By Elias Hazou
THE CHAIRMAN of the Cyprus Telecommunications Authority (CyTA) stuck to his guns yesterday, reiterating that the pension fund’s investments were sound and risk-averse.
Stathis Kittis, CyTA chairman and head of the pension fund management committee, was being quizzed by a panel that is looking into a 2011 land deal.
The land in question in Dromolaxia, next to Larnaca airport, was bought in 2007 from its Turkish Cypriot owner by the Greek Cypriot company Wadnic Trading Ltd for €1,273,770, whereas the land registry –in calculating the transfer fees – had placed the value at €2,970,000.
Allegations have since surfaced of millions given to unions, a political party, an MP and a CyTA official to grease the deal.
But Kittis yesterday dismissed the claims as deliberate misinformation. He suggested instead that the slurs against CyTA came partly from businessmen who had approached the organisation with alternative investment proposals and were turned down.
The false allegations, he said, were being motivated by “hidden agendas and petty-political ambitions, or even a wrangling between trade unionists, which appears to be evolving into a ruthless undeclared war.”
On the Dromolaxia land deal, Kittis said the pension fund decided to go for it after concluding it was an attractive investment yielding high returns.
The land would be used to build offices to be rented out to businesses wanting to set up shop in the vicinity of the airport. Based on a valuation of the real estate in the area, Kittis said, CyTA’s pension fund figured it could rent out office space at €20 per square meter, ensuring a return on investment of 7.5 per cent at the most and 6.5 at the least – a significantly higher yield than keeping the money in the bank at an interest rate of 4 per cent.
Moreover, the pension fund shielded its investment from risk by agreeing with the contractor to withhold some €1.7m in a blocked account until delivery of the project.
And in a bid to kill any notion of dodgy dealing, Kittis said CyTA was never presented with a ‘comparable alternative’.
Kittis explained that a different proposal was submitted to the pension fund on January 25, 2011 – the very day a businessman was telling the House watchdog committee that he had earlier approached CyTA with a more beneficial offer involving another plot.
But the businessman’s claims were false, in fact, Kittis said, this other offer was officially put before CyTA just after the hearings at the House committee that same day.
CyTA turned down the proposal by a company called ‘New Dimensions’, which involved a project consisting of 80 apartments located at a distance of three kilometers from Larnaca airport.
The reasons for the rejection was that CyTA did not want to manage so many apartments, and had set its sights on investing in real estate in close proximity to the airport. By contrast, the Dromolaxia plot was ideally situated just 700m from the entrance of the airport.
Kittis said also the Dromolaxia project was expected to be completed by the end of this year or early 2014. Up until June 28 of this year, the pension fund had paid out €14m, and another €5.2m is pending, minus the €1.7m held in a blocked account.
Kittis cited two recent valuations which placed the value of the completed project at €18.65m and €17.5m, respectively.
The CyTA boss reiterated that had the pension fund not diversified its portfolio and kept its money in the banks, it would have lost almost everything.
Had the fund’s management committee not invested its €250m profits in diverse projects, Kittis said, the cash would have been all but lost through the ‘haircut’ on deposits.
Citing an actuarial report (dated December 31, 2012) drafted for the fund, he said the total value of the fund’s assets stood at €745m, while the level of financing was at 116.5 per cent of actuarial liabilities.
The land deal probe continues.