Cyprus Mail

Appeal to pass ‘dirty contractors’ bill

Auditor-general Odysseas Michaelides

By Elias Hazou

Seven construction companies implicated in the ongoing Paphos Sewerage Board (SAPA) corruption trial and whose officers have admitted to bribing officials in exchange for securing public contracts, could face sanctions from their association including possible disbarment if found to be at fault.

The Council for the Registration and Control of Contractors will be initiating disciplinary hearings against these companies and their technical directors, council head Antonis Koutsoullis said on Wednesday.

From a fact-finding report already compiled by the council, Koutsoullis said, there is prima facie evidence that the companies committed disciplinary offences.

Should the council find any of the companies culpable – in this case of corrupt practices – possible sanctions range from a reprimand, to a fine, suspension of licence and even deletion from the contractors’ registry.

Koutsoullis was not asked, and did not name the companies.

But the companies named in the SAPA trial are part of the public record. They are: Awatech, Atlas-Pantou Constructions, Iacovou Bros, Loizos Iordanous Constructions, ENVITEC SA, Nemesis Construction Public Company, and the MEDCON GCC (General Construction Company) consortium.
A succession of company directors have testified in court in the SAPA case that they gave kickbacks to officials, but argued that they were being blackmailed into doing so.

The businessmen and their companies will evade prosecution as they turned state’s witness.

The sewerage scam saddled Paphos municipality, and subsequently the taxpayer, with extra costs due to often-unnecessary additional work on the project. The project came in some €40m over budget.

However under new legislation, coming up for a vote at the House plenum on Thursday, companies which have been proven in court to have bribed their way into securing public contracts, or whose cadres have admitted to as much without any court proceedings, will be blacklisted and prohibited from bidding for a period of up to five years.

DISY MP Georgios Georgiou, who chairs the House watchdog committee discussing the bill, said on Wednesday he expected the item to be passed into law, despite reservations expressed by some parties.

Main opposition AKEL and socialists EDEK complain that they were given little time to study the hefty bill, comprising 380 pages.
Ruling DISY and the Greens have already stated they are voting in favour. DIKO, whose votes would be necessary to ensure passage, are still mulling it over but are thought to be positively disposed.

It’s possible the bill could not make it to the plenum this Thursday if the required consensus is not achieved during the customary pre-plenary meeting of party leaders or representatives.

In that case the can would be kicked down the road to the new parliament taking shape after May’s legislative elections.

Weighing in, Auditor-general Odysseas Michaelides on Wednesday urged lawmakers to vote on the bill now.

“Appeal to MPs to beat the race against time and pass the bill on kickback-paying contractors,” he tweeted.

The bill will not be retroactive, in that after the law comes into force authorities cannot revoke a contract which has already been awarded, even if the winning contractor has previously admitted to malfeasance or misconduct.

But where tenders are still open and a decision is pending, authorities will be able to exclude bidding companies from that tender as well as future competitions.

This is key, a source at the auditor-general’s office told the Mail.

The source surmised that some parties’ qualms about the bill are not unrelated to lobbying from contractors, alarmed at the prospect at losing out on lucrative contracts now up for grabs.

He explained that currently dozens of tenders are underway relating to public projects announced by President Nicos Anastasiades last summer.
The contracts for these tenders are expected to be awarded by around October, followed by a long lull.

“Companies know full well that if the blacklisting legislation isn’t passed tomorrow [Thursday], then it probably won’t be until autumn that parliament will revisit the matter. But by then, from our perspective, it’s going to be too late because the contractors will have cashed in.”

The bill is designed to blacklist not only companies, but also their senior directors. This is to stop businessmen from gaming the system by merely dissolving a company and reconstituting a new one which would then be eligible to bid for public contracts.

“Once specific individuals are boycotted, it becomes very tricky to then just set up a new company overnight, because you’d need to hire persons with specific qualifications and they don’t grow on trees,” the same source offered.

A case in point relates to Nemesis, one of the contractors named in the SAPA trial.

Last year the Department of Public Works excluded Nemesis from a tender involving the construction of a road connecting the port of Limassol to the Limassol-Paphos highway.

But Nemesis subsequently challenged the decision with the Tenders Review Authority (TRA), which earlier this month ruled in the company’s favour.

In a 3-2 decision, the TRA acknowledged that Nemesis had been excluded from the tender because it was guilty of serious professional misconduct – bribing officials. Nevertheless the TRA said it lacked jurisdiction to act on this acknowledgement, because existing legislation did not spell out the meaning of professional misconduct.

The TRA further opined that it could not bar Nemesis from tendering for the road construction contract, as a final court ruling in the SAPA trial was still pending.

The blacklisting bill, if passed, would change all that, as Nemesis could be blacklisted from the mere fact that its officers have admitted to giving kickbacks, trial verdict or not.

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