Over the past 12 years taxpayers paid €1.7 million in rent for storage space on state land in Nicosia leased to a private company for €6,660 per year, the House watchdog committee heard on Thursday.
The case concerns land in the Strovolos industrial estate leased to a company by the energy ministry for €6,660 per year.
After building a warehouse on the land, the company then sublet the space to the state pharmaceutical services for €135,000 per year, MPs heard.
Auditor-general Odysseas Michaelides told the committee that “from April 1, 2004, when the space was sublet to the pharmaceutical services, until June 30, 2016, they paid around €1.7m in rent to the company” against some €80,000 paid by the business to the energy ministry.
The land was initially leased to the company from May 1979 to April 2012, and was released with the approval of then energy minister Neoclis Sylikiotis for an additional 33 years – from May 2012 to April 2045.
Up until April 2012, when the first lease expired, taxpayers paid the company some €1.2m in rent, the auditor said, adding that it was an agreement that only benefitted the business.
Michaelides said the huge difference in rent was not exclusively due to the warehouse but apparently to the ministry’s failure to impose rent at market prices and the excessively high rent agreed between the pharmaceutical services and the company.
Committee chairman, Diko MP Zaharias Koulias said the matter will be investigated to the last detail to determine whether there was conflict of interest.
Koulias said the company had not even secured a building permit for the warehouse, wondering why people responsible for medicines acted in such a way for such a serious issue.
The Diko MP said another matter emerged during the discussion, involving the current head of the pharmaceutical services Louis Panayi.
It concerns the acquisition of a shop in Aglantzia, Nicosia, by Panayi or his mother in law, which later housed a section of the pharmaceutical services.
The shop in question is next to other buildings that already housed the pharmaceutical services.
“The auditor will examine whether there is wrongdoing,” Koulias said. “I don’t know if it’s wrong or not but it will be investigated to the end whether there is conflict of interest.”
Edek MP Marinos Sizopoulos who had tabled the issue said it was something that had been happening in Cyprus for years.
“Through this irregularity, many people have profited on the back of taxpayers, possibly with the support or silence or help, in some cases, of state officials.”
Green Party MP Giorgos Perdikis said similar scandalous arrangements could be found in other industrial areas where ‘it is a mess’.
“The state is intentionally or unintentionally deceived and there is misappropriation of public wealth in industrial areas,” Perdikis said.
