Cyprus Mail

Parliament adopts law barring auditor-general from co-ops

Parliament passed a legislative proposal tabled by Disy chairman Averof Neophytou, which limits the range of data to which the audit office has access to when auditing the Cooperative Central Bank, and approved an amendment proposed by Akel and Diko restricting its audits to administrative matters, the Cyprus News Agency reported.

Cooperative Central BankWhile parliament’s decision prompted Disy and the Finance Minister Harris Georgiades to express their satisfaction, it left Auditor-general Odysseas Michaelides grumbling.

“We welcome the adoption of our proposal for a reasonable restriction of the audit range” in the cooperative banks, Neophytou said on his Twitter account later, while the minister tweeted an hour later that parliament’s decision was “responsible”.

Neophytou’s proposal, along with an amendment proposed by Akel and Diko, restricts the audit office’s area of responsibility to administrative audits in the state-owned lender, into which the government injected almost €1.7bn in taxpayer’s money since 2014, the Cyprus News Agency reported.

Harris GeorgiadesOver the past weeks, Georgiades engaged in a war of words with Michaelides, known for his no-nonsense attitude which allowed the investigation of wrongdoings in public money management in the recent past, and Attorney-general Costas Clerides. The latter opined that, based on existing legislation, Michaelides’s agency had the right to audit the co-ops, which are preparing for a listing and capital issue on the Cyprus Stock Exchange over the next years.

Georgiades, who favoured barring the audit office from scrutinising the operations of the cooperative banks in order to give Cyprus’s second largest lender sufficient flexibility to operate in a competitive environment on par with other commercial banks operating on the island, threatened  an appeal on Tuesday against any law which could be considered disadvantageous for the co-ops, angering AG Clerides.

With the amendment of the legislation passed by the parliament today, “it appears that the body’s intention was to allow the administrative audit with some restrictions, which parliament deemed it was right to place,” the Audit Office said in a statement on the website of the Press and Information Office hours after the parliament vote.

“These restrictions, which in general complicate the audit and conflict with international standards, mainly concern access to data, information and minutes to which an auditor has access to for the most part,” the audit office said.

“It was therefore deemed right to limit the audit office’s access to data to which a private audit firm, which carries out financial audits, has access to,” the office said, adding that, more importantly, parliament passed a law which removes the Cooperative Central Bank from the list of organisations subject to auditing by the audit office, thus blocking its access altogether.

“The decision is absolutely respected and the audit office will terminate, immediately after this legislative amendment is published in the official gazette, any such audit which anyway did not even start because of the Cooperative Central Bank’s refusal to deliver any data even when the previous legal framework was in place,” the office said.

Odysseas MichaelidesParliament’s decision to completely bar the auditor-general from auditing the cooperative banks is a “setback” in transparency and accountability, Michaelides’s agency said. “This is our opinion and we believe we have every right to express it”.

Irini Charalambidou, one of the two Akel lawmakers who voted against the bill and the amendment proposed by her party, said her vote was justified by the need for transparency. “It was obvious that Averof (Neophytou) and (Harris) Georgiades did not want the Cooperative Central Bank to be audited,” she said in her Facebook account.

“They were so anxious to achieve this that they opened a can of worms with a series of debates which peaked with today’s parliament session, which can only harm the Cooperative Central Bank, which they allegedly want to protect from the auditor-general,” she said.

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