Cyprus Mail
Cyprus

Auditor-general concerned over several Cyta deals

By Angelos Anastasiou

Evidence of possible instances of conflicts of interest and favouritism in state-owned telecoms company Cyta was identified by auditor-general Odysseas Michaelides, according to the Audit Service’s annual report, published on Thursday.

The first suspicious case reported by the auditor-general related to a study commissioned by Cyta on a new cash-reserves administration policy.

Cyta invited tenders from five selected audit and consulting firms in May 2016, but received only one bid, and the tenders review committee planned to scrap the contest.

But on advice from Cyta’s finance department, which argued that the sole bidder had extensive experience in such matters and pointed out the urgency of proceeding with overhauling the cash-reserves strategy, the committee decided to go with them.

Michaelides found out that the daughter of Cyta’s finance department chief works at the audit firm in question, which also served as auditors to the telecoms company, thus raising questions of a conflict of interest and perhaps even abuse of power.

Although the finance department chief responded that her role in the selection process had been minor and inconsequential, Michaelides disagreed, and pointed to her withholding her possible conflict at an earlier meeting.

He recommended that Cyta’s board chairman order a disciplinary probe to look into not just this incident but also all previous contracts awarded to the audit firm.

A second case related to CytaGlobal Hellas, a subsidiary of Cyta’s loss-making Greek arm of operations, Cyta Hellas.

According to Michaelides, CytaGlobal Hellas’ then boss – now a top official at Cyta – had unspecified ties to the manager of Synapsecom Telecoms, a company in which CytaGlobal Hellas decided to invest in in 2014, sinking almost €0.5 million over the next two years.

At the end of 2015, Synapsecom showed accumulated losses of €470,000, Michaelides noted.

Recently discovered data, he added, indicated that a Cyta board member had reported similar wrongdoing by the official in 2012, when he had been serving as manager of CytaHellas.

Subsequent legal opinions determined no wrongdoing could be substantiated because CytaHellas was founded as a private-law entity, and thus public-law regulations – which ban preferential treatment to companies – did not apply.

However, the auditor-general noted, CytaHellas is a subsidiary of Cyta, a public-law state-owned company, and its manager is a Cyta employee, elements that appear to have been ignored in the legal opinions.

Related posts

Anastasiades departs for London and New York ahead of UN general assembly

Lizzy Ioannidou

Paphos police clamp down on noisy bars

Lizzy Ioannidou

Moody’s changes outlook to ‘positive’ on better fiscal and lower risks

Staff Reporter

Teenage climate change protest [video]

Theo Panayides

Means-tested traffic fines bit of a tricky solution, minister says

Lizzy Ioannidou

Bill to shore up legalities tied to vacant MP seats at plenum next week

Evie Andreou

10 comments

Comments are closed.