The House audit committee on Thursday called for the amount of money paid in rent by a law firm in Aglandjia for a property it leases from the state scholarships foundation to be re-evaluated.
At present, the law firm pays €500 per month for the property’s lease, but a private estimate placed its rental value at €2,150 per month – four times the currently paid rate.
In specifics, the estimate, which was requested by the state scholarships foundation’s board, calculated that monthly rent for the ground floor would be worth €945 per month at the current market rate, while the first floor would be worth €1,443.
The property’s total resale value was estimated at €615,000.
The state scholarships foundation had requested that the matter be mediated by the Scientific and Technical Chamber (Etek), though the finance ministry objected to the fact that Etek had chosen to take into account the stated cost of renovations carried out on the property by the law firm.
The renovations had been carried out at the law firm’s own expense with the approval of a previous state scholarships foundation board.
Current board chairman Giorgos Skalias said the disagreement over whether or not to take into account stated costs for the renovation could see negotiations reach and impasse and, in such a situation, end with the two sides facing off in court.
“We are one step away from a complete car crash and a trip to court with all the positive or negative consequences thereof,” he told the committee.
The dispute regarding the renovations centres on the stated costs, with the law firm requesting that the costs be deducted from their rent.
They say the renovations cost almost €300,000, though the tax department could only find receipts for €145,000 of expenditure.
Tax department representative George Georgiou had told a previous House audit committee meeting that when asked about the difference in the combined value of the receipts given to them and the stated cost of the renovations, a law firm representative had said the works “had been carried out by his relatives”, and that it was for this reason that there were no receipts.
With the difference of opinion borne in mind, the state scholarships foundation’s board resolved that it would invite Etek to appoint an individual to view the property and estimate its value as well as the value of the renovations carried out.
However, Skalias said that even with Etek’s intervention, there has been “no convergence” between the state scholarships foundation and the law firm, and the finance ministry’s objection to the taking into account of the stated cost of renovations has remained, with the ministry only able to accept what is provided with receipts to the tax department.
Later on during the meeting, a law firm representative said that if they receive a payout for the cost of the renovations, they will donate it all to charity. He also insisted that there is “every good will for cooperation” on the part of the firm.
With this in mind, committee chairman and Diko MP Zacharias Koulias said there is “still room to find a compromise” through an independent evaluation.
He also called on the finance ministry to show flexibility in its position regarding the stated cost of the renovations.
“Do not come expressing only disagreements, but come to propose solutions,” he said.
He added that it is “crucial” to determine a “fair and objective rent” for the property, and that the issue will remain on his committee’s agenda when it returns from its summer recess in September and until a final solution is found.
Additionally, he said the current impasse is “a stain” for people who wish to donate to the state scholarships foundation.
Disy MP Rita Superman was keen to stress that the purpose of the property being donated to the state scholarships foundation was that the revenue generated from it be used to grant scholarships for students in need.
She said the current of affairs is “onerous” for the state scholarships foundation and “consequently negatively impacts the granting of scholarships, while serving the interests of the law firm in question”.
She was also scathing of the idea that the stated cost of renovations, rather than that provable in receipts, be taken into account.
“It is unthinkable to ask Etek or government agencies to estimate the cost of any work for which there is no proof that it was done, and no proof of legality,” she said.
