The problem faced by the Audit Service due to the "double hat" of the Attorney General of the Republic, in the sense that he is the legal adviser to the state but also has the power to prosecute, was raised by the Auditor General Odysseas Michaelides, referring to a "hostile environment" from the government.
Briefing the parliamentary finance committee on the Audit Service's budget for 2023, Michaelides said he would raise the issue of the dual status of the Attorney General and the problems raised with the Council of Europe's Anti-Corruption Commission (GRECO) during the 5th audit of Cyprus on December 14, during which issues relating to the Audit Service will also be raised.
He also reiterated the need to ensure the independence of the Audit Office on the model of the solution found regarding the budget of the House of Representatives.
Speaking before the committee, Mr. Michaelides recalled that the issue of the financial independence of the Audit Office had been raised during Cyprus' accession in 2003, but was forgotten after Cyprus' accession in 2004, and was also raised in Cyprus' memorandum with its creditors during the 2013 crisis.
"We met all the conditions of the memorandum except this one", argued Michaelides who, addressing the committee members, said that the Parliament "has the mola" meaning the solution found regarding the independence of the Parliament's budget.
"We are not asking for the Parliament to approve it on its own, but for the Parliament to approve it. What we are saying is that it is not compatible with our independence issues to go to the government to approve the budget," he said."
In the House of Assembly, the funds for defunding funds for the purchase of services from El. Service
In addition, Michaelides said that Parliament is right to freeze funds in terms of purchasing services from the government, to note, however, that in this context, funds from the Audit Service for purchasing services are also frozen, resulting in the Service requesting the Ministry of Finance to send a letter to the Finance Committee for their release.
"Request the Audit Service to ask Parliament directly for release," he said, clarifying that "we are subject to the control of Parliament, we want the control of Parliament."
However, Michaelides thanked the Finance Minister for approving additional positions for the Service and made specific reference to IT audit positions.
It all comes down to "a person with two hats."
Michaelides referred to a problem faced by the Audit Service due to the status of the Attorney General of the Republic as the legal advisor of the state and as the person with the power to prosecute. Auditor General has access to all information, there is the framework law (the Fiscal Responsibility Act) and there is the Audit Service Act "all of this comes down to one person with two hats in the Attorney General," he said.
He referred to the instructions given by the Attorney General, as legal adviser to the state, to officials not to give evidence to the Audit Service, citing the Cyprus Investment Programme (CIP) or the Akamas project as examples, adding that when the Service proceeds with a complaint and then some evidence is given, the Attorney General decides that these persons should not be prosecuted.
He said the Service's access is only "formally" guaranteed, as "ultimately everything is judged by one person".
Saying that he will raise the issue at the 5th audit by the GRECO Commission, Michaelides added that "we believe that the way our Service operates is affected in this way and a solution to this issue must be found."
The "hostile environment"
In the note tabled in Parliament, the Audit Service is said to be working in a "hostile environment", a reference with which MPs, especially from the Democratic Rally, disagreed.
Both speaking before the committee and in a statement after the debate, Michaelides referred to the government's reactions after the special audit for the CCP was issued in August 2022. The reaction was completely similar to the one in 2020 and our report was described as inadequate, inappropriate and so on, he said, adding that it was attributed to him "that I was acting with political motives."
"And I explained that this obviously indicates a hostile environment for our service," he said."
Michaelides recommended to the committee members that they re-cross the funds related to the purchase of buildings from the state, as well as funds for advertising on TV channels.
He said, "this is a very serious issue that should be subject to parliamentary scrutiny, as should our recommendation to cross funds for advertising." He noted that the agency's recommendation is that as the government draws up a three-year plan for advertising funds, it can vary the amount but cannot change the proportion to each channel. "Because that may mean that it can put pressure on a channel to take a favourable line to the government and that is a blow to democracy," he said.
To the Anti-Corruption Authority the naturalisation case mentioned in "State Mafia"
Responding to questions from MPs, the Auditor General referred to the CCP and a specific naturalisation case mentioned in Makarios Drushiotis' book "State Mafia", saying that this person was naturalised under the provision for collective investment. He said that today the Service has received a reply from the Ministry of Interior that the specific file has been identified, adding that when it is examined, the Anti-Corruption Authority will be informed.
DISY MP Onoufrios Koulla praised the excellent work done by the Audit Service, saying that "for the first time since 1960, a rigorous audit is being carried out and the Audit Service has been expanded." He expressed reservations about the figures on the perception of corruption, saying that the perception in the world in Cyprus is due to the tighter controls that are being carried out and the increased convictions.
DISY MP Savia Orphanidou disagreed with the reference to the "hostile environment". "You can disagree, but I don't think there is a hostile environment, it is not right to write such things," she said.
AKEL MP Andreas Kavkalias adopted the hostile environment, saying that "the government tried to fabricate" the findings of the Audit Service regarding the KEP. He also underlined the benefits for society of the work done by the Audit Service in recent years.
Moreover, DIKO MP and chairman of the committee, Chrisis Pantelidis, congratulated the Audit Service for its work, saying the need for control, transparency and catharsis, where needed, is imperative. Responding to Koullas that it was the first time that such strict controls were carried out, Pantelidis said, among other things, that it was the first time that we had a naturalisation plan, that based on the fact-finding committee, more illegal than legal naturalisations were given, the first time that Cyprus was included in the reports of INTOXAI, while "for the first time we had the President of the Republic and the Attorney General threatening the Auditor General that they would take him to the Supreme Court".
And EPP MP Elias Mirianthous congratulated the Audit Service for its work, while raising the issue of assigning the audit of small community councils to private auditors, saying it creates problems.
DPA MP Alekos Tryfonidis Alekos said that the recognition of the work of the Audit Service is a given and added that the Service should be supported to carry out proper audits for the benefit of citizens.
According to a note submitted to the Committee, the Service's budget for 2023 is for a total expenditure of about €8 million, compared to about €7.3 million in the previous year. in 2022, an increase of 10.2%.
The largest share of the Agency's expenditure (around 92%) relates to staff costs which were budgeted at around €7.3 million (€6.7 million in 2022).
It is also reported that Cyprus, for the first time since joining the EU in 2004, will host in 2024 the Contact Committee composed of the Heads of the EU and European Court of Auditors.
Source: CNA
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