Cobalt director indicted in Switzerland, in connection with money laundering (Update-1)

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(Adds comment by Cobalt manager on internal due diligence procedures in 22nd paragraph)

By Stelios Orphanides

Urs Meisterhans, the Swiss director of Cobalt, the new Cypriot airline, faces charges in connection with two cases of financial-related offences in Switzerland and is also being investigated in connection with a third case.

Authorities in Switzerland indicted Meisterhans, a Cobalt board member, on May 20 last year of “aggravated money laundering, securities fraud and negligence in financial operations,” according to an order issued by senior US district judge John E Steel and following an ex parte motion for a temporary restraining order and preliminary injunction on June 1, 2015. The injunction claimed that without Meisterhans, described “as founder and principal” of Sinitus AG, a Swiss financial services company, Florian Wilhelm Juergen Homm, German national, and his ex-wife Susan Elaine Devine, a US citizen born in Brazil, would have not been able to launder the proceeds from the so called “Penny-Stock Scheme”.

Investors of Absolute Capital Management, an investment management company at which Homm was chief investment officer, suffered losses in excess of $200m when he conspired with others from at least September 2004 to September 2007, and used the company’s funds as vehicles to manipulate stock, the US court order said. Homm, who a decade ago was one of the shareholders of German football club Borussia Dortmund and faces a term of up to 225-year prison term in the US, benefited with $115 million from the scheme. He is also wanted by Swiss authorities. Investors offer a reward of €1.5m in cash for information that will lead to his arrest. Homm is believed to live in Germany and often appears in television interviews there.

Meisterhans, transferred more than $17m to accounts accessible to Homm and Devine, while Homm was hiding in 2007 and 2008, and “facilitated Devine’s money laundering activities by sending Penny Stock Scheme proceeds via complex routes through at least a dozen countries, employing false identities, using offshore companies, and executing transactions in cash, gold and fine art,” the order said.

The Office of the Swiss Attorney General (OAG) confirmed to the Cyprus Business Mail that it had filed three indictments against Meisterhans without specifying their nature or the exact time he was indicted. One of the three indictments “was rejected on the grounds that investigations are still ongoing against two other suspects in the same matter and that all three persons should be tried together in order to fulfil the principle of unity of judgment and avoid the possibility of contradictory outcomes,” said Linda von Burg, a spokesperson at the Berne-based OAG, in an email response.

On October 17, 2014, FINMA, the Swiss Financial Supervisory Authoritiy, ordered the liquidation of Sinitus AG and the procedure was completed on February 2, 2015, according to its website. FINMA, which also froze Sinitus assets worth CHF24m (€22m), was not immediately available for a comment. The chairwoman of the Cyprus Securities and Exchange Commission, Demetra Kalogerou, said that her agency which supervises financial services firms had no information on Meisterhans or Sinitus.

MOKAS, Cyprus’s anti-money laundering unit at the republic’s Law Office, said that it will check related information forwarded by the Cyprus Business Mail and that it may get in touch with other services. It is noted that Meisterhans has not been convicted for any offence.

Cobalt logoOn Tuesday, Cobalt received its commercial licence from the Air Traffic Licensing Authority (ATLA) which allows it to sell tickets to passengers, and announced that it would begin its flight programme on July 7. Alecos Michaelides, permanent secretary at the transport ministry and chairman of ATLA said that the licensing body was unaware of the indictments.

Still, since Meisterhans “has not been convicted, we couldn’t take into account anything, there is a principle that everyone is not guilty unless the opposite is proven,” Michaelides said in a telephone interview on Thursday. On the other hand, “it would be very naïve for the administration in Cobalt to tolerate someone in the board who might have been involved in this type of offences. It would be suicide”.

In case Swiss justice convicts Meisterhans for any of the above felonies, “things will be different and we may ask for his removal from the board,” the ATLA chairman said adding that in case he refuses to step down “we shall consider together with the Law Office all available options. It would be unwise and it surprises me if indictments have been filed against him and he is a member of the board”.

Transport Minister Marios Demetriades told the Cyprus Business Mail question that “whoever has evidence suggesting that a person is unsuitable as a member of the board of directors has to submit it to the committee which is in charge”.

According to article 6 of the European Council Regulation 2407/92, authorities may suspend or revoke the commercial licence of an airline when one of its directors or executives commits a criminal offence or in the event of serious professional misconduct.

