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Alleged corruption in Cyprus property industry

The problems associated with buying property in Cyprus have again been brought to the attention of the European Union following a question raised in the EU Parliament by Scottish MEP Ian Hudghton.

SCOTTISH MEP Ian Hudghton raised the following question in the European Parliament in July:

“A significant number of constituents have complained to the Commission and MEPs about the incidence of alleged corruption in the Cyprus property industry.

Is the Commission aware of such breaches of the law, and what action has it taken in relation to complaints about property transactions in Cyprus?”

Yesterday, in her reply to Mr Hudghton’s question EU Commission Vice President Viviane Reding wrote:

EN
E-007403/2012
Answer given by Ms Reding
on behalf of the Commission
(27.9.2012)

As regards the problems faced by a number of immovable property buyers in Cyprus who failed to receive their title deed, the Commission has already initiated measures to ensure both an effective protection of EU consumers and a correct application of EU legislation.

As an example, the Commission sent an administrative letter to the Cypriot authorities enquiring about the actions carried out at national level to address the reported problems, in particular to ensure that buyers are provided with all necessary information in order to be able to take an informed purchase decision, such as on the pre-existence of a mortgage on the property offered for sale, as required by Directive 2005/29/EC on Unfair Commercial Practices [1].

The Vice-President and Member of the Commission responsible for Justice, Fundamental rights and Citizenship also met the Cypriot Interior Minister to raise this issue.

As regards the question related to the alleged corruption in the Cypriot property industry, the Commission has not conducted any particular analysis regarding this specific matter. If the Honourable Member has specific information regarding the extent and nature of alleged corruption within this sector in Cyprus, he can provide it to the Commission. The Commission is currently working on an EU anti-corruption reporting mechanism through which all Member States’ efforts against corruption will be assessed. The first such report shall be published by the Commission in 2013, making country-specific recommendations for each Member State.

                                                  
1 OJ L 149, 11.6.2005, p. 22

Further Reading

Alleged corruption in Cyprus property industry

Readers' comments

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  • martyn says:

    Eurocratic mumbo-jumbo. Just another ‘can being kicked down the road’, methinks.

  • Richard says:

    I have to say – I’m pretty disappointed that during their term in presidency of the EU – that this hasn’t had a much more forceful presence on the discussion table.

    Initially – I was at least pleased with the Reding involvement – and I actually understood her rather bland stance as (at the time) a few other things were taking precedent.

    A year has passed though – and nothing much has moved forward. Cyprus wants an enormous bail-out. If it’s going to get one courtesy of Herr and Mrs Schmidt – then at the very least – it should be conditional on getting not just the title deeds issue cleared up – but also a full and thorough investigation of the banks, lawyers, developers and agents all “having a good drink” (as someone we know only too well described it) during the property selling bonanza of 2002-2008. Once people have had chance to rectify the hideous damage inflicted on their lives – and get compensation – then and only then – should the money be released to Cyprus (and be STRICTLY policed).

    One notable missing force in the picture – The British Government!

    How come it’s only Scottish MEPs pushing this? Top marks to them – but why isn’t the British Government as a whole SERVING their people and all over this like a rash defending their citizens rights and interests? Half of them aren’t backwards at coming forwards when it comes to grand-standing gestrure politics defending ‘this and that’ all over the world as if they are still presiding over some vast empire!

    Is it perchance – something to do with not wanting to upset Russia (and the ensuing possible disruption to energy supplies)? Or maybe putting a few useful oligarch’s noses out of joint?

  • Maxwell Hannah says:

    Seems to be that the EU is probably the same as Cyprus and someone should investigate them. Perhaps

  • Stuart says:

    Unfortunately, all this amounts to is Viviane Reding sending a delegation to Cyprus to ask whether there is any corruption going on, only to be told, as andyp rightly says, “Oh no, you can’t be serious. We always conduct our business in Cyprus this way!”

    Surely Ms Reding has already heard of the O’Dwyer saga and the Alpha Panareti fiasco even if Ian Hudghton has not quoted them specifically. How many cases does she need before she is finally convinced that there is a problem?

    Regrettably, it appears that the EU is largely impotent when it comes to taking assertive action against those responsible for the misery being experienced by victims of the Cyprus government’s failure to implement explicit EU legislation.

