Cyprus Mail

Auditor-general accuses predecessor of tax cover-up

Chrystalla Georghadji

Former Auditor-General Chrystalla Georghadji ordered that a former MP not be reported to the tax department after he was found to have not filed tax returns, her successor Odysseas Michaelides told parliament on Thursday.
Answering questions from MPs during the House watchdog committee on taxation policy regarding politically exposed persons (PEPs), into which the audit service is currently conducting an investigation, Michaelides said such an investigation had never officially been conducted before.
“As I have been informed, Mrs Georghadji vaguely reported that some MPs hadn’t filed tax returns but there was never a structured investigation,” he said.
“What I can tell you, because I don’t want to be part of a cover-up mentality, is that I am aware of one case where [audit service staff] had spotted a politically exposed individual who hadn’t filed his tax returns yet, and had prepared a letter with his name to the inland revenue department, but Mrs Georghadji hadn’t allowed it. On instructions from Mrs Georghadji, the reference to this person was struck off the letter.”
Michaelides confirmed the person was an MP at the time.
“This is important because Mrs Georghadji appeared indignant when I said that the service didn’t always work as it should,” he said.
Earlier this week, Michaelides had said that the audit service under Georghadji sometimes served as an agency for cover-ups, citing specific examples where no follow-up investigation was done.
In a statement of response, Georghadji, who is now governor of the Central Bank of Cyprus, rejected the claim and pointed to her annual reports, which included references to Michaelides’ examples.
Meanwhile, the audit service continues to investigate the tax department’s handling of tax returns filed by PEPs, Michaelides told the committee.
He said that the full report of the probe’s findings would require more time.
Last week, he pledged to share with the committee an unprocessed list of the tax returns of 157 PEPs from 2008 to 2016.
These are the presidents of the Republic, government ministers, MPs and party leaders during this period.
A preliminary analysis of the data, he told committee members, suggests a declining trend in the number of PEPs who file their tax returns late.
However, the audit conducted by the service is more diligent, Michaelides said.
“We want to see how the tax department has dealt with politically exposed persons,” he said.
“The tax department must produce the required data by December 11.”

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