team up or team down

Picking the people around you: ‘Team Up or Team Down’

A Greek saying goes as follows: “If you show me your friends, I can tell you who you are”. I would say the same goes for business. Work with the best, be one of the best. Work with the rest, be like the rest. Simply, you can either ‘Team Up or Team Down’.

In today’s competitive environment, if you want to excel in life you need to associate yourself with the best. It’s the same in your personal life. If your friends are crooks you will most likely end up one yourself. If you actively associate with philanthropists you will do more work of that nature. If you talk business with friends you will slowly start to think in a similar manner and absorb the technical terms involved in such analysis.


Associate yourself with people that have a positive impact on yourself, people that demand more from you, that improve you. Never allow people into your life that hold you back. You need positive characters in your life that will help you achieve your full potential.

The same goes for business. One wrong decision can collapse your entire business plan. You need the right people around you to accumulate knowledge and achieve success. Many companies cutting down on startup costs have paid the price in the future. You need the right individuals that may not necessarily offer the most affordable price, but the best quality-to-price result.

Companies in the past have suffered from low-quality planning, marketing, tax advice, accounting, audits, internal audits, and strategic advice. In most cases, remember that you get what you pay for. What many do not realize is the collateral damage of a shortfall in one of the above areas.

Coca-Cola, one of the most prominent brands of any industry in the world, faced a huge threat when they introduced the new coke in 1985, thus changing the recipe of coke. This resulted in public outrage. 3 months later it reintroduced the old recipe. Even though it did not cost Coke in any significant way, in the long run, it could have caused serious damage if they didn’t remain open to feedback and never adjusted the recipe back to its original composition.


Steve Jobs stated the following: “It doesn’t make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do”. What we need to understand as individuals are that we can all learn from one another. The most dangerous thing is when someone’s ego gets in the way of what is right and prudent.

In many cases, egoism does not allow the right decision to be made. As discussed above, we need to associate with the correct type of people, but also adjust on a personal level in order for us to be able to become more receptive to the ideas of the best from these individuals. We need to receive the most positive influence possible and keep out all the negative influence.


One of my favourite quotes is by Confucius that states that “If you are the smartest person in the room, then you are in the wrong room.” This clearly indicates that you should strive to be in groups that you can learn and gain more.

In summary, remember that choices today should not only be financial or convenient. Instead, you should strive to team up with people, groups, and companies that will enable you to achieve your long term goals and become the person that you envision yourself being.

by George Loizou, Managing Director, Palema

corporate fraud

Analysis: Detecting Corporate Fraud

Fraud exists everywhere and you need to be aware so as to not be conned. A con is an art of persuading someone by deception to do something. Discovering fraud in corporations and society in general needs specific skills, particularly as malicious individuals have become increasingly resourceful in covering their tracks.

It is clear that no one is immune to being defrauded. You need to apply many principles in the way you operate to minimize risk. Risk can’t be eliminated entirely. Even with the best controls in place and segregation of duties, people will still find ways to overcome them or collude to circumvent them.

Preventing all known fraud schemes simply is not enough; you need to think like a crook to catch a crook. Catching a fraudster is not as simple as people think; investigations and interrogations need to be planned and performed appropriately.

Types of Corporate Fraud

Thousands of types of fraud may appear within corporations or against a corporation. You need to have a system in place that will mitigate your risks.

Occupational fraud is expensive. It is estimated at around 5% on annual revenues, that if extrapolated could result in a $4 trillion fraud loss annually according to a report by the Association of Certified Fraud examiners (ACFE). Certified Fraud examiners (CFE) can assist in mitigating the cost of employee fraud not only by testing for fraud but also by establishing accurate procedures to enable employees of the company to assist in such a process.

Below you can see the ‘fraud triangle’, originated from Donald Cressey and defined as “the three factors that must be present at the same time in order for an ordinary person to commit fraud; Pressure, Opportunity, and Rationalization”.

The Fraud Triangle

These are the conditions that need to be present to create an environment that enables fraud. Many options exist on how to monitor and mitigate all three factors. Instead of analyzing these now we will review examples of simple frauds and how they may be revealed.

Spot the Fraud

Fictitious employee schemes are the fraud when an additional employee is added to the payroll. This may occur with the owner’s consent to decrease taxes or without the knowledge of the owners with the intent to defraud. Fictitious employees may be detected with the use of various methods. The fraudster may cover his tracks and remove your ability to detect the fraud with the use of some of these tests. However, if you perform enough tests any fraud will be uncovered.

1) Test all bank accounts linked to employees for duplicate entries, if a bank account is present twice in the list it means both salaries are being delivered to the same person (you need to ensure all salaries are deposited in accounts or mark checks for deposit only).

2) Test all addresses, people adding fictions employees may use the same address or a P.O. Box.

3) Check surnames and try to trace the relationship of the individuals.

4) Announce a problem with the payroll system and have everyone come personally to collect their salary. Upon arrival, you should request the ID and job department.

These are some of the many tests you could perform to discover if the company is only paying individuals that actually work for the company.

Many companies focus on various theft threats that may incur in a company but usually tend to miss one very important area: theft of intellectual property. This is becoming one of the most prominent and rising threats for organizations. It may not occur as often as other frauds but when it does it can have devastating effects on corporations.

Imagine a company leaking its list of suppliers or debtors in seconds; a staff manual; Its trade secrets; Its plan to enter new markets or line of products; It most profitable product line.

This type of information may, when received by competitors, have a much greater effect on the company than a fictions employee or an employee stealing a laptop or overcharging their expense account.