  • Elizabeth CPAG says:

    This report makes interest reading – European Commission Special Eurobarometer report on Corruption

    Some snippets from the report :

    Corruption continues to be one of the biggest challenges facing Europe.

    The economic costs incurred by corruption in the EU are estimated to amount to around EUR 120 billion per year. The EU is strongly committed to fighting corruption.

    Almost half of all Europeans (47%) think that the level of corruption in their country has increased over the past three years.

    Countries where respondents hold particularly strong perceptions that levels have increased are Slovenia
    (74%), Cyprus (73%), the Czech Republic (70%), Portugal (68%) and Romania (67%).

    73% of all respondents from all states agree that there is corruption within EU Institutions.

    Two in three Europeans (67%) believe that corruption is part of their country’s business culture. This view is strongest in Greece, Cyprus, Italy and the Czech Republic (all 88%+). (Cyprus top scored with 90%)

    97% of Cypriot respondents agree that ‘Corruption is a major problem in our country’ – only beaten by Greece at 98%.

    91% of Cypriot respondents agree that there is corruption in our national institutions. Yet jointly top scored with Greece in agreeing (81%) that national government is responsible for preventing and fighting corruption!

    Cyprus top scored with 87% agreeing that corruption is unavoidable and that it has always existed in our country.

    Also top scored in agreeing about being well informed about corruption in our country (69%) and in EU institutions (28%). Additionally, in corruption in the police with 75% agreeing.

    Respondents in Cyprus are most likely to cite appointments in public administration not being based on merit as a reason for corruption (56%), and are much more likely than any other EU respondents to mention this reason.

  • Fighting For Justice says:

    I’m sure a study of the Alpha Panareti fiasco will show a level that would shock many.

  • Gavin Jones says:

    Unless I’ve misread this article, as per usual it would appear that legal-cum-diplomatic speak is being employed which appears to let everyone, and I mean Cyprus and the EU, off the hook for the time being. From where I’m standing, the EU doesn’t seem to want to get its hands dirty and mix it with a member state which is condoning sharp practices within its domestic construction industry.

    So an “administrative letter has been sent to he Cypriot authorities enquiring about the actions…to address the reported problems…” And the Cypriot Interior Minister has been seen by Ms. Reding. So what is the reply from the “Cypriot authorities” about the contents of the EU’s letter and assuming they haven’t replied, how long to they have to initiate a reply? A month, 6 months, a year or two? And what exactly did the Interior Minister have to say to Ms. Reding and vice versa? I can guess.

    And then we have the “alleged corruption”. This is more splitting of hairs and dancing round the problem. The Commission can call it corruption, wrongdoing, fraud, collusion between developers, lawyers and banks or whatever. It all boils down to the same thing: breaking of European law to which Cyprus is subject.

    The bottom line is this. What’s the EU going to do to force the Cypriot government to issue title deeds to those who’ve been cheated out of them and what’s it going to do to ensure that all future buyers of real estate receive them at point of sale? Anything else is pure flimflam.

  • Andrew says:

    Maybe the Commission should conduct an analysis regarding corruption. I am sure that there are plenty of well documented cases to draw upon.

    Yet again it appears that only new buyers will be afforded some sort of protection. What will happen to the thousands who are already trapped by developer mortgages which their lawyers failed to disclose?

  • andyp says:

    And what was the Cypriot Interior Minister’s reply?

    My friends you can’t be serious. Surely you are not listening to moaning Brits, Germans, Danes and Russians to name but a few.

  • marktyler says:

    The initiatives referred to, that the EU has taken on the Cypriot authorities failing to ensure issuance of title deeds, are encouraging. The rather “heavy” bureaucratic language which delivers the message (and by implication which also goes to the root of law and EU bureaucracy) is Not encouraging. Perhaps the EU would serve better the general population of the EU if it would adopt a “results oriented” approach to disputes. It should find people able to cut through the “lawyer-speak”, and deliver natural, speedy, efficient justice to the ordinary people, who are wronged by administrations running member states. By doing so, the EU leadership bodies would add substantial weight to their credibility And support from the member peoples. At present, People, including me, are downright skeptical of the EU’s future. Wake up EU! Look at how disgraceful are the behaviors of the Cypriot Leadership and Establishment classes.

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