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Audit boss flags party election expenses

Odysseas Michaelides

MOST of the financial statements submitted by political parties relating to their expenses for the May 2016 parliamentary elections contain discrepancies, the auditor-general has found.

Perhaps unsurprisingly, the most conspicuous mismatch was traced in the accounts furnished by ruling Disy which, as the party with the most seats in the House, is entitled to the largest state grant paid extraordinarily –over and above the regular annual grant – to parties to help them finance their election campaigns.

Disy had spent on advertising agencies €163,575, but got a discount overall of 40 per cent on that amount – the total value of the original invoices.

The discounted amount comes to around €65,000.

According to the auditor-general, these discounts should be listed as non-cash contributions. Disy did not list them as such.

Under the law, non-cash contributions by private entities cannot exceed €50,000.

Disy challenged the auditor-general on this point, having secured a legal opinion from an attorney that discounts afforded by advertising agencies are part of the normal course of business and should therefore not be considered as non-cash contributions.

But in its findings, the Audit Office points out that the attorney furnishing the legal opinion to Disy also happens to be the chairman of the board as well as a shareholder in the same ad agency that gave the discount.

The Audit Office intends to refer this matter to the attorney-general to determine whether the law was in fact broken.

Similar instances of discounts from advertisers were tracked for the other parties, though the amounts concerned were considerably smaller and did not raise flags.

On Akel, the biggest disparity concerned expenses worth €80,000 paid out to the party-affiliated company Dialogos Media Services Ltd.

The auditor-general said that, other than the cash receipts furnished by the company, no other documentary evidence or invoices were available on the transactions to prove that they related to election campaign expenses.

Akel’s response was that these expenditures were part of their campaign to promote the party’s views on the Sunday edition of daily Haravghi and on the Astra radio station.

“However, our Agency has doubts as to whether the amount in question should be included in the [expenses] statement,” the Audit Office said.

Diko’s accounts as submitted displayed a surplus of €8,836. Revenues were at €485,451, of which €421,521 related to the state grant and €64,000 to various donations.

But according to the accounts as adjusted by the Audit Office, the party’s revenues and expenses for the elections came to 487,746 and €491,076, respectively, yielding a deficit of €3,330.

The party omitted to list as expenses a number of discounts given by various organisations as well as certain consultancy services. These totalled a little under €10,000.

The Audit Office found that the amounts in question were not paid out despite the fact that service purchase contracts had been drawn up between the party and the agencies.

Diko had issued the corresponding cheques for these amounts, but the beneficiaries did not show up to collect them.

For socialists Edek, the auditor-general flagged expenses of €54,052 – around a third of the total spent on the campaign trail – for which insufficient documentation was provided.

Part of this included payments made to two full-time party employees, €10,065 and €700, which were listed under expenses for purchase of services and travel.

The party subsequently provided assurances in writing that these expenses were strictly related to the election campaign.

The Solidarity Movement’s statement did not list the party’s revenues. The extraordinary state grant to the party – €138.849 – was paid out on July 19, 2016, after the elections.

The party said this amount was not included in the statement “by omission.” The auditor-general pointed out, however, that the statement was prepared on September 30, 2016, that is, subsequent to the disbursement of the amount.

The results of the audit were posted on Thursday on the website of the Audit Office.

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