Cyprus Mail

Auditor-general turns screw on government over airports

Auditor-general Odysseas Michaelides

The auditor-general as well as opposition lawmakers hauled the government over the coals on Monday, when it emerged that a confidential communication between him and the transport ministry was leaked to a private company that was an interested party in the matter.

In 2006 the government and Hermes signed a deal giving the latter a 25-year concession to operate the airports in Larnaca and Paphos. Now, the two parties are in talks for a five-year extension to that agreement.

Auditor-general Odysseas Michaelides said that the parties have struck up a draft agreement regarding the extension.

According to what he told MPs, the draft agreement would extend the concession to November 2036; and in exchange for the extension, Hermes would waive any claims for compensation for financial losses sustained during the coronavirus pandemic and the fallout from EU sanctions on Russia.

Meanwhile, Hermes had yet to commit to undertaking expansion works on the two airports. The project – costing some €250 million – should have got underway between 2017 and 2018.

Michaelides noted that the initial contract between the government and Hermes stipulated that the former could terminate the contract if the works were not carried out on time.

The auditor-general said he compiled a draft report on these matters, which he sent to the transport ministry on August 30. Marked ‘Confidential’, the report was addressed exclusively to the transport minister and the ministry’s permanent secretary.

Two days later, Michaelides claimed, he received a phone call from a senior Hermes executive wanting to discuss these issues. “So the report was leaked,” he said.

Akel MP Christos Christofides called the incident “unacceptable.”

He added: “Beyond that, it causes us great alarm. We are concerned as to whether during these negotiations they [i.e. the government] are negotiating in the interests of the people, or if they have other things in the back of their mind.”

Also on Monday it came out that the finance ministry had signed a commercial agreement with a consultancy firm without first having the funds approved by parliament.

The €191,000 agreement between the ministry and PWC was signed sometime during the summer, commissioning the company to advise the government about the extension of Hermes’ concession on the island’s two airports which is currently under review.

It appears the government inked the deal during a ‘dead’ parliamentary period, at a time when no credits for this expenditure had been approved – perhaps hoping that the House would rubberstamp the funds at a later date.

Opposition MPs called the government action illegal.

“This is a practice that is alien to our system, we do not understand it, we do not endorse it,” said Diko MP Christiana Erotokritou.

Her party would not release the funds involved, she added.

Dipa MP Alekos Tryfonides called for an investigation, adding that those public functionaries involved should face justice.

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