The case centres on land and properties developed by the Alpha Panareti company, owned by Andreas Ioannou, which used agents such as British IFAs to promote the investment in commercial property in Cyprus to investors in the UK.
Panareti borrowed from Alpha Bank in Cyprus to fund the purchase and development of land on the island, and investors who wanted to invest in the properties were required to take out mortgages from Alpha Bank.
Investors were advised to take out the loans between 2005 and 2007 in the Swiss franc, which was low at the time compared to the euro and Sterling, on the understanding that they would be able to pay the mortgages with rental incomes from the properties.
However since the global financial crisis the Swiss franc has strengthened as a safe haven currency, sending the cost of the loans investors took out with Alpha Bank soaring, and the value of those properties that were built plummeting.
Many of the investors borrowed against their houses in the UK to fund their investment, and now risk losing their homes after Alpha Bank issued writs against them to repay the loans.
Highgate Hill law firm, which acts on behalf of 800 clients, said investors are suffering under huge pressure to pay back Alpha Bank.
The law firm, which is suing Panareti, Alpha Bank, and 67 financial advisers, alleges that clients were not given appropriate advice before signing contracts, which it says were weighted in favour of Alpha Bank and Alpha Panareti, and included investors giving away their power of attorney.
“Financial advisers owed a duty of care to carry out due diligence on these investments and they did not,” said Katherine Alexander-Theodotou, the lawyer leading investors’ cases.
The High Court ruled in November that the investors can pursue their case against Panareti and Roseberry Overseas Property in the UK. The two companies wanted the case to be heard in Cyprus.
A group of MPs have set up an All Party Parliamentary Group to help investors embroiled in the cases.
Bill Cash, Conservative Member of Parliament for Stone, is heading up the All Party Parliamentary Group for the Defence of the Interests of British Property Owners in Cyprus.
Alpha Bank declined to comment.
