Audit office report on citizenship scheme ‘incomplete and insufficient’ (Update 2)

By Christodoulos Mavroudis and Nick Theodoulou

The citizenship by investment scheme sparked a blazing row on Thursday at the House watchdog committee as Interior Minister Nicos Nouris branded the auditor-general’s report as incomplete, insufficient, lacking evidence and politically motivated.

The House committee convened extraordinarily after Auditor-general Odysseas Michaelides’ report was published, indicating a series of malpractices and potential criminal offences in the now-defunct Cyprus citizenship by investment scheme.

Following the meeting, MPs called for heads to roll demanding that anyone found complicit in the scandal be brought to justice.

The passport scandal has resurfaced following the audit office’s report, released on Monday, in which it noted that a very large number of people who were approved under the scheme did not meet the criteria, while at least 3,810 additional people were naturalised as relatives (spouses, adult dependent children, or parents) of the investors without any authorisation in the relevant law.

According to the report, €200m were lost from VAT, as well as €25m from the non-payment of fees.

In addition, €1bn worth of contracts were cancelled while contracts worth an additional €3.5bn are still pending, with the report observing that no satisfactory mechanisms were ever in place to prevent the likelihood of fake investments or their premature abandonment.

During the session, Michaelides, referring to the cabinet’s responsibilities called on the attorney-general to investigate possible criminal offences but also pointed out that the deputy attorney-general Savvas Angelides was present during cabinet’s approval of 1,000 naturalisations and the attorney-general himself Giorgos Savvides in 500 to 600 cases.

“We have found approximately 1,600 naturalisations since the time Savvides and Angelides were ministers. We will report this to the independent authority against corruption,” Michaelides said.

The audit chief further referred to the interior ministry’s actions in determining whether the naturalised individuals had actually maintained the investments they had made that entitled them to citizenship.

He further referred to the 64 companies, where some of the naturalized persons declared fields and parking lots as residential addresses.

“…everyone was naturalised by the interior minister who is now deceased. Instead of ascertaining responsibilities they started blaming us. The attorney-general then called us out. The government had said that our report was full of inaccuracies. In the end what our report found was confirmed,” he said.

Michaelides also said that lawyers were signing as guarantors of their clients’ good character, a practice he described as a criminal offence. He explained that the then applicants had to have people who knew them sign and guarantee their good character. Instead, in 12 out of 20 cases which were approved after August 18, 2020 those who testified for the applicant’s good character were in fact staff members of the law offices. In other cases, the address given was that of the law office handling the application.

Notably, within the form of the application the two people guaranteeing the applicant’s good character must declare that they are not lawyers, agents or family members of the applicant.

The committee chair and members requested that more specific evidence be provided for these cases.

Branding the whole report “incomplete, lacking evidence, insufficient and politically motivated” interior minister Nicos Nouris lashed out at the findings and the comments over the report, criticising the point in time in which it was made public, in the middle of a pre-election period.

“The same audit was carried out in 2016 by the audit service and absolutely nothing was announced,” Nouris said.

“The audit service’ report is always welcome, but we expect that the suggestions, observations and any institutional omissions found be communicated to the competent authorities in a timely manner in order to benefit the Republic and the public interest”

“Reciting the same arguments trying to prove that everything is flimsy”

Further expressing that the report does not deal with those who bear the heaviest responsibilities, referring to providers and supervising authorities.

“No comment is being made for their participation and action in the Cyprus investment programme procedures.” Nouris said.

The minister also challenged the claims made by Michaelides in regards to lawyers signing the good character statement, insisting that in three cases there were forgeries and those responsible were taken to court – both the lawyers and the firms.

Nouris also seemingly shifted blame onto the auditor-general, stating that Michaelides’ office had researched the interior ministry in 2016 but not call out anything untoward.  “Perhaps the programme [investment scheme] would have been different,” Nouris argued, further hitting back at claims made by Michaelides.

Nouris again praised the investment scheme as having greatly boosted the economy and securing thousands of jobs.

Referring to three major developments – the Ayia napa marina, the casino and Wargaming’s investment – he said Nouris said the cabinet concluded that the benefits to the Republic arising out of these developments was great.

The minister further rubbished Michaelides’ claims of opaqueness, as Nouris argued that each investment case is linked to thousands of papers and it would have been impossible to provide all those details – as the government instead opted to only hand over the necessary paperwork. “Instead of having ministerial cars we would have had to have pickup trucks in order to transport all the application documents at the cabinet,” he said.

“The last thing we need right now is for the interest and image of the Republic of Cyprus to be damaged once again over an argument concerning reheated food,” said Nouris noting that the common goal must be the restoration and the strengthening of the country’s economy.

Alluding to political motivations the minister said that the report concerns itself only with findings between 2013 and 2020, and that had there been willingness for the report to be credible then it should have included findings from 2008, not just when the Anastasiades government came to power in 2013.