Cyprus Mail

Audit chief calls for heads to roll over Cyta pension fund

By Elias Hazou

All those responsible for hollowing out the pension fund of the Cyprus Telecommunications Authority (Cyta) should be held accountable, auditor-general Odysseas Michaelides said on Thursday.

“Our agency recommends that everyone who, through their actions or omissions damaged the fund, and by extension Cyta itself, should be held accountable,” Michaelides stated.

“Seeking out the culpable parties cannot be a selective process.”

It’s understood that he was alluding to the need to assign civil responsibility through civil tort proceedings.

The attorney-general has previously found that, the Dromolaxia case aside, no criminal proceedings against Cyta persons were justified with the available evidence.

Michaelides was commenting on the audit office’s report on Cyta’s financial statements for 2017, which will be discussed in parliament on Friday.

The auditor-general cited the findings of Cyta’s own internal audit department, which found that pension fund managers and officers had been derelict in their duties, as a result of which the fund is now in the red to the tune of €201.9m.

Of this deficit, Michaelides said, €85.9m relates to malinvestments in real estate, €48.4m to investments in financial instruments, and €67.6m in cash holdings impairments.

It’s understood that Cyta’s internal audit report names the individuals it considers accountable.

The audit office also lambasted Cyta’s handling of legal action undertaken – civil lawsuits – subsequent to the Dromoloxia real estate scandal, for which six persons were convicted by a criminal court.

According to the government watchdog, Cyta, citing the urgency of taking the civil cases to court, hired two legal consultants who were already contracted by the organisation. These two legal consultants, as well as a third, were hired on no-bid contracts.

The Dromoloxia affair revolved around the purchase by Cyta’s pension fund of office space near Larnaca airport, at a price several times the going market value.

The land was initially sold to a company by the name of Wadnic Trading, which upgraded the coefficients, built on it and sold it on to the Cyta pension fund for some €20m.

In December 2014 Larnaca criminal court delivered a guilty verdict for ex-Cyta boss Stathis Kittis; former Electricity Authority boss Charalambos Tsouris, who was a member of the board of directors of Cyta during the material time; AKEL member Venizelos Zanettos; trade union rep Orestis Vasiliou; land registry official Gregoris Souroullas; and the company Polleson Holdings Ltd as a legal entity.

Moving on to Cyta Hellas, Cyta’s loss-making subsidiary in Greece, the auditor-general called for an independent investigation to determine whether company officials were acting in good faith or not.

In January, Cyta sealed a deal for selling off its Greece subsidiary to Vodafone-Panafon Hellenic Telecommunications SA. The transaction is subject to approval from the relevant authorities in Greece.

Michaelides pointed out that the state telecoms corporation spent €10.7m alone on engaging consultants tasked with exploring parties’ interest in acquiring Cyta Hellas.

In total, seven consultants were hired, all of them on no-bid contracts.


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