By Angelos Anastasiou
Finance Minister Harris Georgiades has failed to safeguard the interests of the Republic of Cyprus in connection with the interstate agreement between Cyprus and Greece over betting giant Opap, Auditor-general Odysseas Michaelides said in a letter to President Nicos Anastasiades, released on Monday.
In the letter, dated October 25, Michaelides told the president that “since May 2014 we informed the finance minister that certain elements of the interstate agreement were not being interpreted correctly, resulting in the state losing tens of millions of euros”.
But despite the Audit Service’s recommendations, Georgiades took no further action to safeguard the state’s interests.
“Despite our repeated urges to the finance minister to seek guidance from the attorney-general with regard to the correct interpretation of the interstate agreement, not only did he take no action, but in a letter dated January 18, 2017, he flatly opposed this effort, claiming that no such issue exists,” Michaelides said.
The auditor-general has been contesting a clause in the agreement allowing Opap to deduct “theoretical”, as opposed to “actual”, cost from its profits, thus paying less to Cyprus in taxes, and, in the face of Georgiades’ refusal to do so, turned to the AG himself.
“In his opinion, dated October 24, 2017, the Attorney-General said that any interpretation that takes into consideration the so-called ‘theoretical’ expense and not what was actually paid is unacceptable and unjustified, based on both the wording of the clause and its proper interpretation,” Michaelides said.
“In addition, Opap’s interpretation of a clause laying down ‘theoretical’ deductible expenses, irrespective of actual cost incurred, is not merely preferential to the company, but in my opinion fails the test of reason. The logical explanation for the counterparts’ decision to include a clause with calculations of sums is to give some indicative measure of the levels of such cost, and perhaps to set a maximum level of expenses. But it is inconceivable for variable cost to have no bearing in actual cost incurred.”
Michaelides informed Anastasiades that the exact amount the state must now demand of Opap runs in the “tens of millions of euros”, but must be calculated by the state treasurer’s office.
“Naturally, one could predict with certainty that Opap will refuse to pay the amount due to the state, and it is obvious that the unforgivable inertia shown by the Finance Ministry for so many years will make Opap’s effort to avoid payment that much easier,” Michaelides charged.
The auditor-general said his office is in contact with the state treasury so that an effort is undertaken under the guidance of the Attorney-General’s office to “claim what has been withheld by Opap”.
“We also believe it is important to make the public aware that the sums paid by Opap in grants for sports and culture are deducted and reduce the state’s revenue [from Opap] by an equal amount, and do not affect Opap’s profits,” Michaelides said.
