THE BEATRICE CASE No charge against Horia Ciorcilă could withstand his lawyer's plea

On Friday, the High Court of Cassation and Justice denied the request of Horia Ciorcilă, the president of the Chairman of the Board of Banca Transilvania, to not take into consideration a report by American consulting firm Alvarez&Marsal, drawn up for the Central Bank of Cyprus, even though his lawyer claimed that it has no connection to the case in which his client is being charged with the manipulation of the stock market and money laundering and that, furthermore, it harms the image of the bank, according to Bancherul.ro.

Any charge brought against Horia Ciorcilă pales before his lawyer's plea. According to Bancherul.ro, he claimed in court that the publication of the information about the difficult situation of Horia Ciorcilă would be "extremely harmful", as it concerns loans amounting to 80 million Euros of companies that are in default, with collateral which has devalued by half due to the crisis.

"The inability to repay such large loans is not something to be proud of for any businessman. And when such an individual is also the president of the third largest bank in Romania, publicizing this situation can harm the public perception of the bank, which we want to protect from any potential negative consequences", said the lawyer, quoted by Bancherul.ro.

In response, the prosecutor who was present at the hearing said that revealing the situation of the companies owned by Ciorcilă has nothing to do with the trial, but it does provide an overall picture of the whole business, as shown by the requisitoire by which the businessman was indicted, more specifically, how those loans were rolled over, namely on the condition that Ciorcilă facilitated the acquisition of the shares of Banca Transilvania by Bank of Cyprus.

However, the three judges of the High Court of Cassation were not too impressed by the potential damage the bank and the companies owned by Ciorcilă may incur, so they have denied the request, and opined that the evidence in question is relevant in this lawsuit, the article on Bancherul.ro states. Furthermore, the judges denied another request by Horia Ciorcilă, to unfreeze some of his accounts that hold 41 million lei.

The Alvarez&Marsal report writes about how the acquisition by Bank of Cyprus of a stake of almost 10% in Banca Transilvania (BT), a deal which was given the code name "Beatrice" in the internal reports of the bank of Cyprus which were preparing the deal in question, in 2009.

The report mentions that Bank of Cyprus bought the shares of BT through various structures, including through the companies of Horia Ciorcilă, which concealed the real owner of the shares, in order to limit the impact the acquisition would have on the stock prices, as the general market was not informed about Bank of Cyprus' intention to acquire a significant stake in BT.

The report states that in 2009, several off-shore companies registered in Cyprus and controlled by Horia Ciorcilă were facing the repayment of loans amounting to 80 million Euros taken out from Alpha Bank and Bank of Cyprus in the previous years, due to the financial crisis and the drop in the value of the collaterals.

Horia Ciorcilă asked the Cypriot bank and the Greek bank for a rescheduling of the debts, but it seems that Alpha Bank was not willing to approve his request, given the difficult situation of his companies, according to the report quoted by Bancherul.ro.

According to the report, the heads of Bank of Cyprus were aware of the problems that Ciorcilă as a result of his companies' debts of his companies and with the fact that Alpha Bank did not want to reschedule his loans, so they devised a mechanism which stipulated that in exchange for the rescheduling of the loans taken out by Ciorcilă's companies, he would sell to Bank of Cyprus part of the shares he owned in Banca Transilvania, through a Cypriot offshore he controlled, called Dodworth.

The report states that, as a result, Bank of Cyprus could buy a significant chunk of the capital of Banca Transilvania in secret and at a low price, and Horia Ciorcilă, would save his companies from bankruptcy and at the same time make a significant profit on the difference between the price initially agreed with the Cypriot bank and the actual price at which the deal was done on the Bucharest Stock Exchange.