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State losing €1m a month from Opap monopoly

AN INTERSTATE agreement with Greece, giving betting giant Opap a monopoly on lottery number games here, is heavily skewed against Cyprus, the auditor-general said on Thursday.

“As long as the Republic postpones terminating this unacceptable agreement…it is losing €1 million a month,” Odysseas Michaelides told MPs at the House watchdog committee.

The once state-run betting giant – founded in Greece in 1958 – turned into a joint stock company in 1999, and in 2013 the cash-strapped Greek state sold the majority of stocks to Emma Delta Hellenic Holding Limited, a Greek-Czech group.

Based on an interstate agreement signed by Cyprus and Greece – renewed in 2003 – Opap is the only company allowed to run lottery games on the island.

Critics argue that since the Greek state is no longer a shareholder, Opap’s special status should be abolished.

In 2013, the year Opap was privatised, the European Commission began proceedings against Cyprus as Opap’s monopoly status contravened EU competition laws.

In May 2014, Cyprus moved to withdraw from the interstate agreement with Greece, and requested a year to prepare legislation regulating the lottery market. But it subsequently reversed its decision to terminate the agreement.

A bill that had in the meantime been prepared was scrapped, and more recently the finance ministry completed another piece of legislation that has been submitted to the House for consideration.

The new bill provides for the exclusive rights to be granted to a single provider to operate specific ‘lottery games’ in Cyprus for a specific period of time and under specific conditions.

It further stipulates that the provider must pay the state 24 per cent tax on its gross profits (by comparison, Opap pays 30 per cent tax in Greece), or at least €20 million per year, depending on which is greater.

Under the current arrangement, Opap in Cyprus pays some €10 million in taxes – meaning the state is currently losing out on potential additional tax revenues of €10 million a year, the auditor-general said.

He opined, moreover, that the previous bill prepared by the finance ministry was so skewed in favour of Opap, that either it must have been written up by Opap itself, or by a person in government “who did not have the best interests of the Republic in mind.”

A finance ministry official who was also attending the watchdog committee session, rejected the jibe, asserting that it was she and a colleague who had drafted the initial bill.

But the auditor-general pressed on, asking why it had taken two years to prepare the new bill.

Michaelides mentioned the case of a senior state’s attorney who had in the past dealt with the Opap issue. Subsequently the same person, who by then had retired, attended a meeting in the capacity as a lawyer for Opap.

Upon MPs’ insistence that he name this person, the auditor-general said it was former state’s attorney Rena Vrahimi-Petridou.

According to the auditor-general, up until the year 2013 the state’s revenues from Opap had averaged out at some €10 million a year. But during the same period Opap’s gross receipts shot up from under €50 million to nearly €200 million.

The betting operator’s revenues spiked especially after the introduction of the Kino lottery game.

Also, under the interstate agreement, Opap in Cyprus retained any undistributed profits, whereas in Greece Opap’s undistributed profits end up in the state coffers.

These were all examples of how the Cypriot state was getting the worse part of the bargain, Michaelides noted.

Demetris Aletraris, CEO of Opap Cyprus, disagreed. In 2015, he countered, the Cypriot state collected €13.3 million from Opap, when the provider’s total turnover was €200 million.

Overall, said Aletraris, last year the Cypriot state and society benefited to the tune of €24.87 million in taxes, grants and other disbursements, while OPAP’s own net profit stood at just €5.6 million.

“Please tell me if you think this is a skewed agreement,” he said.

Speaking to reporters later, committee chairman Zacharias Koulias said he was convinced the state had got the short end of the stick.

In 2004, he said, when Opap’s turnover was €97.19 million, the state collected €9.48 million. In 2013, after the introduction of the Kino game, the provider’s turnover soared to €188 million, but the state collected just €12.27 million.

“It seems some people were sleeping the sleep of the just,” he said, sarcastically.

The question of possible graft was raised by Pavlos Mylonas, an MP with the Citizens Alliance.

According to Mylonas, a number of party cadres or persons in their circle of friends have been appointed to the board of Opap, a private company.

He suggested the attorney-general carry out an investigation into whether political parties have received financing from Opap.

 


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