Nicosia council has entered into a legal battle with Mehmet Cangar, one of the most powerful businessmen in the TRNC.
The Cangar empire includes the franchises for selling BMW and Ford vehicles in North Cyprus.
He has now however, fallen out with Nicosia council mayor Kadri Fellahoglu, in a rapidly escalating legal battle.
Last week, Nicosia council went to court to obtain an injunction to stop repayments on a loan from Cangar Finance.
The loan was taken out in August 2010 to help shore up the financial quagmire created by the previous mayor and the UBP government. It was intended to be repaid in 60 monthly instalments and the Council of Ministers of the UBP government, agreed on a mechanism for doing so. The state portion of grants to Nicosia council was withheld and instead paid to Cangar Finance.
However, Nicosia council is again, in financial difficulties and council salaries for August have not been paid. Subsequently, the council has gone to court to state that withholding of state grants is unconstitutional and causing the council harm.
Mr Cangar has responded by saying that the council owes his company some TL200 million in debts. These were taken out based on a clear commitment by the council and government. Until now, the loan repayments have been met but that this legal move was a surprise to him as no discussions had been entered into.
Mr Cangar said that he had, in the past, done what he could for the council, including letting slip service costs for cars provided to the council. He said that he was shocked by the latest developments and was considering counter suing the council for defamation of his good name.