Secondary employment of a civil servant is illegal

It may lead to disciplinary and/or criminal prosecution

Secret secondary employment of a civil servant, under a spouse’s name instead of their own, happens in Cyprus. It is a sign of illegality and corruption, with many collateral implications. Either the civil servant is dedicated and carries out their duties unswervingly for the public interest and good, as they should, or they take advantage of the position entrusted to them by the state and commit illegal acts.

This is something that can easily be established, as long as the civil servant’s superiors, colleagues or even citizens do not cover for them or tolerate it, but denounce them, so this illegality disappears from the public service.

In a case concerning the above, the court of appeal requested that a case file be sent by the registrar to the attorney-general to examine whether a disciplinary and/or criminal offence was committed by a civil servant running a business in the name of his wife.

Facts

The court of appeal in the decision it issued in C.A.332/18, dated July 4, dealt with whether the decision of the first instance decision to award damages to a shop tenant from the owner was correct. In particular, the tenant complained that there was a breach of an implied term of the rental agreement by the owner regarding the peaceful enjoyment and use of the store as a fast-food restaurant and that he lost profits from sales.

The trial court held that although the tenant registered the business in his wife’s name for tax purposes before the complaint, he was nevertheless the one operating the business and awarded him damages based on the testimony of his accountant.

The latter stated in his report that the tenant was the owner, manager and beneficiary of the business that operated as a fast- food restaurant in the shop. The business was only written in his wife’s name for tax purposes. His wife and their children always helped in the running of the business to some extent.

The landlord claimed that the tenant did not have a right of action because he had transferred the business earlier and did not suffer any damages himself.

Finally, the case ended up in the court of appeal following an appeal by the owner of the shop.

Decision

The court of appeal ruled that the decision of the court of first instance was wrong, saying that it was not a “typical” transfer of the business to the wife, simply for tax reasons at the suggestion of the accountant.

Based on article 6 of the VAT Law of 2000 to 2010, a taxable person is any person who is registered or required to be registered under the Law. The court said it is clear under the legislation that there is no registration in the name of a business owner for VAT purposes while there is another person for other purposes, as was the finding of the court of first instance.

It was wrongly held that the tenant was the owner of the fast-food business and suffered damage and therefore the appeals court set aside the trial court’s decision.

Referring to the minutes of the trial, the court of appeal indicated that an issue of illegality was raised by the business activity of the tenant, who, when asked if he was a civil servant, answered positively, saying “and what does it matter, I am an employee of public works”.

The court said it could not remain indifferent, since the above testimony regarding the tenant’s business activity, which was not consistent with his public servant status, had come to its attention. A question was also raised regarding the “typical” transfer of the business to the wife and the statements made in relation to it. It judged that these are statements that at first sight create the impression of misleading the authorities, regarding the real owner of the fast-food restaurant.

In view of the above, the court instructed the registrar to send the minutes of the first instance proceedings, as well as copies of the written statements of the tenant and the accountant and the evidence they submitted, to the attorney-general for the purposes of investigating the possible a disciplinary and/or criminal offence by the tenant and others involved with the registration of the business in the name of the tenant’s wife.

George Coucounis is a lawyer specialising in immovable property and the founder of George Coucounis LLC, based in Larnaca, coucounis.law@cytanet.com.cy, Tel: 24 818288