we will become a key factor in the development of the capital markets as capital providers.

www.goldnews.com.cy | GOLD | 53

| INTERNATIONAL FUNDS SUMMIT |

Angelos Gregoriades, CIFA

he International Funds Summit, organised by CIFA and coordinated by IMH, took place at the GrandResort in Limassol on 29-31 May 2016. Representatives of more than 100 investment funds and over 500 delegates attended the conference, where they had an opportunity to network, exchange information and experiences, take part in discussions and attend presentations on new investment opportunities, changes to the legal and regulatory framework, international trends and challenges affecting the fund industry. The comparative advantages of Cyprus over its competitors in Europe and the Middle East as a base for international investment funds were also presented during the threeday event.

54 | GOLD | The Business Magazine of Cyprus

John Hourican, Bank of Cyprus

Harris Georgiades, Minister of Finance

Platinum Sponsors

Gold Sponsors

Silver Sponsors

Summit Secretariat

Supporter

Media Partners

Under the Auspices

The President of the Republic of Cyprus, Mr. Nicos Anastasiades

Endorsed by

Organizer

Koula Panayi, CySEC & Andreas Karavias, Numisma Capital

Andreas Athinodorou, ATG Fund Services Ltd

Spyros Droussiotis, S. Droussiotis Real Estates, Marina Pittali, Opus Group Holdings & Nicolas Yiannakas, USB Bank

Panayiotis Chrysanthou, Akis Chrysanthou, Citigrade Capital & Steve Slocombe, GRS Professional Recruitment Services

Peter De Proft, EFAMA, Belgium

Andreas Yiasemides, Treppides Fund Services Oleg Muzychenko, Ankor Capital

7HULS VM :WLHRLYZ S Y ! ,]LS`UL *OYPZ[PHLUZ (SÃ&#x201E; 3\_LTIV\YN ,TPS` @PVSP[PZ Ê HYUL`Z (YPZ[VKLTV\ 3VPaPKLZ @PVSP[PZ 33* *`WY\Z Ê¥HY[PUH 2LSS` Central Bank of Ireland (Ireland), Demetra Kalogerou, CySEC (Cyprus)

Cocktail reception

Julie Patterson, KPMG (UK)

George Nicolaou, Treppides Fund Services & Stephanos Miliatos, CySEC

Elena Mouzouri & Elia Koliandri, KPMG

Evgenia Gova, Anastasis Angelou, Markos Skandalis & George Christodoulakis, ,É&#x2C6;LJ[ : (

Roy Stockell, EY (UK)

Panel of Speakers (l-r): Christopher Stuart-Sinclair, IQ Solutions (Luxembourg),Magnus Lekander, East Capital (Sweden),Emily @PVSP[PZ Ê HYUL`Z (YPZ[VKLTV\ 3VPaPKLZ @PVSP[PZ 33* *`WY\Z Christof Ruhl, Abu Dhabi Investment Authority (UAE) Marios Tannousis & Natasa Pilides, CIPA

Marios Tannousis, CIPA & Miroslav Horsky, GQS Services

Demetra Kalogerou, CySEC & Marios Demetriades, Minister of Transport, Communications & Works

www.goldnews.com.cy | GOLD | 55

| INTERNATIONAL FUNDS SUMMIT |

7HULS VM :WLHRLYZ S Y ! 2VUZ[HU[PUVZ Ê&#x153; )V[VWV\SVZ L_ JOHPYTHU /LSSLUPJ *HWP[HS 4HYRL[Z *VTTPZZPVU .YLLJL (NH[OP 7HÃ&#x201E;SP ,-(4( )LSNP\T ,TPS` @PVSP[PZ Ê HYUL`Z (YPZ[VKLTV\ 3VPaPKLZ @PVSP[PZ 33* *`WY\Z 9VILY[ )YPTL`LY (S[LY +VT\Z 3\_LTIV\YN :[LWOLU 3L^PZ 4HWSL -\UKZ :LY]PJLZ <2 *VUVY .YPÉ&#x2030;[O 4<-. 0U]LZ[VY :LY]PJLZ 0YLSHUK

Paris Themistokli, Maria Danilaki & Ziad Dawas, KMG Capital Markets

Panel of Speakers (l-r):Sandrine Leclercq, Deloitte (Luxembourg), Emily Yiolitis, Harneys Aristodemou Loizides Yiolitis LLC (Cyprus), Katrina R. Hallpike, PwC (UK), Simon Mapham, UBS (Switzerland)

Maria Iacovou, Barclays & Panikos Teklos, Deloitte

Irena Georgiadou,Hellenic Bank & Maya Sycheva, PMT Matrix Capital

56 | GOLD | The Business Magazine of Cyprus

Panel of Speakers (l-r): Behrad Ebrahimi, Agah Group (Iran), Aki Corsoni Husain, Harneys, Patric Colegrave, /HYUL`Z ,TPS` @PVSP[PZ Ê HYUL`Z (YPZ[VKLTV\ 3VPaPKLZ Yiolitis LLC (Cyprus), Vikentios Arsenis, Hellenic Investment S.A. (Greece), Vagan Babloyan, Vardanyan, Broitman and Partners LLC (Russia)

George Rologis, Alter Domus

Gourmet Cypriot cuisine, courtesy of Signature Sponsor Treppides Fund Services

Charles Charalambous, CIFA & Christopher Stuart-Sinclair, Q Solutions, Luxembourg

Vineet Bismal, Bank of Cyprus & Steve Slocombe, GRS Professional Recruitment Services

Daniel Karaolis, GMM Global Money Managers & Christos Kakourides, Jurimex Law Firm

Nicolas K. Theocharides, UPM, George Tsaparillas, Exness Cy & Demetris Taxitaris, Symmetria F.S.

Savvas Pentaris, EY & Panikos Teklos, Deloitte

Andreas Loizou, CyproFund Administration Services

Eleni Koritsa, Eurobank Asset Management

Karlos Zangoulos, BDO

Kikis Treppides, Treppides Fund Services

Athos Myrianthous, BDO

Spencer William Le Grys, Financial Times

Christoforos Antoniades, Argus Stockbrokers

www.goldnews.com.cy | GOLD | 57

| SUSTAINABILITY |

REINVENTING THE

ACCOUNTING PROFESSION

Richard Spencer, Head of Sustainability at the Institute of Chartered Accountants in England and Wales, was in Cyprus recently to talk about the growing industry of sustainable business, which tries to ensure long-term prosperity within the ecological limits of the planet and align business practice with public policy WYPVYP[PLZ MVY H YLZV\YJL LMÃ&#x201E;JPLU[ LJVUVT` /L ZWVRL [V .VSK HIV\[ [OL YVSL VM 0*(,> TLTILYZ PU [OLZL LMMVY[Z By John Vickers | Photo by Andreas Loucaides

