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Wednesday, June 7, 2023

Audit Office report reveals scandalous mismanagement of T/C properties

An Audit Office investigation into the management of Turkish Cypriot properties has revealed several alarming findings.

Out of a total of 8,800 properties examined, a significant number of rental contracts have raised concerns, the Audit Office noted in a report.

Specifically, the investigation found that only 65% of these properties are being used by 1974 refugees.

Among others, the report notes that 25 properties are rented for approximately €420, while the annual rent should have been between €40,000 and €50,000. This results in lost revenue for the state and raises questions about the fairness and transparency of the leasing process.

Another case in Paphos involves seaside properties valued at €1 million, which are being rented out for €500 per month. Based on their value, the rent should have been around €40,000, according to the findings of the Auditor General.

Overall, the investigation has confirmed the chaotic situation that has persisted for decades, despite efforts to address it through new legislation. However, there is a prevailing sense that those who have benefited from these properties continue to do so.

The report also mentions that a lease contract for Turkish Cypriot properties within walled Nicosia, consisting of 26 plots, was granted to a company whose owners are not refugees. This company appears to sublease the properties to third parties.

The leased properties have a total area of 3,152 square meters and are valued at approximately €1.4 million, based on an official assessment.

Regarding the outstanding debts owed to the state for non-payment of rents, the amount stood at €8,304,445 in 2021 and was reduced to €7,680,955 last year.

It is worth noting that out of the 8,880 assets, 5,746 (65%) were allocated to refugees, 536 (6%) to non-refugees, 2,521 (28%) to non-displaced local authorities, and 77 properties (1%) to displaced local authorities.

Nikos Kettiros, president of the House Committee on Refugees, accused a former Minister of secretly granting Turkish Cypriot properties to the refugee organisation of which he is a member, just before leaving office. This occurred despite the existence of numerous organisations that would have been interested in using these properties.

The General Auditor also presented the following findings:

  • Out of the total 538 new leases of Turkish Cypriot properties as professional assets in 2021, only nine were published as available. This practice creates conditions for “shadow” transactions and is not in line with the spirit or letter of the law, the Auditor General noted.
  • The highest percentage of Turkish Cypriot commercial properties leased to non-refugees and local authorities is observed in the Paphos District, amounting to 55%.
  • Cases were identified where assets were not leased based on market rent, contrary to the provisions of the relevant regulations. In some instances, the rent had not been revised for more than 25 years.
  • The market rent estimates were not supported by an appraisal report.
  • In some cases, commercial assets are being used without valid lease agreements, therefore those using them do not pay rent.

Concluding, the Auditor General noted that the Turkish Cypriot Properties Management Service does not appear to manage the assets in the most economical, efficient, and effective manner.

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