VZCZCXYZ0001
PP RUEHWEB

DE RUEHNC #0511/01 0952015
ZNY CCCCC ZZH
P 052015Z APR 06
FM AMEMBASSY NICOSIA
TO RUEHC/SECSTATE WASHDC PRIORITY 5813
INFO RUEHAK/AMEMBASSY ANKARA PRIORITY 4600
RUEHTH/AMEMBASSY ATHENS PRIORITY 3545
RUEHLO/AMEMBASSY LONDON PRIORITY 1159
RUEHSM/AMEMBASSY STOCKHOLM PRIORITY 0421
RUEHVI/AMEMBASSY VIENNA PRIORITY 0441
RUCNDT/USMISSION USUN NEW YORK PRIORITY 0512
RUEHBS/USEU BRUSSELS PRIORITY

C O N F I D E N T I A L NICOSIA 000511 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 04/04/2021 
TAGS: PREL PGOV CY
SUBJECT: PICK-A-PECK-OF-PECCADILLOS:  A RAFT OF SCANDALS 
BESETS THE MFA 
 
 
Classified By: Ambassador Ronald L. Schlicher; Reason 1.4 
(b) and (d) 
 
¶1.  (C) Summary:  The Cypriot MFA is an unhappy and 
dysfunctional place.  A recent raft of scandals -- nearly all 
related to sex or money -- has both embarrassed the ministry 
and undercut its effectiveness.  The scandals are beginning 
to overlap.  The MFA may well choose to pardon an embezzler 
at the embassy in Stockholm who also happens to be a key 
witness in the sexual harassment investigation against the 
Ambassador.  Systemic problems at the MFA have been magnified 
by an increasingly vicious and competitive culture in which 
ratting out one's colleague is often the swiftest and surest 
ticket to personal advancement.  Much of the blame for this 
can be laid at the doorstep of the MFA's Permanent Secretary, 
Sotos Zakheous, who has used the various scandals percolating 
in the ministry to undercut potential rivals.  Our contacts 
describe a personnel system that rewards and punishes 
diplomats in direct proportion to their perceived personal 
loyalty to Zakheous.  Even senior officials are clearly 
afraid to cross the Permanent Secretary, who has allies in 
the Palace as well as in the largest political party, AKEL. 
The bilious atmosphere at the MFA complicates our own efforts 
to urge the GOC to look beyond the parochial Cyprus issue and 
engage more broadly with global affairs.  End Summary. 
 
 
Pride of Lions, Murder of Crows, Raft of Scandals 
--------------------------------------------- ---- 
 
¶2.  (C) A seemingly endless stream of scandal and gossip 
emanating from Cyprus Embassies over the last year has 
embarrassed the MFA and left the Cypriot public with the 
impression that its diplomatic corps is chock-a-block with 
expense account cheats and sexual predators.  Most recently, 
the MFA was forced to announce that it had asked the 
government to begin a criminal investigation into the alleged 
embezzlement of some 200,000 Cyprus pounds ($400,000) from 
the Embassy in Stockholm.  According to press accounts, the 
suspect -- a Cypriot administrator -- had been forging 
documents and signatures (including the Ambassador's) for at 
least three years and transferring the funds to his personal 
bank account to support an expensive gambling habit.  MFA 
officials reportedly offered a deal to the employee -- return 
the money and no charges would be filed -- because the 
suspect was also the key witness in an ongoing investigation 
against Cyprus' former Ambassador to Sweden, Costas 
Papademas.  Last June, three female employees of the Embassy, 
two local staff and one Cypriot diplomat, accused Papademas 
of sexual harassment.  Following an investigation, the Cyprus 
police filed a total of 26 charges against the Ambassador. 
After his arrest, Papademas was released on bail, but his 
passport was confiscated and his name was added to the 
stop-list at the airport.  His trial should begin sometime in 
May or June. 
 
¶3.  (SBU) One day after the March 30 announcement of the 
embezzlement investigation in Stockholm, the Cypriot papers 
reported that the MFA was also investigating the 
disappearance of a dinosaur fossil from the Embassy in 
Brussels.  The fossil had been donated to the Embassy by a 
former Greek mayor some five years ago.  At a recent Embassy 
reception, however, the donor noticed that his fossil was not 
on display and he asked for an explanation.  It turns out 
that the fossil had never been registered as Embassy 
property.  Investigators suspect that a diplomat who was 
working at the mission at that time took the fossil himself 
and gave it to a relative in New York who was active in the 
trade of antiquities and other archeological artifacts.  It 
is believed that the fossil in question is now in the hands 
of a nameless private collector. 
 
¶4.  (C) This is just the tip of the proverbial iceberg.  The 
Cypriot MFA is a fundamentally unhappy and dysfunctional 
place.  Had Leo Tolstoy been a diplomat, he would have been 
the first to observe that all unhappy embassies are unhappy 
in their own way.  Even so, two clear themes emerge 
(unsurprisingly) from the list of recent scandals:  sex and 
money.  The sex is mostly tawdry or coercive and the money 
(Stockholm aside) is mostly chump change.  We are aware of no 
scandals stemming from disagreement over policy issues.  With 
apologies to Matt Drudge, Al Kamen and Liz Smith, some of the 
highlights include: 
 
-- In 2004, the Cypriot Ambassador to Moscow, Andreas 
Georghiades, was recalled pending an investigation into 
alleged irregularities related to hotel room charges. 
Investigators concluded that Georghiades had charged the 
government at the hotel's maximum rate when his own bills had 
been reduced nearly 60% by the hotel management.  Total gain 
for Georghiades:  $2,376.  The Ambassador has since retired. 
(Note:  Georghiades' predecessor, Charalambos Ioannides, was 
also recalled in 2002 in relation to alleged irregularities 
in his expense accounts.  Ioannides is currently serving as 
director of the MFA's Middle East and North Africa 
Department). 
 
