Government says it has been in the dark about how rally money was spent
The Cyprus Automobile Association (CAA) have vowed to set the record straight about their alleged mismanagement of public monies in running the Cyprus Rally, even as the government looks bent on taking control of the annual event or else see it shut down for good – a disastrous move, according to the CAA.
“When our organisation is summoned to parliament, I will personally correct all the untruths and distortions heard there this week,” CAA chairman Antonis Michaelides told the Sunday Mail.
“It goes without saying that we deny the claims made by various individuals. Unfortunately, the impressions created will linger until we are allowed to tell our side of the story at the proper venue, in parliament.”
Michaelides, who served as commerce minister from 2006 to 2008, was referring to Thursday’s session of the House audit committee, where government officials telegraphed they would stop funding the CAA – the private entity with the franchise on the Cyprus Rally.
In parliament, Finance Minister Constantinos Petrides spoke of a lack of transparency by the CAA regarding the latter’s use of the state grants they receive to organise and run the rally.
Petrides asserted that from 2003 to 2021 state grants for the Cyprus Rally amounted to €10.3 million, with “no checks” on how these funds were being managed – and therefore no way to ascertain whether the state was getting its money’s worth.
“It is inconceivable that such events receive no funding from the private sector,” the minister added, citing for comparison the Acropolis Rally in Greece where private funds cover up to 70 per cent of the costs. And he suggested the event should instead come under the control of the Cyprus Motorsport Federation, which is part of the Cyprus Sports Organisation.
The CAA has always dealt directly with the International Automobile Federation (FIA), with regard to the Cyprus Rally’s organisation, logistics and finances. The government says it has been in the dark about how its money was being spent. Between 2003 and 2021, an amount of €10.3 million was paid to the CAA, varying from €900,000 in 2010 to €500,000 the following year.
This year, and for the first time since 1974-1975, the Cyprus Rally was not held as the government refused to commit to funding four rallies from 2022 to 2025 that were offered by the FIA.
That decision was branded “criminal” by the CAA and Michaelides, who cited a Deloitte report showing that the direct and indirect benefits for the Cyprus economy from organising the Cyprus Rally for the four years of 2022-2025 were estimated at €120.4 million, while the total cost amounted to just €10.6m.
Michaelides argues the loss will not be just financial, as Cyprus would miss an opportunity to promote itself as a country that can organise important sporting events, becoming one of 14 worldwide that participate in the World Rally Championship.
According to the Deloitte study, the event was expected to attract a TV audience of 102.3 million over the four-year period, generating a direct benefit to the economy of €30.5m, and another €89.9m in indirect revenue.
The Deloitte report – understood to have been commissioned by the CAA itself – is confidential and not publicly available. But a slide presentation was shown to the government.
Michaelides sounded particularly piqued over the fact that parliamentarians had not summoned the CAA to the House audit committee this week.
“It was a shocking oversight, not to mention unethical. Smears were heard against myself and the CAA, we were not there to defend ourselves, and I hope that the committee will not take too long to revisit the issue and invite us to set the record straight.”
Michaelides also claims that he has meantime made inquiries, discovering that no minutes of the committee proceedings were kept – something he calls “astonishing”.
Asked about the counter-argument – namely that the Cyprus Rally may not be the promotion event for the island that it’s made out to be, given that Cyprus already has a well-established reputation as a tourist destination – the CAA head dismissed this as “baloney”.
He said: “Sure, people of a certain age are aware of Cyprus, but what about younger generations? These things are not static – that’s why you need to keep promoting the island.”
But he declined to comment further, saying he was “saving it” for his appearance in parliament where he’d make, quote, “their heads spin.”
Contacted by the Sunday Mail, the finance minister confirmed the decision to wrest control of the rally franchise away from the CAA is definitive.
“I have spoken to KOA (Cyprus Sports Organisation), and they verified that they will authorise the Cyprus Motorsport Federation to apply for the franchise,” said Petrides. “We are waiting for the Cyprus Motorsport Federation to submit their own financial proposal.”
Asked whether the government’s current position is negotiable, or if some middle ground or other arrangement can be reached with the CAA, Petrides gave a flat ‘No’.
Next we reached out to the finance ministry’s permanent secretary Giorgos Panteli, who said the move to stop the grants to the CAA was a “political decision”.
Panteli reiterated the government line – that the CAA had been overcharging the state for organising the rally.
“For instance, when in 2021 for the first time we sought documentation for their expenses, they [the CAA] broke it down to around €240,000. And that’s the amount they got for 2021. Compare this to previous years, when the state grant ranged from €500,000 to €600,000.”
But when queried as to why the government had not carried out such checks prior to 2021, Panteli demurred.
Likewise the official could not adequately explain why the government now wants to ‘take over’ the Cyprus Rally when – according to their own argument – the event yields minimal benefit to the country’s economy.
Panteli cited a study done for or by the government – which, it was unclear – a few years ago and which found minor economic benefits from hosting the rally.
The Sunday Mail understands that back in 2017 the cabinet had decided to commission such a study, to be carried out by the University of Cyprus. We are told that study never happened.
Sources, who preferred to remain anonymous, said that the government “delude themselves” if they think that after decades that will just step in and take over as the FIA’s local motorsports partner, replacing the CAA.
“Good luck with that,” commented the sources sarcastically.
Established in 1934, the CAA got the FIA franchise for Cyprus in 1966 and has been running the Cyprus Rally annually ever since – bar the years 1974 and 1975 in the wake of the Turkish invasion.