58 | GOLD | The Business Magazine of Cyprus

f there is one thing that one might expect of anyone working for the Institute of Chartered Accountants in England and Wales (ICAEW), it is that he or she is an accountant. Wrong, as Richard Spencer, a recent visitor to Cyprus, proves. His title is Head of Sustainability and his role appears to have little to do with the accounting profession, although this, too, is not actually the case. “When you consider that we have 145,000 members and around 60% of them are in business, many of whom are CEOs or non-executive directors on Boards, Chairmen, Finance Directors, etc., we obviously have to focus on broader business issues,” he explains. He goes on to explain that, because of the Institute’s royal charter, its overriding goal is to exist for the public benefit and serve the public interest. “That gives us a great mandate because it means that, unlike a trade body where we would be constantly lobbying for the interests of our members, we can step back and ask what the issues of public interest are that we should be looking at. That gives us much greater independence and latitude.” The ICAEW is unique in many ways, one of which is precisely the fact that it is in the private sector but acts in the public interest. A key issue over the past decade has been sustainability and that’s where Spencer came in. Having started his career at the Bank of England, he went to Rothschild and worked in the dealing room in precious and base metals before moving into project financing (mainly mining finance) and from there

he went to Accenture as a strategy consultant in natural resources. “I had this theme of natural resources on my CV and, as bankers and consultants, a lot of our interest was around environmental and social impact as risks. So I fitted the bill for this new role at the Institute and it’s been brilliant for me because I’ve been allowed to do what I want and I’ve been encouraged to push the boundaries.” Of course, Richard Spencer still works for a body that represents the accounting profession and he recognises that, during the financial crisis in particular, its members collectively came in for a lot of bad publicity. “Auditors were criticised for not having seen things earlier, accountants were accused of helping High Net Worth Individuals and corporates to avoid paying tax – in the public mind, the difference between tax evasion and tax avoidance is a lost debate – and it was clear that, in order to ensure the sustainability of the profession, we needed to exit the very negative process that was going on and start a different conversation about how audit can reinvent itself and be a part of the solution.” The focus, in Spencer’s mind, comes back to the concept of public service. “At the core of audit is everything the professional accountant does – that sceptical questioning, challenging mind that asks ‘Where did these numbers come from?’ and ‘How do you know that?’, ‘Where’s the evidence for this?’ and ‘Show me the process’,” he explains. “This is what characterises the skills that an accountant learns so we then need to ask what it means to be a professional. Is it just a club of boys and girls who can add

WE NEED TO SEE HOW WE CAN DO THINGS DIFFERENTLY, WHETHER WE’RE TALKING ABOUT RECYCLING OF WASTE OR DRIVERLESS CARS

up? If so what’s the point? But if it means a group of people who aspire to do more than the law requires of them and that aspiration is the public interest, then the profession has a real role in the 21st century.” In order to restore the image of the profession but also to appeal to young people for the right reasons, ICAEW started a series of programmes, including one which involved working with business schools. “We’re very aware that on university degree courses in many different areas, content is crowding out skills,” he says. “We’re feeding young people lots of content, which makes them very good for a very short space of time, but what we’re not teaching them is critical thinking and moral reasoning.” The result was to set up a course called (“rather grandly,” he says with a smile) Philosophy for Accounting and test-run it with some UK business schools. It’s not part of the curriculum but, Spencer says, the students love it. “This generation is looking for purpose,” he goes on. “In the past, if you wanted to ‘do good’, you went and joined an NGO whereas this generation is saying, ‘I can earn a decent living and still have purpose and do the right thing’. And we’ve also found that generally they tend to better in their other courses when they’ve done this.” The Institute is also running a project called The Future Firm which asks the question, ‘Does the firm have to exist? Could it just be a network of qualified accountants?’ and it has worked, perhaps surprisingly, with students of the Royal College of Art. “We said, let’s find a group of people who know nothing about audit and have a completely different skill set,” he recalls. “This year the task we set them was to design a business that delivers on the UN’s sustainable development goals and they brought a completely different

view to the subject. I would never have thought of things in the way they did. So we’re getting quite a lot of traction from this slightly outside-the-box way of thinking.” When most people hear the phrase “Sustainable Business”, they normally think about companies or processes that have the least possible negative impact on the environment or perhaps the economy. The Institute clearly has a broader definition but does it include this too? Yes, he says, noting that unless we can create vibrant and prosperous economies, based on just and fair societies that exist within environmental limits, we face major problems. “It’s about looking at how we exist together on this planet. Our societies are breaking down in many places, our environment is in danger and we’re seeing huge economic problems so we need to see how we can do things differently, whether we’re talking about recycling of waste or driverless cars.” Richard Spencer believes that everyone has a responsibility to promote sustainability and the accounting profession is no exception. “Among other things, we have a responsibility to create the measurement framework that tells businesses how they have progressed with the sustainability goals and make it public. Business is seen as a driver of change but it needs to transform because we can’t achieve those goals doing what we are doing today. We’re starting to see quite a lot of awareness and our job is, in a way, to translate that into willingness. Increased awareness is putting pressure on businesses to be more socially responsible and to re-examine the profit model. It is, after all, just one model of how the things we need are delivered and there’s nothing wrong with profit. But business is now thinking more and more about what its purpose is. This is a good thing for all of us.”

www.goldnews.com.cy | GOLD | 59

SPECIAL FEATURE

| INTERVIEW | PROMOTIONAL

LEARNING

NEVER ENDS

Since its establishment 38 years ago, the Cyprus Institute of Marketing (CIM) has been a pioneer in the teaching of incareer adults by offering evening classes to working individuals. It especially attracts those who may have missed out on the opportunity to study straight after high school but have always had the will to learn and further their careers and it has thus often been described as a ‘Second-Chance Institution’. Here, Deputy DirectorGeneral Yangos Hadjiyiannis talks about two new courses that are due to launch at the start of the 2016-17 academic year.

60 | GOLD | The Business Magazine of Cyprus

AT CIM WE ALWAYS DO THINGS WHICH, WE BELIEVE, WILL IMPROVE SOMEONE’S EMPLOYABILITY PROSPECTS

he name of the Cyprus Institute of Marketing (CIM) says a lot about its history and origins but it also explains why Yangos Hadjiyiannis is keen to use the description ‘The Cyprus Business School’: it has diversified such a great deal over its long history that today it really is what he calls “a professional business school for working people.” In 2011, CIM started a collaboration with the University of West London and added two new graduate programmes to its offering – a Bachelor’s degree in Accounting & Finance and a Bachelor’s in Business Studies with Marketing – and, says Hadjiyiannis, both are still doing “brilliantly well”. He goes on to describe the CIM-UWL partnership as “by far the most successful education franchise arrangement in Cyprus. We know the market and what the market requires and we’ve found a good partner.” That’s why, after five years of successful collaboration, both parties believe that the time is ripe to move on to the next stage, which will be marked by the introduction of two new Master’s Degree courses. “One reason is to strengthen the collaboration with our current partner,” explains Hadjiyiannis, “and the second has to do with our strategy to become ‘The Cyprus Business School’ and move on from being just an Institute of Marketing, as we were 30 years ago, to the more fully rounded business school of today.” The Deputy Director-General is keen to point out that CIM’s aim is not simply to introduce new programmes for the sake of it. “We’ve been discussing them for a long time, we think they are innovative and they bring something fresh to the market,” he says. Interestingly, the courses are in areas

that CIM has not served before: “The LL.M. in International Business and Commercial Law is new to us but given that Cyprus is a professional services centre, the subject suits us well,” he says, adding that, “We wouldn’t do a Master’s in Law in an area that is not closely associated with the realities of the island’s business scene.” Like all CIM programmes, this one is in the English language. Similar ones exist in Cyprus but they are taught in Greek, something which, Hadjiyiannis says, “for us doesn’t make a lot of sense. We live in a global environment, whether we like it or not, especially regarding legal services and, frankly I don’t think it adds a lot to anyone’s CV for them to have a Greeklanguage Bachelor’s or Master’s in Law. At CIM we always do things which, we believe, will improve someone’s employability prospects, so this is an Englishlanguage qualification.” It is worth noting that this particular course is not only open to lawyers. Accountants and other professionals wishing to gain an understanding of how the business and commercial law environment operates will be welcome, says Yangos Hadjiyiannis. “With the University of West London, we have chosen subjects that are more appropriate to Cyprus, such as mediation and arbitration which are gaining ground here, so it’s tailored to the needs of the Cyprus economy but, at the same time, it’s a UK degree so it’s controlled 100% by the UWL. This means that, in the end, the students will obtain exactly the same award that they would get in London.” The second Master’s programme is a so-called Finance and Accounting topup and is especially aimed at professional accountants. “Any member of ICPAC is eligible to do just two modules in six months to obtain a Master’s,” Hadjiyiannis explains. “It’s for professionals, many of whom have obtained the ACCA qualification without having a Bachelor’s Degree and therefore lack the academic element on their CV. It’s not so much about promotion in the workplace as professional development.” He adds that it is the only programme of its kind that will give an opportunity to chartered and certified accountants to obtain a Master’s within six months at low cost.

