The attorney-general has been asked to provide a legal opinion on whether the government should continue its co-operation with the Nicosia bus company Osel after two of its officials were convicted of fraud relating to their contract with the state, Transport Minister Marios Demetriades said on Monday.
Auditor-general Odysseas Michaelides has suggested that the state should terminate its contract with Osel and give the capital’s transport system to another company following the conviction of chairman Iordanis Iordanous and vice chairman Kyriacos Kyriacou last week.
The pair were given a 15-month jail sentence, suspended for three years, after they had pled guilty charges of fraud, including forging invoices and attempting to obtain some €77,000 monies under false pretences.
The pair had issued false fuel invoices without having filled the buses in a bid to get more money from the state.
The police investigation into financial wrongdoing at Osel began in late 2015.
Michaelides has asked the transport ministry permanent secretary to also withhold €4m, considered to be overpayments.
The auditor argued that following the conviction, the company’s credibility, as provided for by the law, had been lost.
Demetriades said they have asked the attorney-general for his opinion on the matter, something also suggested by Michaelides.
The minister said auditing the company’s financial statements was a priority he had set when he assumed office.
“This had not been done for various reasons, mainly because the contractors had not submitted any, apart from 2010,” he said. “Audits started in 2015 and certain issues relating to possible overpayments have emerged, not just for Osel, but other companies also.”
The minister said there was also the practical aspect of the situation to take into account when considering termination of the contract, the state’s obligation to provide public transport.
“We must be especially careful, it is a service that must afforded to people and we must find a way to continue providing this service.”
Speaking in parliament in January, Michaelides had described the island’s public transport as “appalling,” expected to cost taxpayers some €500m over its 10-year contract period that expires in 2020.
Michaelides said the biggest mistake in the process was not going to an open tender n 2009. And it was only due to the financial crisis that the government forced a review of the agreement in 2012, cutting the annual cost from €100m to around €55m.
“Shouldn’t even think about extending the contracts,” Michaelides said.
The government never went to open tenders on the suggestion of the Road Transport Department, which said going directly to locals would prevent unrest among the 200 bus operators.
Trouble with the EU was averted by way of concession contracts.
The agreement was signed during the tenure of former minister and now Limassol Mayor Nicos Nicolaides.
His successor had asked for a review of the system in all districts after it transpired — due to the economic crisis — that taxpayers were paying too much money for a mediocre service.
There were also reports in 2012 about bus companies that employed relatives as executives and paid them princely salaries.
The state has managed to cut down the subsidy paid to companies but the system is still problematic with strikes being a frequent occurrence.
