Issue on the decision of the Board of Directors of the Housing Finance Corporation (HFC) to select an individual for the position of Director General of the Corporation who "is a senior official of the Ministry of Finance and was related to the management of the Co-operativism issue", was raised by Auditor General Odysseas Michaelides before the Parliamentary Audit Committee.
At the same time, it was reported that since July 1, 2021, when the term of the previous Chairman of the Board has expired, no new Chairman has been appointed and the Vice-Chairman of the Organization is acting as Chairman, while since January 22, 2022, the Board cannot meet due to the fact that it does not have the necessary number of members (6 instead of 9).
In particular, the Committee, which on Thursday examined the special reports of the Auditor General for the OCHA for the years 2019-20, was told that for this person there is an ongoing process by the Central Bank of Cyprus (CBC) in relation to the assessment of his fitness and propriety for the position (fit and proper), while Mr. Michaelides said that the Audit Office (EA) believes that "there is an issue about the OCHS Board making these selections and it is not a matter of what the CBC will say".
"When we see that the Board is acting ignoring the previous actions and life of a person it chooses to put at the most crucial point of such a large organisation, yes an issue is raised by the Auditor General and for this Board," he stressed.
More specifically, Michaelides said that "the Board is under scrutiny for the decisions it takes on such important matters" and noted that EY had a complaint before it about the person selected for the position of Director General of the Agency.
He stated that in February 2022, EY forwarded to the CBI, as part of the complaint, the evidence from two sources, adding that "one source was the finding of the Investigation Committee on Co-operativism in which specific references to this person were recorded."
Stating that in August 2018 he was invited and attended the Investigation Committee on Co-operativism, Mr. Michaelides read out evidence from his testimony before the Investigative Committee concerning the specific individual in relation to "ecause of the action of the specific individual during the examination of various issues related to Co-operatism" and which "related to the issue of the control of Co-operatism by EY, the issue of the merger of the 18 Co-operative Credit Institutions (CCIs) into one entity and the notorious issue of the granting of free shares"..
Michaelides said that there are 60 references to this individual in the Arrestis conclusion on Co-operativism, most of which are negative.
He said that "it does not mean that everyone who has not been convicted of an offence is suitable" and added that "it is clear that the appointing body has an obligation to pass on any information concerning this individual".
"If in the transmission of the particular person's details to the CBI there was a failure to transmit the references that are at least in the Aresti finding, which is a public document, the minimum that the directive requires in terms of the instructions that the appointing body must send to the CBI to have the full picture when assessing that person was not complied with," he added.
Furthermore, Michaelides referred to the existence of a problem for the Board to function due to a problem with its composition, noting that as of January 22, 2022, the Board is not able to meet due to a smaller number of members.
Director General of the Ministry of Finance George Pantelis said that a process is being followed as in any organization in relation to transparency and good governance, adding that the whole process is before the CBC for evaluation of the person selected.
He said that any reports having to do with the action of the person in question are being examined by the CBI, adding that the conclusion of the Investigation Committee is being studied by the Legal Department and it has not found after three years that "anything untoward or irregularity has emerged from the person in question".
Referring to other findings of the Audit Service, Michaelides said they found the employment of a disproportionate number of staff through the purchase of services, referring to meeting permanent needs in a way that is not appropriate, adding that there were 30 people in 2017 through hiring services, while at times it went up to 127 people.
He said that because the need for permanent staff was not approved, they were proceeding to purchase services which is not the appropriate process and added that when the 30 months of work is over then based on criteria applied by the Superintendent of Social Security they become permanent.
The Deputy Director of OXS Vasiliki Vassiliou said that the organization has a dual role that separates it from other semi-governmental organizations as it has to comply with the directives of the CBC while respecting the legal framework that created it.
She said that because of this dual status, various problems are caused related to tenders, purchase of services, staffing and current needs.
Referring to the report of the GM on the recruitment by purchase of services of 127 persons, Ms. Vassiliou said that "it was 127 persons in the whole year" and added that "at no time has the number of persons exceeded the number of persons included in the budget of the Agency" and the budgeted amount has not been exceeded.
Regarding the evaluation by the CBC of both the person appointed to the position of DG and the person appointed to the position of Chairman of the Board, Vassiliou said that since both persons are under evaluation by the CBC, "we are awaiting the position of the CBC, we have provided the necessary information and since the administrative act has not been completed anything we comment on the part of the Agency will not be correct."
Regarding the problem of the functioning of the Board, Ms. Vassiliou said that in 2019, the legislation of the OCHA has been amended so that two executive members participate in the Board unlike other semi-governmental organizations and added that with this amendment the Board will function with 7 non-executive and two executive members.
