Cyprus Mail

‘Getting serious about NGO purge’

The interior ministry is already performing risk assessments, for instance by checking one-by-one the paperwork filed by NGOs to ensure the persons named on their boards and other info is accurate
As many as 5,000 of the 7,000 organisations could get scrubbed

By Elias Hazou

It appears the government is finally getting serious about tidying up the so-called ‘third sector’ here, following Interior Minister Nicos Nouris’ warning two weeks ago that some 5,000 of the 7,000 NGOs could get scrubbed from government registries.

It’s understood that, once off the registry NGOs may theoretically still operate, but without government accreditation. But non-accredited NGOs aren’t allowed to open a bank account, so in practical terms that’s a major constraint on their operating.

Moreover – this point being key – unregistered societies and foundations are ineligible for state grants or EU funding.

Nouris cited a 2017 law, which obliges such entities to update their statutes, hold a general meeting at least once a year, produce audited accounts and notify authorities of their current contact information and address. Failure to do any of these may result in the local District Officer deleting an organisation from the registry.

Although the law was passed in 2017, a transition period was granted for compliance. With subsequent extensions, the deadline got pushed to the end of 2019, but then the ministry granted another three months, until the end of March this year.

So far a mere 2,000 entities have complied, the rest facing deletion from the registry. In parliament recently, Nouris said the ministry would nonetheless give these groups another 30 days, hinting that the hammer would drop after that.

The Sunday Mail meanwhile learns MPs have just drafted a legislative amendment granting NGOs two more months to register from today.

Nouris had also argued the ‘purge’ was necessary, framing it as a question of Cyprus’ credibility in terms of complying with the recommendations of Moneyval, the Council of Europe’s anti-money laundering watchdog, who earlier this year warned that the non-profit sector here resembled a free-for-all.

“Cyprus should conclude the risk assessment of NPO [non-profit organisations] sector to identify those NPOs that are vulnerable to TF [terrorist financing] abuse and implement a risk-based approach to monitor the NPO sector consistently with TF risks,” Moneyval said.

Eleni Karaoli, an attorney engaged with the ‘third sector’ (civil society), says Nouris’ comments about deleting NGOs lack sting – for the most part.

“If you read the Moneyval report, nowhere do they state or urge Cyprus to carry out a blanket erasing of NGOs or non-profits. Rather, it’s explicitly stated that Cyprus ought to carry out a risk assessment of the sector, and then take any steps.

“To date, the government here has conducted no such risk assessment.”

But a senior source with the interior ministry dismissed the notion the government has put the cart before the horse. They said the ministry is already performing risk assessments, for instance by checking one-by-one the paperwork filed by NGOs to ensure the persons named on their boards, as well as all other data provided, are accurate and true.

Karaoli further argued that Cyprus law itself doesn’t authorise the automatic de-registering of entities if the latter don’t provide updated data on their statutes or financial statements.

The Associations and Foundations and other Related Matters Law of 2017 explicitly states that entities must submit their updated statute to the District Officer within 30 days of the update, so that the change be accordingly entered into the government registry.

But the law goes on to state: “It is understood that belated filing of such an application shall not on its own constitute grounds for denial to record a [statute] amendment in the registry.”

Where an entity doesn’t meet the 30-day deadline, the entity is requested to comply within another 30 days.

And only once an entity remains non-compliant, can authorities petition a court to de-register the entity.

“So the law is clear about the process. It’s the authorities who must contact an NGO or what have you, and give it time to comply,” argues Karaoli.

“You can’t just remove an entity from the registry without first going through this process.”

What happens in practice?

According to the attorney, hundreds of entities are indeed defunct, while many others are delinquent in failing to notify authorities of their current contact info or address. For these categories, authorities will indeed be left no choice but to expunge them from the records as they have no way of getting in touch with them anyway.

The problem, says Karaoli, lies with the hundreds – perhaps thousands – other NGOs who do exist, do carry out work, but for one reason or other haven’t met all the legal requirements to stay registered.

“For these NGOs, I doubt they’ll get the chop, not that easy.”

The attorney cautioned that, should the ministry pursue an aggressive policy – going on Nouris’ comments – it would be akin to throwing the baby out with the bathwater.

However, the interior ministry source described this as a flimsy argument:

“Wrong. For months the government has put out announcements in the media and via the Press and Information Office calling on NGOs to comply with the new rules.

“And the Commissioner for Volunteerism has personally held several meetings with such entities informing them of the new requirements. So they can’t claim at this late hour that they still don’t know…it just won’t fly.”

Asked whether the government has direct evidence of money laundering in the ‘third sector’, the ministry sources said they personally did not at this time.

What they do know, is that many entities register as NGOs to avoid paying taxes. This is done for example by small sports clubs.

Doros Polycarpou, head of the migrant support NGO Kisa, underscored another facet.

He said several entities registered as non-profits – some of which could be involved in shenanigans – will be left untouched by the interior ministry’s ‘get tough’ policy.

In Cyprus, NGOs as such lack legal personality or legal status. They’re registered either as an association, society or foundation, in which case they fall under the aforementioned 2017 law and the jurisdiction of the interior ministry; alternatively they may register as an NPO, in which case they fall under the Companies Law and are regulated by the commerce ministry.

As a for-instance, Polycarpou said virtually every single municipality in Cyprus has set up a parallel, or affiliated, NPO. That NPO – of which the board typically consists of the mayor and a very small group of people – then files for funding for EU projects and, more often than not, gets the cash.

“There’s a lot of this business going on…a gravy train where connected individuals pose as non-profits. Now, if Mr Nouris truly wanted to reform the sector, maybe he should look into that as well.”

Polycarpou indicates that most NGOs are small organisations lacking the financial wherewithal to file the necessary paperwork. Affirmations by lawyers, external audits and so forth may cost anywhere from €2000 to €3000 per filing.

“Instead of cracking the whip on these organisations, why not actually help them meet their requirements?”

However, he did acknowledge a contradiction pointed out by the Sunday Mail – on the one hand NGOs want to be called ‘non-governmental’, but on the other they seek government support.

“We are the first to say that the civil society sector needs to be cleaned up, as it were,” Polycarpou said.

“An NGO that’s transparent about its membership and finances earns credibility, and so more likely to draw potential donors. But I somewhat doubt that real reform is what’s driving the current government policy.”

Asked to comment, Yiannis Yiannaki, Commissioner for Volunteerism and Non-Governmental Organisations, emphasised that the government intends neither to ‘eliminate’ nor ‘penalise’ NGOs.

“We want them to comply with the law, which would benefit them at the end of the day,” he said.

Regarding the financial scale of the ‘third sector’ as a whole in Cyprus, Yiannaki said it’d be impossible to even venture a guess, precisely because so many NGOs currently fall under the radar.

But he did offer a rough estimate as to the combined annual budget allocations by the various ministries to NGOs and related activities: €20 million.

That doesn’t mean all the allocated funds are absorbed, he added.

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