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Kouklia re-zoning saved developer €90m, offset against bank debt

THE re-zoning of forest and agricultural land in Kouklia, Paphos, has made millions for a certain businessman, MPs heard on Thursday.

“With these re-zoning decisions, we allowed a businessman to not only get rich but also, through the tolerance shown subsequently, we gave him the chance to transfer part of his land to the bank and in this way rid himself of a €90m debt,” Auditor-general Odysseas Michaelides said in parliament.

He was speaking at the House watchdog committee, which revisited the matter of a circumspect re-zoning decision dating back to 2007.

In May 2007 the cabinet issued a decision where private lands in the Akamas were to be swapped with state-owned land in Kouklia.

The latter consisted of agricultural land and forest, so as an incentive to the private owners in the Akamas, the state lands in Kouklia were re-zoned as commercial.

The land exchange itself never materialised and in June 2018 the cabinet revoked the 2007 swap decision.

But the zoning change in Kouklia was not likewise rescinded and it is still in effect today, meaning that commercial development is allowed there.

The re-zoning of 2007 applied not only to the state lands in Kouklia earmarked for the swap, but also to adjacent land already owned by a real estate developer.

The reason cited then for extending the re-zoning to the adjacent private tracts was to “ensure the functionality and accessibility of the forest land.”

The developer in question owned two tracts in the vicinity. The re-zoning into commercial drove up the value of his adjacent land.

A 2018 valuation by the Department of Lands and Surveys showed that the smaller private tract (1,708 donums) was worth €31m.

The larger tract (2,315 donums) was valued at €83m in 2018. In 1980 it had been worth €4m.

This second tract was transferred to the Bank of Cyprus, settling a €90m debt the developer owed the lender as part of a loan restructuring deal.

Committee chair Zacharias Koulias spoke of a “racket” that enabled a businessman to settle a €90m debt.

He also questioned the reason given for re-zoning the adjacent private lands – ostensibly to facilitate access to the general forest area.

“Then why did they not simply expropriate a road?”

Without naming names, Greens MP George Perdikis essentially identified the developer who made a killing as a result of the re-zoning decision.

He said the person in question is a known Paphos businessman who previously served as chairman of the Bank of Cyprus.

The only person fitting that description is Theodoros Aristodemou, chief executive of Aristo Developers, the island’s leading property developer.

The whole matter is the subject of an administrative probe underway by the interior ministry.

Ministry officials said the probe will be concluded on January 17. It will assign responsibilities to government officials, if any are found.

The auditor-general is advising the government that, given the original land swap itself has been revoked, the re-zoning decision for Kouklia must be invalidated too.

But should the developer’s private land now be re-zoned back to agricultural, it would impact the tract’s value, opening the government up to a lawsuit.

For this reason, the interior ministry is seeking guidance from the attorney-general on how to untangle the legal mess.

In the meantime, in 2016 the same businessman applied for plot separations on the smaller of the two tracts in order to start development.

The application to separate the plots is still pending, due to the fact that the tract borders with a protected area.

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