CIM’s philosophy has always been to deliver programmes in the English language only (“because it is the international language of business”) and only through evening classes (“because we believe that people should not have to disrupt their careers, so they can study and work at the same time”). This also enables the school to get what Hadjiyiannis calls “real industry people” to share their knowledge and experience. The Deputy Director-General is also eager to note a further aspect of how CIM works: charging “manageable and low fees”. He cites the €7,000 fee for the LL.M., noting that other similar ones in Cyprus range from €8,000 to €15,000 while the same qualification in London costs £13,000, and that’s not counting the unavoidable living expenses. Although CIM is a business school for working professionals of all ages, it has seen huge growth in the number of enrolments by younger people, in part, Hadjiyiannis acknowledges, due to the financial crisis. “There are family businesses in Cyprus that have persuaded their children to work with them during the day so that they earn some pocket money and gain a better understanding of the business environment, and study in the evening.” There is fierce competition in the tertiary education sector in Cyprus, which is one reason why CIM decided to go for specialization and become a niche player early on. “This means that we’re not for everyone,” Yangos Hadjiyiannis says. “We are an elite business school – though not an expensive one – in the way we operate and work. We offer a quality product that gives people a return on their investment, without that investment being too high.” Both new courses are available in Limassol and Nicosia and will launch in September 2016. He is optimistic that there will be enough interest in them on both campuses. LL.M. International Business & Commercial Law (12 months full-time/24 months part-time) MSc Finance & Accounting, Top-Up for Professional Accountants (6 months) For more information: www.cima.ac.cy | Tel: 22778475

www.goldnews.com.cy | GOLD | 61

| MICROSOFT INNOVATION CENTER |

ONE

YEAR

ON THE MICROSOFT INNOVATION CENTER AND EUROPEAN UNIVERSITY CYPRUS RECENTLY CELEBRATED THE FIRST ANNIVERSARY OF THEIR INNOVATIVE COLLABORATION. DR. CHRISTOFOROS HADJIKYPRIANOU, CEO OF THE UNIVERSITY, SPEAKS TO GOLD ABOUT THE VALUE OF HAVING THE MIC ON ITS CAMPUS. By John Vickers 62 | GOLD | The Business Magazine of Cyprus

he Microsoft Innovation Center has been in operation for a year now. What do you feel it has added to the image and reputation of European University Cyprus? Christoforos Hadjikyprianou: We are certainly very proud of our cooperation with Microsoft and the way Dan Grantham, Microsoftâ&#x20AC;&#x2122;s President for Central and Eastern Europe, embraced the whole project. The fact is that there are only around 100 such centres globally. As for our reputation and image, I think these are enhanced by the very fact that we are able to substantively contribute to education, to the economy and to society. In that sense, the Microsoft Innovation Center is very visible and that is important to us. However, its purpose lies in what it brings to our students and academics in terms of research capacity and employability and for the business community in terms of growth opportunities.

UNIVERSITIES IN THE ST CENTURY HAVE BECOME KEY DRIVERS OF THE ECONOMIES IN WHICH THEY ARE BASED Gold: How has it contributed to what the university has to offer its students? C.H.: The Microsoft Innovation Center highlights and enhances the significant shift in our University over the last decade. Laureate International Universities, which owns European University Cyprus and has invested substantially in Cyprus, is founded on the principle of investing in Growth, Innovation and Excellence. The MIC falls within that framework. In terms of what it contributes to students, it clearly allows us to organise and host initiatives which aim to engage and involve them, whether these are fairs, study courses, competitions or start-up initiatives. Ultimately the aim is to connect the students, their ideas and their work with the business sector and allow them to get project-based experience, networking and potential employability.

www.goldnews.com.cy | GOLD | 63

| MICROSOFT INNOVATION CENTER |

Gold: Given that the MIC’s operations are not restricted in any way to EUC students and courses, has this helped create greater links with business and broader society? C.H.: Of course. The MIC reaches out to the business community, in the high-tech sector, and tries to breed the spirit of innovation by supporting start-ups and projects and programmes that steer that path. I must stress that the Microsoft Innovation Center’s strategy has been formulated on the basis of the Government’s employment strategy as well as Microsoft’s national strategy for Cyprus.

students today, through technology, can engage with the market more directly and more easily. The start-up spirit has re-energised the way we look at universities and businesses and the way students look to their future. The MIC recently organised an event called “Disrupt Youth Unemployment” which brought tens of Cypriot start-up companies at various stages of their development on campus to present their ideas and activities to hundreds of students seeking inspiration as well as job opportunities. It was a huge success.

WE ARE MORE THAN JUST AN EDUCATION FACILITY; THROUGH THE MIC WE HAVE ADOPTED INNOVATION ORGANICALLY AND WE STRIVE TO OFFER THE BEST Gold: I know that it has become a popular place with schoolchildren from a quite young age. How important it is to encourage this engagement with technology many years before they are ready for a university education? C.H.: It is clearly important but I believe that rapid technological developments and the availability of technology are now so pervasive that schoolchildren do not consider it an obligation or in any way something that requires effort. It is a huge part of who they are and how they learn and certainly how they will work and live in the future. Gold: Does EUC support the ‘entrepreneurial university’ concept, where students are encouraged to look beyond the academic sphere and become involved in business while still studying? C.H.: Universities in the 21st century have become key drivers of the economies in which they are based. They are crucial in the way they influence how governments and businesses envisage sustainable economic growth. Equally,

64 | GOLD | The Business Magazine of Cyprus

Gold: Have you had any specific success stories or is it too early to talk of such things? C.H.: We have recently celebrated our first anniversary and, despite the fact that we are still very young, we managed to have a prominent impact. Our most successful story is the two-day event for young students on Robotics, titled “Deconstructing Robots”. On May 24-25, we delivered an event targeting schoolchildren aged 10-14. The event focused on informing the students about the history and evolution of robotic science, offering interactive activities with various types of robots and teaching the basic principles of robotic programming through creative play. During the course of the two days, we accommodated around 800 children from schools all over Cyprus, with huge excitement generated both from the children but also from the teachers. Demand for the event was great, as we had to book slots on a first-come, first-serve basis, with many schools asking when we will host the event again in November! Gold: Have you been forced to try and persuade your own students and staff to

make use of the MIC or has this come naturally? C.H.: There is no ‘coercion’ if that is what you are implying, nor is there any need for it. Our Business and Science Schools have a mindset that seeks to innovate both in terms of their academic curricula as well as in terms of their links to business and society at large. The workshops, the showcase presentations and networking are very popular. The “Disrupt Youth Unemployment” event I mentioned earlier was clear evidence that the interest from our students is there and that the synergies are possible. We should not underestimate how well students are integrated in this new high-tech start-up context. Our role is to enrich that, offer them the skills and the tools and facilitate their choices and their transition to employment. Gold: What is your vision of the outcome of the EUC/MIC collaboration over the next few years? C.H.: We are more than just an education facility; through the MIC we have adopted innovation organically and we strive to offer the best. Our bonds, not only with the MIC, but also our Innovation Partners, grow stronger, and very soon this collaboration will be elevated into a more active and effective way. The MIC has been part of our mission statement and values. As an institution and through the MIC, we plan to offer creativity, innovation and a desire to challenge our status quo on a constant basis. At the same time we look forward to a stronger engagement with the business community and the Government.

