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Audit service reveals startling payments ahead of municipal elections

Auditor-general Odysseas Michaelides

A substantial number of irregularities and decisions by municipalities and local communities were recorded in the Audit Service annual report for 2015, part of which was released on Friday, with some instances referred to the Legal Service for further handling.

The report on municipal and local councils, which forms part of the Audit Service’s comprehensive annual report, was released ahead of time so that voters could make informed decisions in the upcoming municipal elections on December 18.

According to the report, delays and additional compensation were the result of the Nicosia municipality’s handling of the tenders’ process for the construction of Eleftheria square, which had been slated to cost €13.5m and should have been finished by April 2016.

After the original winning bidder withdrew in 2014, the report said, the municipality broke the project down into two smaller projects – one concerning the underground parking and the other the main square – and invited separate tenders for each.

Technicalities allowed only for the construction of the square project to be granted, but it was then revealed that parts of the underground project were required for the completion of the main square, at which point the municipality was forced to incorporate these into the contract awarded, at extra cost and delay.

In Limassol, the auditor general uncovered a case of possible conflict of interest, where in 2005 an architect with close family relations with the incumbent mayor had the construction derogations he applied for, on behalf of one of his customers, approved.

“Although we have not identified any violation of the law by the sitting municipal council, we do believe that the need to avoid giving the public the impression of wrongdoing remains,” the auditor-general wrote.

“This goes for the mayor, the municipal councilors, and municipality officials.”

In the Larnaca section of the report, the auditor-general noted that a municipal plot of land was leased out in 2014 for €130,000 for the first two years and €160,000 the third, when a valuation commissioned by the municipality showed an annual valued lease at €307,800.

“The municipality must inform our service of the reasons for signing a lease in which rent was agreed at a much lower rate than the valuer’s estimate,” the report said.

In a separate section in the report, the auditor-general described various irregularities found in the operation of local councils.

In one case, the Trachoni local council was found to have made payments of €127,000 to two sorts clubs in the community, without prior approval by the district officer. The Trachoni mukhtar also reported that “three councilmen had also been members of the two clubs, and sat in the council sessions that decided to approve the disbursements”.

The same council was also found to have approved the payment of over €340,000 for the appropriation of a plot of land in 2006, although the plot has yet to be transferred to the council.

Perhaps the most suspicious of findings concerned the Stavrokonnos local council, where it was found that payments had been made to the mukhtar of another community, ostensibly for construction work, with no paperwork as evidence, while similar payments for similar reasons were also made to the mukhtar’s wife and parents.

Astonishingly, the Audit Service reported that other local councils made similar payments to the same mukhtar.

Further investigation of the mukhtar’s tax records revealed that he, his wife, and his underage children, had substantial undeclared income.

The Attorney General’s office, the report said, instructed police to investigate the findings.

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