Cyprus Mail

Report into Presidential connection to patrol boats tender due within the week

The Audit Office has forwarded to the police its findings regarding the purchase of four problem-ridden patrol boats, and will await the police’s comments before drafting its final report.

Meanwhile, the Cyprus Mail has learned, the auditor-general is close to completing a separate report concerning allegations made by opposition politicians to the effect that president Nicos Anastasiades may have influenced the outcome of the tender to procure the patrol boats.

The Mail understands that this latter investigation – requested by Anastasiades himself in a bid to clear his name – will be handed over to the president alone within the week.

“It’s understood the Audit Office will not make public the contents of this second report, but it will announce that the report has been delivered to Anastasiades. It would then be up to the president to disclose the report’s findings.”

In December 2015 the police received delivery of four patrol boats from Lung Teh Shipbuilding Co. Ltd, a Taiwanese shipyard.

The boats in question feature dual jet engines and have a range of 180 nautical miles.

It soon emerged that three of the boats were faulty, with glitches in the engines, the propulsion systems and the pumps, among others.

The auditor-general is probing why the police did not claim compensation, a right afforded by the contract when the vessels remained inactive for more than 20 days due to technical problems.

Another question is why an inspection certificate signed by a French expert in Taiwan was dated December 28, 2015, when the boat had already been delivered in Cyprus on December 17.

Also, the police had agreed for the repairs to be carried out here, rather than at the shipyard of the Taiwanese company, as stipulated in the contract.

Another apparent discrepancy has emerged as far as the police angle of the Audit Office’s report is concerned. The agreement between the police and Lung Teh was signed by Christos Chrysostomou, the director of Cyprus-registered Follyson Holdings Ltd, the Cypriot agents for the Taiwanese company.

Speaking at the House watchdog committee earlier this month, Chrysostomou produced a document showing that Follyson Holdings Ltd was authorised to act as the local agents for Lung Teh.

The document he produced was dated August 2013.

But when in September 2013, a month later, Lung Teh submitted its bid for the patrol boats, the Taiwanese company had made no mention of Follyson Holdings or that a Cypriot agent would be acting on its behalf.

The tender had initially been awarded to Cantiere Navale Vittoria, an Italian firm, but it went to the tender review board (TRA) following an appeal filed by the Taiwanese company.

The lawyer representing the appellant was Nicholas Christofinis, a lawyer at Nicos Anastasiades’ law firm.

The TRA ruled that the Italian firm did not meet the tender’s technical specifications and lacked the requisite experience for building the type of boat requested.

The Italian company has been in the shipbuilding business for 90 years.

It’s understood that following its own investigations the Audit Office disagrees with the TRA and feels that the Italian firm’s bid did in fact satisfy the technical specs.

Moreover, the Italians’ offer was overall some €80,000 lower than Lung Teh’s, the successful bidder.

Lung Teh’s offer stood at €1,670,000. The police budget for the tender was capped at €2 million.

Another matter that raised eyebrows is the fact that part of the correspondence with the Taiwanese company was done through FLC Modena Automobile, local representatives of Maserati cars.

The shareholders and partners in Modena are Christos Chrysostomou – also the director of Follyson Holdings – Theofanis Philippou, a managing director at the law firm the president founded, and Yiannos Loutsios, the president’s son-in-law.

Explaining this, Chrysostomou told MPs that he used Modena’s email address because of temporary problems with Follyson’s email.

In a statement following the reveal in early October, Loutsios denied any connection to the patrol boats deal and dismissed insinuations of a conflict of interest, in that his father-in-law is the president.

And Anastasiades asked the auditor-general to look into allegations suggesting his in-laws had been favoured in the tender.

“I shall tolerate from no one the slightest imputation that I favoured anyone, be it a relative or not, with regard to a public tender,” the president said at the time.

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