Strategic partners of Microsoft Innovation *LU[LY *`WY\Z! ʜLYUOHYK :JO\S[L :OPWTHUHNLTLU[ *`WY\Z *VTW\[LY :VJPL[` *57 (ZMHSPZ[PRP HUK *57 *`WYPHSPML TLTILYZ VM [OL NYV\W *57 *`WY\Z 0UZ\YHUJL /VSKPUNZ *`[H ,__VU4VIPS ,ZZV *`WY\Z 3[K ,@ *`WY\Z .UVTP *VTT\UPJH[PVU *VUZ\S[HU[Z /LHKJHUK` 05 )\ZPULZZ THNHaPUL 3H\YLH[L 0U[LYUH[PVUHS <UP]LYZP[PLZ 3VNPJVT 7\ISPJ HUK 5L[<

| COMPANIES |

THE IMPORTANCE

OF SUBSTANCE

ased on the OECD’s recommendations, more and more countries are focusing greater attention on matters of substance and transparency. This implies that, under the relevant provisions of treaties for the avoidance of double taxation, the tax authorities are exchanging information on the substance more frequently. Substance will affect the level of profits allocated between different jurisdictions under various provisions of the OECD’s Base Erosion and Profit Shifting (BEPS) Action Plan, and hence it becomes an essential aspect of tax planning.

SUBSTANCE CAN DETERMINE A COMPANY’S TAX RESIDENCY

Statutory Substance is the minimum, by which a company proves that it is real and not simply a conduit by paying taxes, filing tax returns, preparing audited financial statements and meeting all its statutory obligations. Physical substance is statutory substance plus an office, tele-

The tax framework is changing worldwide and it is fundamental for Cyprus to be ahead of current developments and future challenges. By Constantinos Katchamis

phone facilities, employees and properly qualified directors. Economic substance refers more to day-to-day activities and is a similar concept to effective management. Cyprus has amended its requirements to the issuing of a tax residency certificate, taking into account some of the above considerations.

participate in local business community/organisations.

LICENSING AND FINANCE COMPANIES

WHAT TYPE OF SUBSTANCE IS REQUIRED?

As above, statutory substance (Board of Directors with sufficient qualifications and background) is a must and, depending of the activities of the company, it may need physical substance as well. For example, in the case of a finance company having only one loan and the only decision is to assess the financial position of the company once a year, then the minimum physical substance is required. On the other hand, if a finance company provides loans regularly to affiliates and receives interest regularly, then more physical substance is required and, sometimes, economic substance as well.

Holding companies Statutory substance (Board of Directors) is a must and, depending of the activities of the company, it may need to add physical substance as well. For ACTIONS/MEASURES example, if a holding compaINDICATING ny holds only one investment SUBSTANCE and the only decision is to An important indicator condeclare a dividend once a year, cerns who the directors are, then the minimum physical their business background, substance is required. If, on how much time they allocate the other hand, a holding to the business of the company company buys and sells invest(i.e. of how many companies ments regularly and declares they also act as directors) and, dividends regularly, then more furthermore, how the directors physical substance is required take decisions and who operand, sometimes, economic ates and maintains the compasubstance as well. ny’s bank accounts. Furthermore, the directors A company may consider it need to be in a position to run the company properly and necessary to maintain fully not be directed by the sharefledged offices with its own holders. The directors employees and reloneed to prove that they cate senior executive Info: Constantinos are in a position and staff/decision makers Katchamis is have sufficient knowlto Cyprus. AdditionManager, Tax Consulting edge to run the business ally, it must carry Services, Baker and not simply follow out its accounting Tilly Klitou and Partners someone else’s instrucand HR functions in (Limassol) Ltd tions. Cyprus and actively

ANTI-AVOIDANCE ISSUES An increasing number of countries in the EU and internationally (including Russia) are introducing anti-avoidance and Controlled Foreign Corporation (CFC) rules as well strict tax residency rules where no such rules previously existed, and where substance becomes an important element. www.goldnews.com.cy | GOLD | 65

SPECIAL PROMOTIONAL FEATURE

AUDITCHART LIMITED

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CONTACT INFORMATION: AUDITCHART LIMITED

GEORGE THEMISTOCLEOUS, Managing Director

Address: .SHKZ[VUL :[ 2LYTPH *V\Y[ UK Ã&#x2026;VVY 3PTHZZVS c Postal address: 7 6 )V_ 3PTHZZVS c Tel: Fax: c e-mail: PUMV'H\KP[JOHY[ JVT c Website: ^^^ H\KP[JOHY[ JVT 66 | GOLD | The Business Magazine of Cyprus

Ser v icing with Quality and Trust Certified Public Accountants and Registered Auditors

www.goldnews.com.cy | GOLD | 67

IN GOOD COMPANY

FUELLING THE TALENT ENGINE +2: 67$52,/ 0$,17$,16 $ )$0,/< (19,5210(17 ,1 7+( :25.3/$&(

By Artemis Constantinidou | Photos by Emma Louise Charalambous

68 | GOLD | The Business Magazine of Cyprus

stablished in 2006 with the aim of covering the fuel needs of commercial customers and fleet operators, Cypriot company Staroil is now celebrating its tenth anniversary. In 2011, the company expanded into the retail sale of petroleum products while inaugurating its first petrol station in the village of Avgorou in the Famagusta district. Since then, Staroil has been gradually expanding and it now operates eight petrol stations in the Nicosia, Larnaca, Famagusta and Paphos districts. “Looking back, I would say that our strategic decision to expand has been successful as we have now developed a strong bond with the local communities in which we are based,” Stathis Papaconstantiou, Marketing, Sales and Logistics Manager of Staroil tells Gold. He proudly admits that, even though the company is constantly growing, it has managed to develop and maintain a sense of family among the staff. “Many of the employees have been with us from the very beginning and it is gratifying to see that they feel ownership in Staroil’s achievements to date. Trying to maintain a sense of community is of great importance to us.” Management is in regular contact with the rest of the staff through meetings, where employees are allowed the space to reflect upon their tasks, roles and responsibilities. This provides them with an excellent opportunity to share ideas and suggestions, as well as to address any potential problems that might occur. According to Papaconstantinou, the door of CEO George Petrou is always open to anyone who wishes to discuss matters with him in person. Staroil’s staff – comprising 53 employees, 12 of whom are based at the head offices while the rest work at the filling stations – enjoy flexible working hours that cater to their needs. The company provides cars for work-related travel and free drinks through-

