Paphos police on Monday were investigating the Kissonerga community council, in Paphos, in connection with claims of misappropriation of funds, reports said.
On the instruction of the attorney-general, officers begun investigating transactions going back several years.
Community leader Giorgos Stylianou said the claims about embezzlement and mismanagement concerned the previous council.
Stylianou said both the auditor-general and the attorney-general deemed that a police investigation was required.
However, he said, no statements have been taken yet from members of the council.
According to an unnamed police source quoted by the Cyprus News Agency, Paphos police had begun looking into the council’s dealings that could involve possible misappropriation of public funds and theft of money belonging to taxpayers.
The reports relate to the acquisition of the museum building at a price that was double the estimated value — €238,000 on top of the highest evaluation – the use of loans for other projects than those initially claimed, and presenting false data to secure bank loans.
Stylianou said the money used for a museum were originally borrowed for a cemetery.
The matter was reported by Stylianou to the auditor-general in 2012. The community leader had also supplied the auditor with various documents he had found.
Following an investigation, the auditor suggested referring the case to the attorney-general on September 1, 2015.
Some three months later, the attorney-general wrote to the interior ministry to instruct police to investigate.
In January 15 of this year, elected members of the council raised the matter anew with a letter to the auditor-general, after four months had gone by and no action had been taken.
Stylianou said the interior ministry had assured them that it had instructed the district administration on May 18, 2016, to notify the police.
In August, Stylianou said, council members urged him to contact the district officer about the case.