Urs MeisterhansIn a telephone interview, Meisterhans dismissed information about his indictment and described as “rumours” information to the contrary. “I can confirm that I have never been indicted by any authorities, neither (sic) in Switzerland or anywhere else”.

Meisterhans “would have never have accepted the board membership in Cobalt” if he had been indicted, he said adding that Cobalt has done its due diligence, which “confirmed that there is no indictment pending or passed against me”.

Meisterhans said that he was not aware of the reasons that led to the liquidation of Sinitus AG by FINMA as he had left the company and sold his stake in it in 2013. The website of Sinitus AG, sinitus.ch now diverts to sinitusgroup.com. A Cyprus Business Mail call to the telephone number listed in the “contact us” section of the website was answered by Meisterhans personally. When asked repeatedly about his role in Sinitus AG, Meisterhans declined to respond adding that he was not the firm’s managing director. “This is all irrelevant,” he said. “What happened with the company after I left is not my responsibility”.

Cobalt Gregory DiacouThe chairman of Cobalt, Gregoris Diacou, who is according to the company registrar also the only Cypriot national director of Cobalt which defines itself as Cyprus’s national carrier, said that he could not answer questions related to a possible indictment of Urs Meisterhans.

“I am not going to answer to such things and it is not my business,” said Diacou, who is also an advisor to DIKO chairman Nicholas Papadopoulos on privatisations, in a telephone interview on Thursday. “I have a certificate of clean (criminal-)record”.

The airline’s shareholders are according to an online search at the company registrar, Pictet Capital Ltd, owner of 808,500 regular shares, AJ (Cyprus) Holdings Ltd with 808,500 regular shares, and Balneria Holdings Ltd with 33,000 regular shares. AJ (Cyprus) Holdings Ltd is in addition owner of the 26.400,000 issued “Class A” shares. Regular shares have voting rights while the rest has none.

Diacou appears as the owner of Pictet and so in control of 49 per cent of the airline’s voting rights. Meisterhans said that he is not “directly or indirectly a shareholder in Cobalt”.

Balneria is owned by the British Virgin Islands-based Integrity Overseas Ltd and its director is the Austrian Guenter Eibel, also member of Cobalt’s board. AJ (Cyprus) Holdings Ltd is owned by Hannice Investment, also based in the British Virgin Islands, and one of its directors, the British national Patrick Thomas Carrol is also sitting in the airline’s board of directors.

The Cyprus Business Mail understands that AJ (Cyprus) Holdings Ltd represents China’s state-owned Aviation Industry Corporation, also known as AVIC.

On Friday, a manager at Cobalt said that the airline had nothing to do with the report on Meisterhan’s indictment. “It is an issue concerning a member of the board,” Philokypros Rousounides, senior vice president of corporate affairs said on the phone.

He added that the airline applies strict due diligence procedures, which are repeated every four months and include the re-submission of criminal records by both workers and executives or directors.

Swiss Attorney Office

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About Author

Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: [email protected]

  • GSP

    Oops!
    So much for the Cyprus authorities checking out the legitimacy of the company finances before awarding their operator licence.

    • Pc

      No, it is not the company. It concerns one of its directors, not how the company is financed. And the problem, if there is one, is easily resolved by having the Swiss guy quit the board.

      • GSP

        So how do you suppose he became a board member if not for his knowledge of the banking business? Maybe he saved up enough coupons from his breakfast cereal and wrote a catchy slogan?
        Read the final paragraphs regarding the company finances, a tangled international web, not a simple arrangement with transparency and accountability.

        • Pc

          Hardly any company, especially the ones not listed, has a transparent set up. Also, how the company is financed has been public information for months, so I don’t see why that is suddenly an issue. How the company is financed and set up is a separate issue to the (possible) indictment of a board member.

          What interests me more here is why a journalist finds out there is an indictment and everyone denies it. If it turns out that the Swiss authorities confirm the indictment, then why did the government offices not pick this up and how did this guy get a seat on the board? If there is no indictment, who is spreading the rumours and why?

          • Pc

            Seems the indictment is real. Why did the authorities not know?

      • Peter Kelly

        This is your plan Kelly. You expected some money and you didt got it?Who is bad guy in this story , life will show to us. Things is not always looks how somebody tryng to present. By the way what is gonna be at 23? Cannot wait to read next bullshit .

  • Gocmen.g

    Wait man ! You just got the licence yesterday, wait just a minute for dirt.

  • Road Warrior

    Oh dear……

  • JSReturnsAgain

    I hope the actions of one director does not sink the deal.