www.goldnews.com.cy | GOLD | 69

IN GOOD COMPANY

out the day. In addition, Staroil offers its people a series of benefits such as a Provident Fund, insurance against accidents and theft, as well as discounts on the companyâ&#x20AC;&#x2122;s products. A bonus scheme is also in place, rewarding employees based on their â&#x20AC;&#x201C; and the companyâ&#x20AC;&#x2122;s â&#x20AC;&#x201C; annual performance. Asked about initiatives to encourage a sense of belonging in the workplace, Papaconstantinou notes that, â&#x20AC;&#x153;We try to provide pleasant work spaces for our staff, where they can interact and collaborate with one another, working together as a team in a relaxed environment. This applies to all of us working at the head offices, irrespective of our position in the company. We donâ&#x20AC;&#x2122;t want our staff to feel that management is unapproachable and we try to express our appreciation of the work of our staff as much as possible. This is why, as part of our 10th anniversary celebrations, and as a small token of our appreciation, we will be rewarding the people who have been with us from the very start, as well as those partners and collaborators who have honoured us with their trust,â&#x20AC;? he adds. As regards employee retention and building its human capital, Staroil has chosen to invest in young, educated and talented individuals, offering them all the necessary support and entrusting them with positions of importance in day-to-day operations. This philosophy has helped develop a special bond between the staff and the company, which, says Papaconstantinou, has been extremely beneficial for everyone: â&#x20AC;&#x153;It feels as if we are growing up together.â&#x20AC;? Staroil does not follow a strict, hierarchical modus operandi, which helps the staff feel comfortable when working and interacting with management, actively contributing with suggestions for the growth and development of the company. â&#x20AC;&#x153;I would say that the respect and appreciation we show to our employees, both through the benefits we provide and fair treatment in their daily work, is what makes Staroil stand out as an employer of choice in Cyprus. We try to offer our people the best possible working conditions as well as attractive remuneration packages, ensuring that they reap the fruits of their labour,â&#x20AC;? he explains. On the employeesâ&#x20AC;&#x2122; input in the establishmentâ&#x20AC;&#x2122;s success, Papaconstantinou reveals

70 | GOLD | The Business Magazine of Cyprus

75<,1* 72 0$,17$,1 $ 6(16( 2) &20081,7< ,6 2) *5($7 ,03257$1&( 72 86

:+(1 3(23/( &2//$%25$7( ())(&7,9(/< 7+(< 6(( 7+(06(/9(6 $6 $ *5283 :25.,1* 72:$5'6 7+( $77$,10(17 2) $ &20021 *2$/ that they would not be able to offer the office atmosphere they pride themselves on if it were not for their people. â&#x20AC;&#x153;Everyone is friendly and respectful to one another and, in all the years that I have been working at the company, I have never witnessed any great disputes or clashes that would negatively impact the work environment. This is something we strive for, and we will continue to make sure that the people we bring into the company fit in with the rest of the staff. When people collaborate effectively, they see themselves as a group working towards the attainment of a common goal, rather than just individuals competing against each other.â&#x20AC;?

Stathis Papaconstantinou concludes by commenting on the companyâ&#x20AC;&#x2122;s corporate culture, affirming that Staroil places very high value on environmental protection, not only with regard to the provision of clean fuel but as a company commitment across all its operations. â&#x20AC;&#x153;Staroil focuses on professionalism and treats its customers, collaborators and the communities hosting its stations with the utmost respect. These are central to our recruitment process, and we aim to cultivate this further among our employees. I like to think that this philosophy is one of the key factors in our success so far.â&#x20AC;?

BUSINESS CLASS

How often do you travel, whether for business or pleasure?

What is the most W exciting destination ex you ha have visited for work? An And for pleasure?

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Natalia Rudakova

For the Managing Director of OLIESERVE and EASY-IMMI, Barcelona is a favourite destination that she is always happy to return to and numerous capitals inspire her, but at this time of the year, a cooler place like St. Petersburg g is ideal. Tell us about your best corporate travel experience.

What is the most impressive hotel you have ever stayed at and why?

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What is your favourite f it international i t destination and why? ([ [OL TVTLU[ T` MH]V\YP[L PU[LYUH[PVUHS KLZ[PUH[PVU PZ )HYJLSVUH ;OL WSHJL PZ HTHaPUN HUK L]LY`VUL ^OV OHZ L]LY ILLU [OLYL MHSSZ PU SV]L ^P[O P[ PTTLKPH[LS` ;OL J\S[\YL MVVK T\ZPJ \ZPJ HYJOP[LJ[\YL HUK [OL HTHaPUN HUK ^LS^LSJVTPUN WLVWSL JYLH[L HU \UMVYNL[[HISL HISL H[TVZWOLYL [OH[ THRLZ `V\ ^HU[ U[ [V NV IHJR V]LY HUK V]LY HNHPU

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COLLECTION

SELF PROPELLED 72 | GOLD | The Business Magazine of Cyprus

What

started as a young man’s hobby eventually led to Roger White discovering rare species, subspecies and forms new to science, all named and described in various scientific papers over the years. For this and other work involving honeybees, he was elected as a Fellow of the Royal Entomological Society in 1986. “The butterflies in the collection are all from Africa and the surrounding islands and 95% of the African Charaxes species are represented,” he says. The collection, which consists of around 5,000 specimens, each

with its full collecting data, has attracted a lot of interest from scientists from around the world over the years. When, in 2003, Christodoulos Makris produced the book Butterflies of Cyprus for the Bank of Cyprus Cultural Foundation, White was tasked with the translation of the English edition. Roger White, who is today a bee keeper by profession and owner of Super Bee in Ormidia in the Larnaca district, explains the process of finding and preserving butterflies. “Usually butterflies are caught

IT WAS WHEN HE WAS A TEENAGER LIVING IN AFRICA THAT ROGER WHITE FIRST BECAME INTERESTED IN BUTTERFLIES. WHILE HE MAY NOT HAVE VIEWED THEM AS “SELF PROPELLED FLOWERS” AS SCI-FI WRITER ROBERT HEINLEIN MEMORABLY DESCRIBED THEM, AS HE GREW MORE INVOLVED, HE BEGAN TO REALISE THAT THERE WAS STILL A LOT THAT REMAINED UNKNOWN ABOUT THE BEAUTIFUL AND SADLY SHORT-LIVED CREATURES. THIS LED TO HIS CREATION OF A REFERENCE COLLECTION OF PRESERVED BUTTERFLIES AND A LIFELONG STUDY OF THE BIOGEOGRAPHY, BIOLOGY AND TAXONOMY OF AFRICAN CHARAXES BUTTERFLIES. By Voula Loizou | Photos by Andreas Loucaides

FLOWERS

with a hand net, and then, hen, after aft culling, the specimens are spread on special boards until they are dry. They are then transferred into storage boxes or cabinets. Charaxes do not usually feed on flowers and are extremely swift fliers so, in their case, special hanging traps baited with rotting fruit are hung where they are flying and they enter the trap to feed. After feeding they fly upwards into the trap cylinder where they can be safely removed and examined by the collector. Anything that looks interesting is kept, the rest are released. Very often, the same specimens come to the trap day after day for a meal.” Does he have a favourite? He says no, noting that all members of the species are very beautiful and each one special in its own way. In any case, he did not collect them simply for aesthetic reasons. “Some of the forests where the specimens were collected no longer exist,” he says. “Habitat destruction causes the extinction of many species of flora and fau-

Some of the forests where the specimens were collected no longer exist www.goldnews.com.cy | GOLD | 73

COLLECTION

na around the world.” Collecting all 5,000 specimens took him to many special places in Africa, including Mount Kilimanjaro in Tanzania, the crater on Mount Mulanje and the Nyika Plateau in Malawi and Victoria Falls in Zimbabwe, but Roger White’s butterfly chasing days are now over, he says, mainly due the logistics, expense and personal health/ safety issues associated with such trips. That said, although no longer actively collecting butterflies, he maintains many contacts with others who do collect as a hobby. On Facebook, he says, there is a Cyprus Butterfly Study Group and Eddie John produces a monthly newsletter detailing sightings.

