A “large number” of businesses and self-employed people received state aid without meeting the necessary criteria during the coronavirus pandemic while potential beneficiaries were rejected, an audit office report showed on Monday.
This was the result of deviation in a number of provisions of the state aid scheme for enterprises and self-employed workers implemented in Cyprus compared to the plan approved by the European Commission, the audit office said in its report.
The plan was published and implemented by the finance ministry last year as part of efforts to support and assist companies affected by the government measures imposed to contain the spread of Covid-19.
With its audit, the AG aimed to verify the implementation of the plan’s provisions as approved by the European Commission. This concerns distinguishing between eligible and ineligible enterprises and verifying the correctness of the calculations of the subsidies based on the parameters set by the commission .
The audit office stated that the deviations from the provisions resulted in the unlawful payment of a grant to a “large number” of enterprises thus constituting “unnecessary administrative costs”.
Furthermore, potential beneficiaries were rejected.
Substantial amounts to non-beneficiaries were also paid due to the failure to document the process that was decided, the report added. It explained that the responsibilities between the finance ministry and the tax department were not divided, and the latter failed to inform relevant finance ministry officials of the checks they were supposed to carry out prior to the payment of grants.
Meanwhile, an administrative investigation by the tax department revealed that 503 non-beneficiaries received the grant. However, no action was taken to recover the amounts wrongly paid. Furthermore, the finance ministry, responsible for the management of the scheme, failed to proceed with a similar investigation.
The audit office recommended the finance ministry should immediately proceed with the recovery of the state benefits paid in excess to those 503 non-beneficiaries.
The ministry, the report said, should also recalculate the aid amount based on the framework approved by the EU Commission and recover the amounts paid in excess.
If more non-beneficiaries of the plan emerge other than those already identified, the audit office said the competent ministry should be informed so it can initiate the recovery procedures.