  • Excellent investigative journalism by Stelios Orphanides and the Cyprus Business Mail team. We look forward to the next chapter, especially if Nicholas Papadopoulos is involved.

    • Pc

      Any specific aversions to NPap? 🙂

  • Neroli

    Ha ha another corrupt airline for Cyprus but before it even starts!!

    • Slomi

      Imagine!

    • Pc

      The only odd thing is that the corrupt ones are not Cypriot…

      • Neroli

        It will be there somewhere, and surely why didn’t the authorities know?

        • Pc

          I agree. If a newspaper can unveal this information then the government was (deliberatly) napping.

          • Neroli

            At last! You agree with me about something!! ??

          • Pc

            If we only get to discuss the one thing we disagree about, how can we discover what we have in common? Let June 23 come quickly so everyone can move on.

          • Peter Kelly

            So Mr.Pc( Peter)what is your own interest on this story? Or maybe your behind of this article? Very cheap you know …

          • Pc

            I have no idea what you’re insinuating or implying. I don’t think i am who you believe i am.

  • Maverick

    Good one Mr Orphanides. THE FOLLOWING IS CONJECTURE!

    1. I wonder whether a little bit more research would have uncovered that Pictet Capital is actually a nominee / subsidiary / related entity to Pictet Private Bank. I sincerely doubt that a bank of the size and prestige of Pictet would have allowed uncontested use of its name; the fact that the company name is unchallenged may point to the fact that Pictet may indeed be involved behind the scenes. These vehicles are used by Private banks to ensure anonymity and secrecy about their clients, the company’s actual shareholders etc. This will make Diacou it’s nominated representative in Cyprus. In such circumstances his freedom to act is severely circumscribed by his letters of appointment which essentially make him nothing more than a mouthpiece of Pictet. It is also common that after a certain operating period such entities “sell out” their stake to entities controlled by the “real” owners.

    2. The way these things work it would not surprise me if the end beneficiaries of Pictet and Balneria ( Balkan X X anyone) are one and the same.

    3. It is a travesty that all the “fit and proper” authority checks about the company its shareholders and directors, the anti money laundering and “know your client” investigations etc failed to uncover the fact that a director of the company was indicted in Switzerland. This may indeed NOT have affected the granting of the license if yet to be proven guilty but for ATLA to publicly admit that it is NOT aware of the indictment is revealing in itself. One wonders whether ATLA’s investigation extended as far as calling the contact number yr reporter did (good one btw! ?). It just goes to show that a fancy name, a good suit, a bit of swagger and the PROMISE of investment is enough to make our regulators salivate (Chinese investors for the old LCA airport anyone??).

    • Cydee

      Oh yes, the Chinese/LCA airport, what happened about that………..

  • Wanderer

    I guess no one except this kind of individuals is interested in buying hot air (err… “licences”) from Cy government.

    • Neroli

      But have they bought the Mouflon logo from them yet?

  • Barry White

    What is the problem? Have the gentleman given honourary or otherwise membership of the Cyprus Bar Association and ready to go.

    Birds of a feather etc.

  • Argent

    Fasten you safety belts and prepare for take off, or not…………….

    • Νίκος Λοφίτης

      Force landing

      • Argent

        Bet they will hide the black boxes too.

  • Philippos

    Mr Orfanides has obviously found out a few things that were not so intended, because no one is supposed to be more clever than the company structure builders. This sounds like an excellent piece of investigative journalism. Having found the smoke, lets dig a little more and see if there is any fire. There is at least the slight whiff of “Patriotism” having squashed all for a few quid on the side, but that is an allegation until proven. Nonetheless not a great start to Cobalt’s life on any front yet

    • Neroli

      Where there’s smoke there IS fire!

  • Bemused

    A good “Connected CBA Lawyer” could easily override the Attorney General of Switzerland say Junior law firm ?

  • Peter Kelly

    Well done Aegan and Ryanair, fnally Cyprus got a
    Cypriot Low Cost Carrier braking their price monopoly and giving us Cypriots good connectivity at low prices and with high safety standards. This is a dirty, smoky smear campaign trying to undermine our Cyprus institutions and legacy in aviation. I am very proud of Cobalt Air and our Government for the bold move to give us uncompromised and free access to low cost connectivity.Good bless Cyprus.

    • peemdubya

      Was about to book September flights to Manchester but think I’ll hold off for the foreseeable future………