Detection of Intellectual Property theft is much harder as in some cases nothing truly goes missing. If no controls and procedures are in place the company will only discover the theft when the competitor has access to any information taken and is already acting based on its acquisition. At that point, most of the damage is already done and different policies need to be set in place to discover what the competitor has and how to mitigate the risk.

The difference between the two types of frauds we reviewed is that with fictitious employees, detection techniques may be enough. Once the fraud is committed, if procedures are in place to detect it, then any harm is minimal. In the case of intellectual property theft, prevention techniques must be implemented in addition to detection. This is because we want to prevent it from happening in the first place, not just catch the perpetrator once fraud has occurred.

Fraud has been here since the beginning of time and the art of the con is first described when the snake gave the apple to Adam and Eve. Fraud will not stop any time soon and you will never be totally immune to it. What you need to understand is that you must be vigilant and proactive in your corporation in order to avoid both internal and external threats. Seek knowledge and help from specialists and always remember that you need to think like a crook to catch a crook.

by George Loizou, MSA, CFE, CM, CPA, Managing Director, Palema


Limassol, My tax Home

Limassol, Cyprus your home away from home. We may not choose where we are born but we can choose who we become. My home, my town has all that is needed to become the next best city. Let’s have a look at what we have going for us.
Firstly, what do you look for when you choose a country as a new home or operational hub?

Why Limassol?

Some ingredients include location, weather, safety, education, housing, currency, language, services and if you’re savvy a great taxation system.
Let’s have a brief look at how Cyprus ranks in all of the categories before we focus on one specifically.
Location; located at a crossroads between three major continents Europe, Asia and Africa.
An island in the Mediterranean Sea.
Weather; a survey by InterNations has identified Cyprus as one of the countries with the best weather. There are days in the winter where you can windsurf in the morning and snowboard in the afternoon. Troodos Mountain is only a short drive from the beach.
Safety; value penguin performed a study on safety in 2015 and ranked Cyprus as one of the top 5 in the global ranking and 1st in nations of the population of under 5 million.
Education; the Global innovation index in 2016 ranks Cyprus in the 14th position on the overall topic of education.
Housing; The Cyprus market offers high-quality housing and by taking advantage of current market conditions, opportunities may be available both for investors and for relocations or holiday homes. Limassol, due to foreign investment, has seen increases in prime properties even during market slumps.
Currency; Cyprus adopted the Euro on 1 January 2008.
Language; Cyprus is a multicultural island. The island has as official languages, Greek, English, and Turkish. English is considered the preferred language for doing business. In addition, Limassol also offers a large community of Russian speakers.
Services; Cyprus offers a high level of financial services. All major auditing firms are well established on the island, legal firms operate at high standards, trading companies, shipping companies, and others boast an array of professionals who are easy to work with.
Finally, the best reason to select Cyprus is an assortment of tax benefits that the island has to offer. What is better than relocating yourself or your company to Cyprus and enjoying the wonderful benefits that will increase your disposable income?

Tax Home

Cyprus corporation tax is set at 12.5%, is one of the lowest in the European Union.
Having 0% withholding tax on dividends and interest for non-domiciled Cyprus tax residents or foreign nationals. Personal income tax rates range from 0%-35%. It also has tax treaties with most countries.
A newly implemented scheme for new tax residents provides the following tax benefit: If someone relocates and receives an annual gross salary which exceeds €100.000 is allowed an exemption of 50% on his gross salary (for first 10 years of residency in Cyprus and provided that the individual was not a Cyprus Tax resident for any 3 of the previous 5 years prior to taking employment in the country). In the case, an individual receives a lower
salary but above the €19.500 (for the first 5 years in Cyprus, following the year of relocation, this scheme is limited to the year 2020), that is the first tax band, an exemption is allowed the lower of 20% of €28.000 or €8.550 of gross remuneration.
The non-domiciled tax residents’ status is a new addition to the Cyprus tax system making it more attractive for individuals to seek relocation to Cyprus. This has generated even more interest in high net worth individuals to relocate to the island. Specific terms are applicable to establishing this status.
This all sounds good, but a question raised by many individuals is how easy is it to become a tax resident?
Well, that depends on whether you’re an EU resident. If yes, it’s just a matter of relocating to Cyprus, spending more than 60 days on the island and a registration procedure that is simple and quick (As long as you do not fulfill the requirements of being a tax resident somewhere else). If you are an individual that does not hold an EU passport there are various schemes that you can take advantage of.

Where to start from?

The first option is to be employed by a Cyprus company. Steps are being taken to simplify the employment of all foreign nationals (non-EU). An application will need to be submitted and all bona fide cases are usually approved.
The second scheme is the residence permit. Any individual that purchases property of at least €300.000 can relocate and live on the island. However, this will not provide you with a work permit and one must indicate how he plans to support himself from personal funds that amount to €30.000 p.a. and an additional of €5.000 for the spouse and each child.
The third option includes a total investment of €2.000.000 – €2.500.000. A residence must be purchased and maintained of €500.000 but the additional investment may be withdrawn after three years. This scheme provides an individual with the eligibility to apply for a Cyprus citizenship. A Cyprus citizenship also entails being a European citizen that enables free movement and establishment within the EU. All three options allow you to relocate to the island. Cyprus has many things going for it but each individual or company should perform their own assessment to decide what’s best for them. Individuals are available that can assist you in this process.
Limassol, Cyprus; it’s got the beach, the weather, the lifestyle, the inflow of investments and it’s my home. A multicultural city that is willing to welcome anyone and may become your home away from home.