The representative of the CBC said that a completed questionnaire was received from the OCHA for the person proposed for the position of DG which is under evaluation and added that the letter from the Auditor General was also received a few days after the questionnaire was received.
He further said that because the questionnaire was not fully completed we approached the Agency requesting additional information which we received on July 2 and added that the information is the same for all persons receiving key positions.
He said that once all the information is received the CBI within 4 months takes its decision.
"We believe that in the next two months we will take our decisions" in relation to the evaluation of this person.
Speaking to the Committee, the Director of the CFICB said we have a good working relationship with the CFC "in trying to assist our applicants who are mortgaging their occupied property to secure a loan with CFICB funds from the CFCB" and added "whatever problem arises we always try to solve it".
In statements after the meeting, Committee Chairman Zacharias Koulias said that an unacceptable event is taking place and added that "the man who is described in the Arrestis report in the darkest colours in terms of the machinations and tricks to close the Co-operative - which was a financial crime of enormous proportions after the haircut - is proposed to run the OXF".
He said that the organisation was established during the time of Spyros Kyprianou along with the Land Financing Organisation and it was the organisation that made a huge social contribution to the lower and lower middle classes of society.
He also said that "the only thing left to us from the golden times when there were Presidents whose concern was the country and the people is this organization" and added that "on the eve of abandonment by this Government, another crime is being attempted which is the closure of the OCHS".
"When such persons are proposed, they are aimed at dismantling the organisation," he said and urged the CBI not to approve "such persons who have been found by reports of a great judge of Arrestis to be unfit for such positions."
DISY MP Savia Orphanidou said that the CTO has over time played a social and key role in helping young couples and families to acquire their first home particularly in very difficult economic circumstances, a role which has expanded to include other types of loans in recent years.
She also said that they have been made aware of the problems and challenges arising from the dual role of the Agency, on the one hand operating as a credit institution and supervised by the Central Bank and on the other hand being a legal entity under public law and supervised by the Ministry of Finance.
According to Ms. Orphanidou, in order to address these challenges, the Ministry of Finance is proceeding to amend the legislation to correct these distortions but at the same time the Agency is taking seriously and proceeding with the implementation of the recommendations of the Auditor General to strengthen and reinforce the good governance principles of the Agency.
Finally, he expressed the hope that "with the above actions which will give the Agency the necessary flexibility and efficiency, it will continue in an even stronger way to support families and the citizen who really needs it".
AKEL MP Christos Christofides said that various issues emerge from the reports of the GA but there is a top institutional issue and added that "he has been placed in the leadership of an important bank for the country, as Director General, a man who during his time at the Ministry of Finance played an important if not leading role in what we call the crime/sale of the Co-operative, the transfer of billions from public social ownership to a private bank."
"Regardless of the existence or not of criminal charges, which will be decided by the Attorney General's Office and then the judiciary, there is a serious question of order," he said, adding that two important political issues still arise.
He said, "The first is the insistence of people in the inner circle of the Ministry of Finance and the former Finance Minister who enter key positions in banks in an apparent attempt to fully control the banking system."
Christofides said that "the second serious political issue is that this attempt to reward those who played at least a shady role in the sale of Synergatis proves that the crime of Synergatis was planned and organized."
Responding to a question, Mr. Christofides said that "we want the OXS to play its role, to build houses for needy families so that in this very problematic environment in which we live where the acquisition of private housing seems a distant dream for the majority of young people and families to be compensated by the intervention of the state."
"Our great concern is that in such an important organization, in key positions there are unsuitable people," he concluded.
PPP MP Alekos Tryfonidis said that for the past one year the new Board of Directors of the OCHA cannot meet and take legal decisions due to the fact that important officers of the organisation such as the President, DG and other Board members have not been approved by the CBC.
He said that the OCHA has grown into a regular bank and needs the approval of these senior positions by the CBC and added that a year after the appointment of these persons, the CBC has received the full details of these persons and will exhaust the 4 months available to evaluate them.
"This institution cannot function properly for the benefit of citizens for about 16 months," he said, adding that he asked the CBC to speed up the procedures and "we asked for proper vetting of the individuals."
On the selection of the Board of Directors for the new DG of the OCA, he said that "there are serious issues," adding that the number of references in the Arrestis finding for this person reaches 60.
Tryfonidis said he urgently called for the technological upgrading of the OXF to enable it to provide quality services to its clients, who are mainly the middle and lower strata of the people, adding that this issue also runs up against the absence of a legal governing body, and called for the organization to be staffed with permanent personnel.
Source: CNA
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