Phedonos under scrutiny over alleged embezzlement and illegal appointments

Attorney-general George Savvides is reportedly examining a police file concerning suspended Paphos mayor, Phedonas Phedonos, after a four-year investigation into allegations of embezzlement, unlawful recruitment practices, and illegal handling of Turkish Cypriot property.

The inquiry was triggered by a complaint filed by a municipal employee who was dismissed shortly after alerting the authorities.

The investigation began in April 2022 and focuses on four main allegations involving Phedonos and a senior official of the Paphos municipality.

These relate to the alleged diversion of €1.5 million from the municipality’s employees’ pension fund, the appointment of at least five staff members outside approved procedures, the unlawful subletting of Turkish Cypriot property for commercial use and the improper use of an official vehicle with municipal employees paid overtime to act as drivers.

Police inquiries were supported by parallel examinations carried out by the audit office.

Auditors conducted an on-site inspection at the municipality in May 2023 and produced findings that were later incorporated into the broader criminal investigation.

Investigators gathered documents, internal correspondence and witness statements, which, according to police sources, pointed to breaches of established procedures and regulatory frameworks governing local authorities.

One aspect of the case concerns the use of the mayor’s official vehicle.

According to material obtained during the investigation, the vehicle was used without the required administrative records.

An internal report states that no vehicle journey log was kept, and no monthly cost statements were maintained, contrary to regulation.

The same report records that two municipal employees were assigned to act as drivers for the mayor during official trips, including journeys outside the Paphos district.

When these trips extended beyond normal working hours, the employees were paid overtime from public funds.

Investigators considered whether the use of the vehicle and the deployment of staff complied with public service rules and municipal regulations.

The findings were forwarded to the police as part of a broader assessment of administrative conduct within the municipality during the period under review.

Another facet of the investigation relates to recruitment practices.

The complaint alleged that at least five individuals were hired into municipal positions without the necessary approvals.

Two of the posts were linked to smart city projects and carried salaries at senior levels, up to the high-ranking A13 scale, that being between approximately €53,258 and €77,657.

Police and audit findings indicate that in these cases, employment offers were made to named individuals before approval was obtained from the interior and finance ministries, as required by law.

Investigators examined whether the appointments bypassed competitive processes and whether statutory safeguards intended to ensure merit-based recruitment were observed.

The findings formed part of the file submitted to the attorney-general and are expected to be central to any assessment of potential criminal or disciplinary liability.

The most serious allegation involves the alleged misappropriation of €1.5 million from the municipal employees’ pension fund.

According to the complaint, the funds were used by the municipality to purchase a plot of land intended for the construction of student accommodation.

Trade unions raised concerns over the transaction in a letter to the labour ministry dated January 31, 2022, arguing that the use of pension fund assets in this way breached the law.

Investigators reviewed documentation relating to the transfer of funds and the acquisition of the land, and whether the transaction served the interests of fund members.

A further element of the probe concerns Turkish Cypriot residential property under the management of the municipality, specifically in the Mouttallos area.

Police and audit inquiries concluded that a property was sublet to a private individual for the operation of a café, despite the absence of legal authority to do so.

Investigators also established that the business did not hold the necessary planning or operating permits.

Documents obtained during the investigation include written legal advice stating that existing legislation does not allow for the subletting of Turkish Cypriot residential properties or for profit to be derived from them.

The legal position emphasises that such properties are managed to safeguard assets and to meet the needs of refugees.

Investigators are treating the subletting as a potential breach of both property management laws and planning regulations.

The criminal investigation was initially handled by Paphos CID and later transferred to CID headquarters at Nicosia.

Over the course of 2024 and 2025, investigators collected additional material from various public services.

The completed file, including recommendations from the lead investigator, was forwarded to the attorney-general on January 9.

The complaint that triggered the investigation was filed in spring 2022 by a municipal employee.

On May 17 of that year, the employee received a dismissal letter.

In correspondence sent to police during the early stages of the inquiry, the municipality’s legal adviser argued that the complaint was motivated by personal grievances.

The letter claimed that the employee had been assessed as inadequate in his duties and described the allegations as “unfounded and unsubstantiated”.

Phedonos has rejected all accusations of wrongdoing.

He has consistently argued that the allegations are part of a coordinated character assassination and to undermine his public standing.

He has denied any misuse of public funds or abuse of authority and has said he will address all issues through legal channels.

The mayor is currently on mandatory leave under the municipalities law, following separate criminal investigations that are not connected to the financial and administrative allegations.

While suspended, he remains entitled to one third of his salary.

The leave will remain in effect until the relevant investigations are concluded or a court decision is reached.

The attorney-general has not indicated whether criminal charges will be filed.