“Recently a butterfly new to Cyprus was photographed on Troodos and it is thought that this particular one migrated here from Turkey,” he tells Gold, adding that while many people still study

The hand net has largely given way to the digital camera

74 | GOLD | The Business Magazine of Cyprus

butterflies, “the hand net has largely given way to the digital camera.” Asked if he would consider putting his remarkable collection on display for the general public, White says no, mainly because many of the specimens are very valuable from a scientific

point of view and they therefore need to be protected. However, he would consider allowing visits from interested scientists and expresses the hope that Cyprus will eventually have a natural history museum in which his butterfly collection can be safely stored.

BOOK SHELF

BOOKS of the month 1

+RZ (XURSH·V “solution” WR *UHHFH·V ÀQDQFLDO crisis was no solution at all.

Why we need to come to terms ZLWK WRGD\·V DQG WRPRUURZ·V technology.

The authors put the problem down to the euro.

The former governor of the Bank of England on his favourite topic.

The world economy, told in the language of everyday objects.

The title is what the former Greek Finance Minister Yanis Varoufakis said to the author when James K. Galbraith arrived in Athens as an adviser two years ago. He examines the country’s crisis, its causes and its meaning, as well as the viability of the austerity programme (described as “economic policy as moral abomination”) imposed on the Greek people.

Subtitled Understanding the 12 Technological Forces That Will Shape Our Future, this optimistic book show how changes like virtual reality, an on-demand economy and artificial intelligence can be understood as the result of a few long-term, accelerating forces. By understanding and embracing them, says Kelly (who launched Wired magazine), it will be easier for us arrange our dayto-day relationships with technology in ways that bring forth maximum benefits.

Seventeen years after the launch of the single currency, two British journalists argue that the euro has failed to deliver more jobs, more growth and greater equality. They compare the European Central Bank to the Federal Reserve, arguing that the architects of the euro subjugated economic measures to political considerations and the end result is its inability to cope with difficult economic circumstances.

The past twenty years saw unprecedented growth and stability followed by the worst financial crisis the industrialised world has ever witnessed. The former governor of the Bank of England proposes revolutionary new concepts to answer the central question: are money and banking a form of alchemy or are they the Achilles heel of a modern capitalist economy?

Dr Pippa Malmgren tells the story of the world economy in the language of diverse everyday objects, places and events, ranging from a Vogue magazine cover to a protest by a Tibetan monk. It explains why we all seem to feel that the cost of living rising but our standard of living falling and shows that economics is a topic that touches everyone’s life.

WELCOME TO THE POISONED CHALICE: THE DESTRUCTION OF GREECE AND THE FUTURE OF EUROPE By James K. Galbraith (Yale University Press, 2016) R.R.P. £18.99 (£15.90 FROM AMAZON.CO.UK)

THE INEVITABLE By Kevin Kelly (Viking, 2016) R.R.P. £22.50 (£15.30 FROM AMAZON.CO.UK)

(8523( ,61·7 WORKING By Larry Elliott & Dan Atkinson (Yale University Press, 2016) R.R.P. £14.99 (£10.49 FROM AMAZON.CO.UK)

THE END OF ALCHEMY: MONEY, BANKING AND THE FUTURE OF THE GLOBAL ECONOMY By Mervyn King (Little, Brown, 2016) R.R.P. £25.00 (£17.00 FROM AMAZON.CO.UK)

SIGNALS: HOW EVERYDAY SIGNS CAN HELP US 1$9,*$7( 7+( :25/'·6 TURBULENT ECONOMY By Dr Pippa Malmgren (W&N, 2016) R.R.P. £20.00 (£16.59 FROM AMAZON.CO.UK)

www.goldnews.com.cy | GOLD | 75

Lunc Lunch with FIONA MULLEN

THE DIRECTOR OF THE ECONOMIC RESEARCH CONSULTANCY SAPIENTA ECONOMICS LTD DISCUSSES BREXIT AND WHY HALF THE UK POPULATION CHOSE TO IGNORE THE ECONOMISTS’ ADVICE, PLUS THE CHANCES OF A SOLUTION TO THE CYPRUS PROBLEM AND THE NEED FOR BUSINESS TO PLAY A PART IN PREPARING THE GROUND IF THE POLITICIANS ARE TO GET THINGS RIGHT.

Gold

henever I spend time with ith Fiona Mullen, I know that hat I am going to be talking to one of the best-informed economists on the island and, given that our lunch date has been scheduled just days after the result of the British referendum on EU membership has seemingly shocked half the world, it is a topic that can’t be avoided. In the cool and quiet of the Fontana Restaurant inside the Hilton Cyprus, we order – she is keen

76 | GOLD | The Business Magazine of Cyprus

By John Vickers

ANT RESTAUR FONTANA s, 98, Arch. ru Hilton Cyp icosia III Ave., N s o ri a k a M

€24.00 BUFFET €17.00 E S LOGNE PASTA BO €4.00 R E T A W MINERAL €5.70 TEA €5.70 COFFEE €56.40 TOTAL

on the buffet while I go for a much simpler pasta Bolognese – and start a long discussion about the remarkable events in the UK, which I won’t bore you with here (her studied views on the matter can be found in this issue’s cover story) but first I want to tease her by asking her what the victory of the ‘Leave’ campaign says about her profession, given that virtually every economist in Britain and elsewhere was

very clear about what the expected impact of an exit from the European Union would mean. And a majority of the population didn’t listen to them. She laughs at my implication that nobody thinks economists know what they’re talking about (she has a great sense of humour and laughs easily) and says straight away that her former employer – The Economist Intelligence Unit – has been asking that very same question. “I’ve gott a slightly strange response to it,” she says. “One reason is very basic – it was all about presentation. Let’s face it, a big red bus with the figure £350 million emblazoned on the side – even if it’s not true that the UK is paying that every week to the European Union – is a lot more memorable than a boring 30 page report! And frankly, most economists are not veryy good at presentation.” She admits that she makes “a conscious effort to make sure that when I write about the economy it’s in a way that ordinary people can understand.” What’s more, she adds, it was very late in the day when the Remain campaign finally started using infographics and so on. “There was a nice simple one about how decisions are taken in the EU, showing that legislation is not actually passed by the so-called ‘faceless bureaucrats in Brussels’ but it was all a bit too late. When people absorb their news through images and catchy soundbites, you need to do your best to make things easy for them.”

Throughout the course of our meal, she quotes articles and columnists from the Financial Times and although that might be precisely what you would expect from the founder of Sapienta Economics, she frequently non economics refers to non-economics pieces that she has found amusing. Still on the subject of Brexit, she quotes an FT article by Gillian Tett entitled “Why

voters to listen to experts when it comes to politics. “There is probably some truth in that as an explanation why people didn’t listen to the economists, who were overwhelmingly predicting that Brexit would be a bad economy, thing for the economy,” Mullen says, and she admits that she makes considerable use of social media herself. “I’m normally a Twitter maniac,” she confesses but notes what “while it’s a great source of

there too. It brings out the worst in people and there has been plenty of abuse since the referendum.” She suggests that British users are much more likely to be abusive than the Cypriots, “so I’m more likely to have abuse heaped o me for talking about on B Brexit than about the Cyprus P Problem.” In any case, she s that she has kept away says f from Twitter for a while “ “because it can get to be too m much in the end.” I first met Fiona Mullen in t early days of Gold when, the a she mentioned, she was as w working for the Economist I Intelligence Unit as well as p providing economic analysis f the United Nations in for C Cyprus. I wonder whether s has been forced to revise she t calculations she made the f the UN some years ago for about the potential price of a settlement of the Cyprus Problem. “Not really,” she says before clarifying, “I did say recently that the cost of p property compensation needs t be below €5 billion, which to means that it needs to be m valued properly and people v should be persuaded to accept s s something other than a l large sum of money because i simply won’t be there. I it

