Weaknesses in compliance with the provisions of the relevant Laws and Regulations, governing the implementation and monitoring of the budget, as well as the regulation of issues related to staff, is found by the Audit Service in its Special Report on the Cyprus Port Authority (CPA).
The Audit Service states that it identified serious weaknesses in the Authority's internal control systems, relating to the incorrect application of the terms of service lease contracts, failure to ensure the completeness and timely registration of correspondence, minutes and other documents in files, incorrect and/or payment of unrealised overtime compensation, failure to take effective measures for the collection of debts, significant delays in the invoicing of rights to use port premises, etc.
It also found non-compliance with public procurement legislation, in breach of general principles of administrative law, such as the principles of good administration, transparency and equal treatment.
It also considers that the appropriate actions may not have been taken by nALK, for the purpose of proper and correct management of the project of the New Passenger Hall at the Port of Limassol and expresses its strong concern about the many problems, which even today, are still present in the above completed project.
"Apart from the fact that the Republic bears additional expenses due to the restoration of the malfunctions/defects of the building, the responsibility of repairing which the Contractor was contractually responsible for, there is a further loss of revenue from the Variable Concession Fee and VAT for the provision of services, due to the fact that the restaurant has not yet been put into operation", it says.
It is also noted that Contracting Authorities should properly implement the terms of the annual right of use/exploitation of their land areas.
The Audit Service also observed significant delays and weaknesses in the implementation/completion of the Access Control System for the Container Terminal and General Trade Terminal at the Port of Limassol and, therefore, the Service will further investigate the matter and will report back once its investigation is completed.
False statement by former Board member
Among the main findings of the Audit Service is that a former Board member, upon taking office on 12.9.2016 signed an affidavit stating that he was not professionally engaged and did not hold shares in a business related to the Authority's activities, which appears to have been false, as he was a director and shareholder in a company to which the Authority has been licensed since 2011 to supply ships.
Also an official of the Authority, who appears to have been involved in the negotiations for revision of an agreement with a company, has a first degree relative who is the legal adviser of the company and therefore a conflict of interest appears to arise.
The Authority has retained the same legal adviser since its inception in 1973, in violation of the provisions of the General Accounting Office Circular No. GL/ADS 74, issued on 27.4.2016.
The selection of a particular building to meet the Authority's housing needs was made outside the legal procedure, in violation of the principles of good administration, transparency and equal treatment and without ensuring the reasonableness of the expenditure that the Authority will pay for the rental of the building.
At the same time, it is reported that €27 million was given to 28 licensed porters of Limassol and €3.6 million to 28 licensed porters of Limassol. to 22 licensed Larnaca porters, as compensation for termination of their licences, even though, according to legal advice, the licensed porters had no legal right to compensation and which related to work which, according to the Competition Protection Commission, was carried out in an illegal manner.
It also finds that a Certificate of Final Approval, which is a legal obligation, was not secured for the project for the redevelopment of the land area of the old Limassol port.
It also states that in June 2021, ALC proceeded with the award of the tender for the concession of the licence to use/operate two land areas at Limassol Port, for a period of 13 years, with the possibility of renewal for another 12 years, as well as the conclusion of contracts with two economic operators for an annual right of use, which in both cases, is much lower than the estimated values that ALK itself had requested from the Department of Cadastre and Land Surveying in 2017 and from a private valuer in 2020.
In the second case, the Letter of Participation, which had been submitted by the economic operator to which the contract was finally awarded, had an expiry date prior to the date specified in the tender documents and, therefore, its bid had to be rejected at the stage of checking the conditions of participation, without further evaluation, for breach of an essential condition of the tender.
It is also reported that there was a significant delay in the submission of the Authority's Budgets, for the years2016 and 2017, to the House of Representatives.
Furthermore, in the notice for filling two vacant posts of Director of First Appointment and Promotion (Grade A14(i)), one for the Port of Limassol and one for the Port of Larnaca, the procedure was not specified in relation to the filling of the posts, in violation of Regulation 10(4) of the Ports Authority of Cyprus (Conditions of Service of Employees) Regulations (K.The Authority, following annulment decisions of the Supreme Court for appointments and/or promotions, paid compensation for retroactive salaries for a total amount of €264,411.
It is also mentioned that in 2016 and 2017, compensation was paid to retired employees for the non-granted annual rest leave, for a total amount of €75.
It is also mentioned that in 2016 and 2017, compensation was paid to retired employees for the non-granted annual rest leave, for a total amount of €75.953, of which an expense of €55,764 relates to employees who opted to leave under the Voluntary Separation Scheme and €20,189 to an employee who retired early, without taking into account the employees' remaining annual leave and the date of retirement when considering their requests to leave, in order to allow for the use of the leave they had in good faith.
In the context of a study concerning the adaptation of the Authority to its new role as a regulator/supervisor and owner of the ports, which was awarded through an open procedure for an amount of €98,000 plus VAT, additional services were required for a total amount of €199,000 plus VAT, which, in the opinion of our Audit Service, are not considered urgent, as they could be addressed and included in the scope of the original call for tender. Therefore, it is stated, the public procurement legislation has been violated and furthermore the Authority has failed to ensure wide participation of bidders and to ensure lower prices by developing healthy competition.
In recent years and especially after the massive departure of Authority employees in 2017 with the implementation of the Voluntary Departure Plan, the Authority has been purchasing services from third parties to cover its needs in terms of vacancies, in violation of the public procurement legislation and the Prohibition of Filling of Vacancies Act. In one case, a contractor was paid for a total number of hours absent due to health reasons or leave of absence.
Weaknesses were also identified in the internal control systems for overtime work, resulting in a risk of incorrect and/or unrealised overtime payments. Again, it was found that several tenants of port facilities owe significant amounts (around €350 thousand) to the Authority, while no effective measures are taken to collect the debts.
Source: KYPE
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