Auditor releases annual litany of wrongdoing

Lack of accountability, fostered by “a culture of impunity and cover-up” that has been ensconced over the course of several years, remains a principal problem in the state’s dealings with the public, auditor-general Odysseas Michaelides notes in his preamble to his annual report for 2015.

In the report, submitted to President Nicos Anastasiades on Tuesday, Michaelides said also that increased public awareness, particularly in the wake of the 2013 financial meltdown, as well as a coordinated effort between audit authorities and law enforcement, “have struck the first blows to the graft and corruption that have taken root in our country”.

In receiving the report, the president urged Michaelides to press on with his work.

“At times there may be complaints about leaks when an offence is being investigated. But do not hesitate to make public your findings, provided that confidentiality has been assured,” Anastasiades said.

Among others, the auditor-general’s report zeroed in on the granting of a town planning permit by way of derogation and of a higher building ratio for a mall.

Although the mall is not named in the report, it’s understood it references the Mall of Cyprus in Strovolos, Nicosia.

“The findings cast serious shadows over the handling of private interests by the government, as it appears that private parties gained significant benefits to the detriment of taxpayers,” the report notes.

In December 2013 the Shacolas Group applied for the derogation in order to make expansions to the mall. The application was initially rejected, but the cabinet sent it back for re-evaluation.

In June 2016, the body examining derogation applications revised its prior decision, granting the derogation. But the body also recommended that the Shacolas Group pay compensation to Strovolos municipality.

As it turned out, the Shacolas Group paid some €4.5 million less in compensation than it should have. The auditor-general notes that, beyond preferential treatment of a private concern at the taxpayers’ expense, this case may involve a criminal offence.

Moreover, the derogation was granted just a month before the Shacolas Group sold the mall to the South Africa based Atterbury Group.

Elsewhere, the report notes that cumulative unpaid taxes to the state, including interest, came to a whopping €1.29 billion by the end of 2015. Of which €548 million, or 42 per cent, is considered uncollectible.

Tax payments in arrears amounted to €467 million.

A major scandal highlighted relates to the subleasing by companies of land plots in industrial zones at rates that are astronomically higher than the rates paid by the same companies to the state.

The state leases land to companies at low rates to generate an income. Often, however, the companies then sublease the space to government departments, charging them several times the government rate.

In one case, company ‘A’ was subleasing a land plot and a warehouse to the Pharmaceutical Services. From April 1, 2004, the date of the sublease, to June 30, 2016, the Pharmaceutical Services paid the company around €1.7 million. But during the same period, the company paid the state a mere €80,000 for the lease.

Moreover, a number individuals and companies who rent out real estate to the government have been delinquent on their taxes.

A case in point was a company which did not file an income tax statement from 2012 to 2014, while during the same period accruing revenues of €622,000 from renting buildings to the state.

The Audit Office recommends a full investigation into all individuals and companies who earn money by renting space to the state.

On a related theme, unexecuted police warrants continued to build up. Up until March of this year, the total value of unexecuted warrants was at least €246 million, of which €21.7 million concerned traffic violations.

In 2015, an additional 72,000 warrants were issued concerning criminal cases. The police executed just 25,873 warrants, worth €58.5 million. But only 28 per cent of the warrants and fines were paid.

Concerning the landfill at Marathounda, Paphos, the Audit Office established that as much as 15 to 20 per cent of the charges billed to local authorities did not correspond to actual amounts of waste processed at the site.

The site was operated by Helector, the company currently embroiled in a criminal case for overcharging Paphos taxpayers.

OCCUPIED MUNICIPALITIES

Insufficient checks are carried out on the actual expenditures of occupied municipalities, the auditor-general has found.

The municipalities, which get an annual grant from the state for their operating budget, receive the money in a designated bank account.

But the Audit Office, based on data furnished by the finance ministry, discovered that some occupied municipalities maintain bank accounts other than those designated.

In one case, one such non-designated bank account was found to have a balance of some €800,000.

There are nine occupied municipalities.

The Audit Office recommends that the government carry out timely and precise checks of the occupied municipalities’ spending, and that all bank accounts are looked into before topping up the municipalities’ accounts each year.

SICK JUDGES

A number of judges do not clock in their sick or rest leave, cheating the state out of significant amounts of money.

The number of leave days to which judges are entitled, and not used, are counted towards their pension payout.

But it is not possible to verify the number of days taken for sick or rest leave, as many judges do not bother to record them.

UNQUALIFIED NURSE

A warrant officer has been practising nursing since 1990 despite lacking the necessary qualifications.

According to the auditor-general’s latest report, a National Guard warrant officer has since 1990 been stationed at a military hospital, where he carries out both administrative and nursing duties.

However, the same officer does not possess a degree in nursing and is not listed on the nurses’ register.

OVERSEAS ALLOWANCES

The auditor-general has questioned the payment of the General Overseas Allowance (GOA) to ambassadors and civil servants serving at diplomatic missions.

In July of this year, the government revised the GOA, increasing the allowance at 46 diplomatic missions but slashing it only at six.

The Audit Office notes that under the circumstances, it is excessive to pay the heads of missions a GOA – even if this has been cut by 15 per cent since 2013 – when the same individuals receive a host of other allowances covering rent, travel, a housemaid, phone bills and school fees for their children.

In 2016, the Cypriot ambassador to Qatar benefited from the largest increase in GOA, which went up from €36,116 to €63,049.

The second-largest hike in GOA went to the ambassador in Canada (€19,991 extra), followed by the High Commissioner to Australia whose allowance increased by €19,347.

Overall, in 2015 the state spent some €5.8 million on GOAs. Civil servants posted to certain embassies also receive a Difficult Post Allowance.