THE CYPRUS PROBLEM WON’T BE SOLVED UNTIL THE BUSINESS COMMUNITY COMES UP WITH SOME OF THE SOLUTIONS we no longer trust the experts” which basically says that if we rely on crowd-sourced advice to choose healthcare or holidays, we can hardly expect

information, especially for geeks of any kind and you can find experts on the most esoteric of subjects, there is, unfortunately a lot of abuse

noted five years ago that there would be problems in the short term but any cost will eventually be paid back.” Like many observers

www.goldnews.com.cy | GOLD | 77

| LUNCH WITH GOLD |

with long experience of Cyprus, she sees things through a different lens from many local professionals. One recent bone of contention in the local media has concerned the Turkish youth sports cooperation programme, allegedly ‘imposed’ on the Turkish Cypriots. Fiona Mullen refers to the fact that “There’s been a lot of shouting by the Turkish Cypriots about Turkey pushing this youth and sport programme on them” and she says, with a conspiratorial smile, “I don’t read Turkish but I know a Troika programme when I see one! It reads just like one, which is why I don’t buy this ‘Turkish annexation of the north’ story. It would just be one more security headache that Turkey doesn’t need. I think they are genuinely trying to make the Turkish Cypriots financially independent and stand on their own feet.” Whatever the truth of the matter, she is fairly certain of one thing: that time is running out for a settlement of the Cyprus Problem this year. “It will be a great shame,” she says. “Having the World Bank and the IMF taking a serious look at the economy of a reunited Cyprus is unprecedented so there can be no doubt that the two leaders have achieved things as never before but I fear they’re not moving fast enough.” Indeed, she foresees that when the French oil company Total starts drilling for natural gas, Turkey will again send its exploration vessel into the island’s Exclusive Economic Zone, which will cause the talks to stop for three months and then talk will begin of elections on both sides of the dividing line. “It’s already July so I don’t think they’re going to make it this year and if Mustafa Akinci doesn’t get re-elected, that will be the end again.” She also has an interesting slant on the need for input from the business world into the peace process: “The Cyprus Problem won’t be solved until

78 | GOLD | The Business Magazine of Cyprus

the business community comes up with some of the solutions,” she says, but points out the Catch 22 situation where business won’t take initiatives unless there is visible political progress and the politicians won’t take steps forward without the support of the business community. “Unfortunately, the politicians don’t seem to get it,” she says with a sigh. Although I have known Fiona Mullen for about six years, it is only over lunch that we discover that we both went to school in the city of Lincoln. The revelation comes

we’ve had a bumper season this year, in part due to the Russians avoiding Turley but now that they’ve kissed and made up it may not be so good in the future. But it’s not going to be a disaster. British tourists will always come to Cyprus. Many of them have a longstanding relationship with Cyprus and even holiday homes.” She orders a tea and I have a coffee while we take a last look at the strange situation that Britain has got itself into. “Britain’s ‘first past the post’ electoral system means that a candidate or a party can win by a small majority and they probably don’t think

LET’S FACE IT, A BIG RED BUS WITH THE FIGURE £350 MILLION EMBLAZONED ON THE SIDE IS A LOT MORE MEMORABLE THAN A BORING 30 PAGE REPORT! about during a discussion about how educational issues were somewhat neglected in the UK during the years of Margaret Thatcher’s time as Prime Minister and she tells me how she met someone who had taught at her old school and who shocked her with the news that there were security guards on the school grounds. In my day, both hers and my school were single-sex but as we are of different generations, by the time she was there both had changed composition. We are agreed on the fact that many years ago, at least, Lincoln was a pretty good place to be a teenager. This brings us on to talk about which areas of the country had voted to leave the EU and how it may affect Cyprus. “At least it will make trips to England cheaper for us,” she says and she is indeed about to go back home on holiday, “but the weak sterling will probably have an effect on tourism to Cyprus next year. I worry a bit because

about the people who voted for the losing candidates,” says Mullen, “but a referendum like this suddenly shows that millions of people are unhappy. And they have now changed the country forever.” We thought things were complicated here, I say, to which she replies, laughing again, “After what’s happened in the UK, Cypriot MPs have gone up in my estimation. I normally moan about them! But when I see politicians in London who seem to think that Europe has 500 million people but Britain somehow has the upper hand, it drives me mad.” It’s all very depressing, she says as we prepare to walk out into the searing heat but she doesn’t really mean it, as her smile reveals. “Nothing is certain anymore,” she says, “except that economists are always wrong.” She said it, not me, OK?

WHAT’S

THINGS T

RODI EVENT VENUE, LIMASSOL FRIDAY, JULY 22 & SATURDAY, JULY 23, 8PM

to do

here’s plenty of Greek music to suit all tastes this month, featuring a range of popular artists from the Grande Dame of Greek song, Marinella, to relative newcomers like Eleni Foureira

GREEK MUSIC SIC GIORGOS TSALIKIS Soho Summer, Yermasoyia, Limassoll Wednesday, July 20, 9pm ELEONORA ZOUGANELI Skali Aglandjias, Nicosia Thursday, July 21, 9pm Municipal Garden Theatre, Limassol Friday, July 22, 9pm

CASTLE SQUARE, PAPHOS HARBOUR WEDNESDAY, AUGUST 10, 9PM

MARINELLA, ANTONIS REMOS, CHRISTOS STOS NICOLOPOULOS LOPOULOS

ELENI FOUREIRA Rebuke Lounge, Larnaca, a, Saturday, y, August 13, 10pm

ROCK MUSIC

BANK OF ΤHE ZILLA CYPRUS CULTURAL PROJECT Local four-piece FOUNDATION THURSDAY, blues-rock band JULY 21, 9PM play original songs plus classic blues, ssoul and rock ‘n’ n roll.

NICOS PORTOKALOGLOU LOU & ELEFTHERIA A ARVANITAKII

Municipal Garden Theatre, Limassol Thursday, July 21, 9pm Pattichion Municipal Amphitheatre, Larnaca Friday, July 22, 9pm Makarios III Amphitheatre, Nicosia, Sunday, July 24, 9pm P PANOS KATSIMICHAS & KITRINA PODILATA K Municipal Garden Theatre, M Limassol L Wednesday, July 27, 9pm W

80 | GOLD | Th The B Business i Magazine M of Cyprus

METAL MAYHEM Local heavy metal bands, including Vomitile, Infected Syren, Teror, Nekhrah and Kraama. Red Music Stage, Nicosia y JJulyy 31, 7pm p Sunday,

CLASSICAL MUSIC FLAUTISSIMO F he Limassol Flute Choir performs Bach, Strauss and Tchaikovsky plus Greek favourites.

DANCE MUSIC CRA DAVID CRAIG Platinum album-selling Plat and chart-topping international star Craig inte David presents his “TS5 Dav live” set. Makronisos Beach, Agia Napa, Monday, July 18, 7pm ARMIN VAN BUUREN ne of the world’s most influential DJs, the King of Trance performs a 3-hour set, after opening sets by nine local and international DJs.

