Nicosia Council were in in court again, yesterday, having applied for a court decision on a dispute between themselves and Cangar Finance.
Under the previous UBP government, the council had borrowed £12 million from Cangar Finance to shore up its crumbling financial position.
The UBP government had agreed, in return, to pay the state share of council contributions direct to Cangar Finance rather than Nicosia Council.
Now the council is seeking an injunction to cancel these payments, saying that they are unconstitutional.
Kadri Fellahoglu, the mayor of Nicosia, (pictured above) in his opening statement, said that the previous mayor had decided to borrow the money without the approval of Nicosia council and had done the deal directly with the UBP government, of which he was a member.
Mr Fellahoglu stated that this transaction was illegal because it had not been approved and also because the council is only allowed to borrowed from banks. He said that the withholding of central government grants was pushing his council towards bankruptcy.
Nicosia council had been banned from making payments by cheque because a number of them had bounced. Furthermore, council employees had not been paid for two months now and the unions had warned him that they would be going on strike in October.
The court hearing continues on September 20th.