Cyprus Mail

Where did TEPAK’s VAT payments go?

The Cyprus University of Technology (Tepak)

THE CYPRUS University of Technology (TEPAK) is again under the spotlight over alleged waste and misuse of public funds relating to contracts for campus premises.

Daily Politis, which broke the story, said internal financial checks at TEPAK have uncovered that the university paid hundreds of thousands in VAT for construction and refurbishing works on buildings it is leasing; it later transpired that the four construction companies that were charging VAT were not even listed on the VAT register.

The VAT amounts in question – some €360,000 – could therefore not have been paid to the state, raising the question as to where the cash ended up.

The findings are drawn from an internal memo prepared for TEPAK’s governing council by the university’s acting chief financial officer.

Moreover, according to Politis, which obtained a copy of the memo, the head offices of four companies that provided construction services to the university all share the same address.

In the memo, the university’s CFO notes that if TEPAK, as the recipient of taxable services, “has grounds to believe that VAT should have been paid to the state but was not, it has a duty to report this, otherwise it is committing a criminal offence.”

The memo goes on to record other potentially dubious transactions. In one case, the university made a down-payment of €860,000 on equipment for two buildings it is leasing, even though it turned out that of this money only €272,000 was actually used to buy equipment.

To date the university has been billed around €400,000 on the ‘Simeon’ building for additional works and equipment, despite the fact the leasing contract did not provide for these extra services.

The building meanwhile has never been fully built.

Regarding construction work and equipment for both the ‘Simeon’ and ‘Kalipso’ buildings, no work execution certificates were submitted, nor was the university able to trace suppliers’ invoices.

Staying with the ‘Simeon’ building, the university is said to not have made use of a clause in the lease contract that stipulates compensation for any delays. According to Politis, for the building in question – which has yet to be delivered to the university – the amount arising from the delay clause comes to €620,000, which the university has not claimed.

It’s hardly the first time that TEPAK has been in the news for the wrong reasons over allegations of misappropriation of state funds and waste.

Down the years, the university has been a regular feature in the Auditor-general’s reports. The official has drawn attention in particular to the university’s practice of not inviting tenders for contracts and instead assigning contracts directly. Although TEPAK is not obliged by law to invite tenders for purchasing or leasing buildings, the Auditor-general pointed out that, regardless, this practice contravenes good governance and transparency. She also cited a number of instances where TEPAK paid excessive rent on premises precisely because it had not opted for the lowest bidder.

A public-law entity, TEPAK was founded in December 2003 and welcomed its first students in September 2007. The university’s faculties are all located in the city centre of Limassol.

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