OLD AIRPORT, LARNACA THURSDAY, JULY 21, 8PM

MUSICALS THE MAGIC OF THE MUSICALS our London West End stars perform songs from popular musicals including The Phantom Of The Opera, Mamma Mia, Chicago, Jersey Boys, Grease, Joseph and The Amazing Technicolour Dreamcoat and Les Miserables. Pattichion Amphitheatre, Larnaca Tuesday, ANCIENT %YKYWX ć ą āþTQ YASMIN LEVY ODEON, PAPHOS, Coral Beach Hotel, Paphos ith roots MONDAY, JULY 8LYVWHE] %YKYWX ÿÿ ą āþTQ 25, 8.30PM Pissouri in Israel, Amphitheatre, Pissouri Spain and Friday, August Turkey, Yasmin Levy ÿĀ ą āþTQ stops in Paphos on her Zante, Limassol 7EXYVHE] %YKYWX ÿā “Sentir” tour. ą āþTQ BULGARA ight-piece world-fusion band from Bulgaria uses folk instruments plus drum ‘n’ bass, funk, jungle, rock and jazz. GUABA SUMMER CARNIVAL Rialto Theatre, Limassol orld-famous DJs on the decks Thursday, July 28, 8.30pm every Sunday at the Guaba Beach Bar, Limassol, starting from 5pm. W&W, Sunday, July 17, Paul Van Dyk, Sunday, July 24, Gareth Emery, Sunday, July 31, Paul Oakenfold, Sunday, August 7, Fedde Le Grand, Sunday, August 14

WORLD MUSIC

FESTIVALS

EXHIBITION SPICE GIRLS wenty years after the Spice Girls arrived, promoting Girl Power, this exhibition TRAKASOL features iconic stage CULTURAL costumes, thouCENTRE, LIMASSOL sands of items of MARINA memorabilia and SATURDAY JULY Spice Girls branded 23-SUNDAY, AUGUST 21 products.

20TH INTERNATIONAL FESTIVAL OF ANCIENT GREEK DRAMA The well-established festival continues is now in its 20th year. Plutus by Aristophanes Greek-language production of Aristophanes’ last surviving comedy by the Ftochologia Theatre Company. Surtitles in English MAKARIOS III AMPHITHEATRE, NICOSIA, TUESDAY, JULY 19, 9PM. ANCIENT ODEON, PAPHOS, FRIDAY, JULY 22, 9PM ANCIENT CURIUM, LIMASSOL , SATURDAY, JULY 23, 9PM

Oresteia based on Aeschylus The Belgian theatre company ompany de Roovers’ production based on the Oresteia trilogy, the last and greatest work by Aeschylus. Surtitles in English and Greek. Ancient Odeon, Paphos, Monday, July 25, 9pm Makarios III Amphitheatre, Nicosia Wednesday, sday, July 27, 9pm. ANCIENT CURIUM, LIMASSOL, FRIDAY, JULY 29, 9PM. ANCIENT CURIUM, LIMASSOL SATURDAY, JULY 30, 9PM.

Antigone b by S Sophocles h l 5th Season Art’s Greek-language production of Sophocles’ ancient tragedy. Surtitles in English. 6TH FENGAROS FESTIVAL Bands and solo artists from Cyprus, Greece, Israel and the UK perform music covering a huge range of styles - progressive, ethnic, blues, pop/rock, psychedelic, ambient, jazz and more in this 3-day festival at Kato Drys village in the Larnaca District (Friday-Sunday, July 29-31). Don’t miss Joss Stone on Saturday, July 30. AFRO BANANA REPUBLIC FESTIVAL 2016 The 6th annual festival features artists from Spain, Nigeria, Venezuela and elsewhere, including Electric Jalaba, Cassegrain, Batida, Delta Funktionen, Orlando Julius & The Heliocentrics and Family Atlantica who will be performing tracks from their new second album Cosmic Unity. Kornos Village, Nicosia district Friday, August 19 & Saturday, August 20 7TH CUBAMISALSA FESTIVAL The annual four-day festival features artists from all over the world, including Alain Sosa & Kiara Santoro, Alberto Valdes, Alfredo Garcia, Andria Panagi, Drum Secret Ensemble, Francesco & Valentina, Full Project, Jamba & Adoree, Lieb J & Crew, Madeline Rodriguez, Mario Charon, Osmani Segura, Pablito y su Mezcla Latina, Rayda Salas and Wilmer & Maria. MEDITERRANEAN BEACH HOTEL, LIMASSOL FRIDAY, AUGUST 5 MONDAY, AUGUST 8

www.goldnews.com.cy | GOLD | 81

A DAY IN THE LIFE

Stelios Anastasiades

am a very light sleeper and I tend to wake up several times before 6am, which is when my wife Vasiliki wakes up to get ready for work. Once she’s left, I’ll take the dog for a walk and then do some exercise, always with music in the background. I’m a news junkie and there’s always something to read just from our professional network so by the time I get to the office at 8.30-9.00am, I’ve already sorted through my e-mails and I know what’s happening in the world. Every day is different; that’s the beauty of our business. As a kid I wanted to be a movie actor but I later thought I could maybe become a cinematographer. I took a television production pro-

gramme at the University of Delaware and got a lot of experience. Eventually I started to get more excited about advertising, to the dismay of my father, who considered the idea ridiculous! I worked for a couple of years in a TV production studio and then I came to Cyprus. The idea was to get my six-month army service over with and to go back to the USA but I fell in love with the place, I rediscovered my roots so to speak, discovered this girl called Vasiliki and that was it! The advertising industry in Cyprus at the time was very ‘Mickey Mouse’ so even without any practical experience, I thought, ‘I can do this’ so that’s how it all started. Today I have a successful agency, a successful career, I’ve made a name for myself here and I’m very proud of what I’ve accomplished. Cyprus is a very small market, of course, and the money being spent is correspondingly small, which creates problems in terms of creativity. Clients sometimes ask us, ‘Why you can’t give us ideas like the ones that come from America?’ and we say, ‘We can. Just give us the time and the budget.’ An account

The Managing Director of Telia & Pavla BBDO on how he got into the advertising business, the role of music in his life,and why he is secretly looking forward to retirement.

in the US might have 70 people working specifically on one product. Are they going to come up with better ideas than three people who are also working on half a dozen other accounts? You bet they are! Once I’m home after work, I’ll play guitar for up to an hour, take the dog for a second walk and then, because Vasiliki has a fairly important position in the parliament, we tend to get invited out a lot or we invite people on a regular basis. I rarely watch TV though I love certain series. A recent favourite is Vinyl directed by Martin Scorsese. Fantastic! I’m always listening to music. The last album I got was I Still Do by Eric Clapton, who I’ve seen in concert many times. In fact the first album I ever bought was Disraeli Gears by Cream so Clapton has stayed with me throughout the years. I read a lot on the iPad, lately business books related to marketing and advertising. Years ago my favourite author was Kurt Vonnegut and things like Breakfast of Champions have stayed with me. Weekends used to mean going to the beach in Paphos but I now have a granddaughter! So we now spend all the time at home with her! I have a beautiful work/life balance

these days and I’m very comfortable with the idea that someday I will retire because I A fantastic recent TV series have two kids who are both in the company and they have far more knowhow than I Clapton is a long-time did at their musical hero age. When it comes to new technology, I’m an old dog that can’t be taught One of my new tricks favourites anymore! I from way back find myself relaxing a lot more these days, probably because I have the best team of people I’ve ever had and it’s not just that they are good creatives. They have been loyal to this company through the hard times. My greatest achievement is that I’ve managed to build something that everybody working here loves and everybody cares for. That’s something I’m very proud of.”

I’VE MADE A NAME FOR MYSELF HERE

AND I’M VERY PROUD OF WHAT I’VE ACCOMPLISHED 82 | GOLD | The Business Magazine of Cyprus

www.pwc.com.cy

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