Filenews 12 May 2023 - by Fanis Makrides
The side effects of the U.S.-British sanctions imposed on April 12 are not limited to freezing bank accounts and companies of legitimate investors. At the moment, a few hundred employees of the major service agencies included in the restrictive measures lists remain unpaid for the month of April. Simply put, it is a labour issue.
The affected employees work at Meritservus and CHRISTODOULOS G. VASSILIADES AND CO. LLC. Meritservus was sanctioned by the UK for allegedly working with Roman Abramovich, while the lawyer's firm was included in both lists of restrictive measures (UK and US) on the grounds of providing services to the Russian oligarch. Alisher Usmanov. Both large companies cannot do financial operations, since the commercial banks of Cyprus have "blocked" their accounts.
Yesterday morning, the vice-president of the Cyprus Bar Association, George Christofides, in statements on CyBC's radio news show, said that there had been a large number of dismissals of office employees in Limassol affected by the sanctions. A position that Mr. Christofides repeated a little later speaking to "F". In fact, in his statements to our newspaper, he stressed the need for the State to take actions to address the issue. He referred to the scenario of an escalation of sanctions, but also affecting the stability of the services sector. "Consider the possible dismissal of hundreds of employees in such a case, as well as the burden on the state redundancy fund," Christofides added. He also spoke of actions that must be taken by the State so as not to destabilize the sector.
In addition, a source informed us indicated that an affected business entity has dismissed employees with English passports who worked in subsidiary offices.
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It should be added here that yesterday afternoon, Meritservus published a letter to relevant organizations and bodies in order to assist in the effort to de-freeze money from accounts in order to pay employees. There is talk of a sum of EUR 500 000 to be released in order to pay the remuneration of officials. The letter is addressed to the Bank of Cyprus, the Central Bank and the Ministries of Labour and Finance. It is argued, inter alia, that "banking institutions operating within the territory of the Republic of Cyprus, their regulatory authority, i.e. the Central Bank, as well as the competent and/or relevant ministries, maintain a clear stance of cold indifference towards the employees of these companies, who, for more than a week, have not received their salary from their employer due to the refusal by the Bank of Cyprus to release amounts from the their accounts'.
At the moment, the position put forward by the relevant ministries is that the requests of the two companies affected by the sanctions should go to the competent agencies of the US (OFAC) and the UK (OFSI) in order to be able to have derogations in relation to payment orders. However, other sources of information told "F" that this does not seem to be entirely true.
It should be noted that for sanctions imposed on companies by the UN and the European Union, the procedure is predetermined. The frozen companies' requests for exemptions were put before two bodies controlled by the finance ministry. The reason for the Sanctions Enforcement Unit (MFN) and the Financial Sanctions Advisory Committee (EEOK). When a business entity with blocked accounts wanted to make employee payments or pay money against other liabilities (office operating expenses, taxes, etc.), it contacted the bank with a special request. The bank in turn forwarded it to the EUSS, which examined it. The remaining requests for derogations from the restrictions were submitted to the MEK.
In this case, however, the facts are very different. Because the sanctions come from Britain and the US, the requests of the affected companies to Cypriot banks should be forwarded to the competent bodies of the countries in question, which are the American OFAC and the English OFSI.
A Foreign Office source, asked to clarify the above-mentioned procedure, said: "Commercial banks that have frozen accounts of affected companies are urged to contact the relevant UK and US agencies." He added: "The foreign ministry from the first moment took measures. Indicatively, he contacted the U.S. Embassy in Cyprus, as well as the respective ministry, in order to find contact points with OFAC. We received contact details for this service and forwarded them to commercial Cypriot banks to immediately forward the relevant requests of the offices included in the sanctions."
However, information received by "F" from a competent person indicates that an office on which restrictions were imposed has already contacted OFAC for clarification. The U.S. Treasury Department said that if transactions were made in euros rather than dollars, then it did not need to give permission for a derogation.
