QUESTIONABLE decisions, selective enforcement of the rules, dubious procedures and squandering of taxpayers’ money are once again the highlights of the auditor-general’s reports on semi-governmental organisations.
The reports were submitted to parliament on Wednesday and cover a number of semi-government organisations, including the electricity authority (EAC) and telecommunications company CyTA, which was censured over its promotions procedures that cost thousands in wasted taxpayer money.
Meanwhile the government yesterday said the auditor-general’s reports were necessary tools for the state to solve the problems and improve procedures within the organisations
“The government’s instructions to the boards and management of the semi-government organisations is to study the reports carefully and act accordingly so that problems and deficiencies are tackled with decisiveness and resolved,” government spokesman Stefanos Stefanou said in a written statement.
“It has been observed that promotions by the board are in many cases annulled by the Supreme Court,” Auditor-general Chrystalla Yiorkadji said in her report on CyTA. “This on one hand raises an issue of credibility of the system of promotions, with a negative impact to the organisation’s image and on the other hand it entails significant cost (administrative expenses, legal fees, retroactive pay, etc).”
One example is the case of a man promoted to senior manager in May 2009 who took early retirement six days later.
The manager received increased pension benefits and retirement bonus afforded to him by his promotion, which was however, ruled void by the Supreme Court in November 2010, following an appeal.
The court said the board’s decision to promote the official went against the recommendation of his superior and was not “sufficiently substantiated”.
“But what is unacceptable is the fact that the board decided” that the retired official would continue to receive a senior manager’s pension, the auditor-general said.
Yiorkadji said the board’s decision had no legal standing whatsoever.
Despite the official not being obliged to return the extra cash he received up to the date when the promotion was overturned, his pension cheque from then on should be based on the scale he was on previously, the report said.
The auditor-general also questioned the EAC’s selective enforcement of its rules when it came to unpaid bills.
While it cuts power to consumers who owe small and insignificant amounts, “to force them to sort out their dues,” the EAC does not seem to apply the same policy when it comes to big businesses who owe hundreds of thousands.
In one case the authority had agreed with a Nicosia-based company owing some €336,000 in October 2010 to pay its dues in monthly instalments by this month.
The agreement included a proviso that if the company failed to comply the EAC would cut its power without notice.
The agreement was not honoured and in March this year, the authority’s chief financial officer asked the Nicosia district manager to cut the power.
Instead, and while the amount owed by the end of March reached around €351,000, the district manager struck a second repayment deal.
The deal included a provision for the company to supply the EAC with a personal guarantee of €150,000 by one of the owners.
The guarantee ultimately given to the EAC was in the form of two post-dated cheques (for the end of the year) from another company.
The auditor-general said the EAC should have done what it does in similar cases concerning other consumers – cut the supply – or secure bank guarantees or property to protect its interests.
The auditor-general also cites a second similar case in which a company owed the EAC some €538,000 in April, 2011.
Between 2008 and 2009, the EAC struck three repayment deals with the company, which failed to meet any of them.
Instead of cutting the power, the EAC tried to reach another agreement in January 2010 but was informed by the company nine months later that it could not meet its obligation because its factory had been destroyed by fire.
