Horia Ciorcila, chairman of Banca Transilvania (BT), has been charged by the Cluj Directorate for Investigating organized Crime and Terrorism (DIICOT Cluj) with stock market manipulation and money laundering, and was sent to trial last Monday. Investigators to the case cite an illegal profit of approximately RON 200,000.
Along with Ciorcila, Claudiu Silaghi, former vice-president of BT, Georgios Christofourou, general manager of the local subsidiary of the Bank Of Cyprus, Anastasios Isaakidis, employee of Bank Of Cyprus, as well as Mirela Silaghi, Silaghi’s wife, Dorina Marioara Cojocaru, Silaghis’s mother-in-law, Sergiu Dan Dascal, operations director at BT Securities, and Radu Codrut Jurcovan, broker at IFB Finwest, are all charged with manipulation of the stock market. Representatives of the National Securities Commission (CNVM) said last week that the transactions investigated by DIICOT involve insider trading rather than market manipulation.
According to DIICOT, the defendants allegedly used privileged information to create unfair trading conditions, thus manipulating the supply and demand of BT shares. Claudiu Silaghi, member of the BT board of directors and one of the bank’s founding members, acquired between May and December last year 43,646,740 BT shares (BSE:TLV) worth RON 74,797,448 (approximately EUR 17.6 million), through his 74-year-old mother-in-law’s account. On December 7, he sold a 33.6 million share package out of this account to the Bank of Cyprus Public Company Limited for RON 80,640,000 (approximately EUR 19 million). Prosecutors claim that Silaghi acted on privileged information as he knew as early as the autumn of 2008 that Bank of Cyprus intended to buy BT shares. Ciorcila is accused of having sold to the Bank of Cyprus on the same day 8,918,671 BT shares worth RON 21,404,762 (approximately EUR 5 million) through Dodworth Limited, an offshore company headquartered in Cyprus, which he owns.
Ciorcila and Silaghi allegedly obtained the information regarding Bank of Cyprus’s intention to buy BT shares from Christofourou and Isaakidis who also transacted BT shares.
According to media reports, Silaghi sold 3.2 percent of his BT shares in September 2009 for EUR 13.2 million but the buyer’s identity was not revealed at the time. The transactions took place through the Cluj subsidiary of IFB Finwest and BT Securities, BT’s brokerage company. In December, Bank of Cyprus reported that it held 9.6 percent of BT.
“The accusations brought against me are unsubstantiated. I haven’t done anything illegal,” Ciorcila said in an official statement last Monday. He added that he was convinced that the trial would clear him.
DIICOT prosecutors have also said that the charges have nothing to do and should not be associated with the activity of BT and Bank of Cyprus. This position, as well as the defendants’ presumption of innocence, was affirmed by representatives of the two financial institutions.
Following the media announcement of the charges, the bank’s shares were suspended from trading on the Bucharest Stock Exchange for a short period on Monday. The share price then fell 3.5 percent on Monday and Tuesday, to RON 1.35 per share, but had recovered by the end of the week. On Friday, BT shares were traded for an average price of RON 1.45 per share.