-- In July 2005, the MFA confirmed press reports that the 
Cypriot Ambassador to Iran, Stavros Loizides, was under 
investigation for both sexual harassment and embezzlement. 
According to MFA officials -- many of them displaying the 
unmistakable signs of schadenfreude -- the owner of an 
Iranian travel agency had accused Loizides of making 
inappropriate advances on two of his customers and one of his 
employees.  FM Iacovou publicly defended Loizides, 
characterizing his invitation to a young Iranian female visa 
applicant to wait in his private quarters while her 
application was reviewed as nothing more than "an act of 
politeness."  In addition to the sexual harassment 
complaints, Loizides is also facing nine charges related to 
expense account padding.  The investigation is ongoing. 
 
-- In February 2006, the newspaper Politis reported that a 
Cypriot Ambassador serving in a Central European country 
posted a half-naked picture of himself on several gay-themed 
internet sites along with solicitations for sexual partners. 
The paper had been tipped off by an anonymous e-mail signed 
only "a group of Christians."  An investigation by the MFA 
reportedly concluded that the Ambassador had been set up by a 
professional rival, but he was nevertheless recalled to 
Nicosia on March 1. 
 
What's Going on Here? 
--------------------- 
 
¶5.  (C) Cypriot diplomats receive little in the way of 
administrative support or guidance from the home office. 
They are responsible for making their own travel plans, 
renting their own houses, and managing their own and their 
embassies' affairs with minimal oversight.  The system is 
rife with abuse, and conflicts between employees and the 
central system typically wind up in the courts.  Reflecting 
the litigious nature of Greek Cypriot society, the diplomatic 
corps is quick to pull the trigger on a lawsuit over 
everything from hiring, to assignments, to voucher 
processing.  The current head of the MFA's Legal Affairs 
Division, Michalis Stavrinos, has filed no fewer than three 
separate law suits against his employer. 
 
¶6.  (C) The systemic problems in the MFA are magnified by an 
increasingly vicious and competitive culture in which ratting 
out your colleagues is one of the swiftest and surest tickets 
to personal advancement.  Perched at the center of the web of 
intrigue and infighting like some malevolent spider is the 
MFA's Permanent Secretary, Sotos Zakheous. One MFA official 
told us that the Ministry was prepared to pardon the 
embezzler from the Swedish affair because he was a key 
witness in the investigation into Papademas, who was himself 
a potential rival to Zakheous.  The Permanent Secretary makes 
all personnel decisions below the level of Ambassador (and 
has significant input into those appointments as well).  Our 
working-level contacts tell us that Zakheous uses this power 
as both a form of patronage to reward his loyalists and a 
cudgel with which to beat his rivals. 
 
¶7.  (C) Even senior officials with their own established 
networks and bases of support -- such as Political Director 
Thalia Petrides or Cyprus Question Division Director Erato 
Marcoullis -- seem scared to cross him.  We have heard from 
some in the MFA that the Foreign Minister handles his 
Permanent Secretary as one would a poisonous snake, carefully 
and infrequently.  Moreover, Zakheous has also taken personal 
responsibility for the stepped-up intake of new junior 
diplomats.  Like replicates like, and the incoming crop of 
MFA officials seems both loyal to Zakheous and remarkably 
similar to him in style. 
 
¶8.  (C) Zakheous is a self-promoter of the first order. 
President Papadopoulos declared to the Ambassador in their 
last meeting that he regularly receives reports of meetings 
with foreign officials directly from the Permanent Secretary. 
 His reports are invariably fulsome in describing Zakheous' 
interventions but typically neglect to mention what his 
foreign interlocutor had to say.  That said, the President 
went on to describe Zakheous as the best Permanent Secretary 
the MFA has ever had even if "some of the time -- OK much of 
the time -- he is too aggressive."  Although he seeks to 
cultivate a personal relationship with the Presidential 
Palace, Zakheous is widely-regarded as an AKEL loyalist.  It 
was AKEL that reportedly insisted the Ministry accept 
Zakheous as junior diplomat. One of Zakheous' cohorts from 
the Cypriot MFA's equivalent of A-100 told us that "from day 
one, we knew to be careful of this guy.  He was politically 
connected and seemed to be without any kind of ethical 
compass." 
 
Comment 
------- 
 
¶9.  (C) The MFA is hardly unique in laboring under the dark 
cloud of scandals.  Similar charges have beset other 
ministries.  The allegations against the MFA are the 
juiciest, however, and the air of "international intrigue" 
adds an additional layer of salacious appeal.  Part of the 
problem at the MFA is that the culture is changing.  From 
what we understand, Cypriot diplomats have always shaded the 
truth in their expense reports.  It is only recently that 
this practice has come to make problems for them.  Older 
diplomats, in particular, have found it hard to adapt to 
changing mores and standards. 
 
¶10.  (C) Meanwhile, the overall bilious atmosphere at the MFA 
complicates our own efforts to urge the GOC to look beyond 
the parochial Cyprus issue and engage more broadly with 
global affairs.  The diplomats in the MFA are reluctant to 
take risks of any kind for fear of crossing their martinet 
PermSec.  It is far easier for the mid-level officials who 
make the wheels turn at the MFA to keep their heads down and 
maneuver for that cushy posting in Geneva. 
 
SCHLICHER