The attorney-general’s office irregularly authorised an out-of-court settlement with a company that saddled the Cypriot taxpayer with €700,000, while separately failing to pay VAT for services rendered to it by a foreign law firm, the Audit Office said in a report released Tuesday.

The findings were part of the Audit Office’s special report on the attorney-general’s office for the year 2022.

According to the dossier, the AG’s office irregularly agreed to a €700,000 out-of-court settlement with a bus company, which had taken the state to court.

The same company had been subsidised by the state up until 2010 for carrying out routes in the Nicosia district.

In 2013 the company sued the state, asking for €800,000. In response, the state filed a counterclaim for €540,000.

Subsequently the attorney-general – the legal advisor of the government – dropped the counterclaim and settled for €700,000 to be paid to the company.

“We expressed the opinion that the attorney-general’s decision to pay the €700,000 and abandon the Republic’s counterclaim was lopsided to the Republic, and chiefly raises an issue of unlawful state aid given to the company…” the report said.

The Commissioner for State Aid Control, with whom the Audit Office raised the matter, agreed with this assessment.

“We further note that even if there were data demonstrating the rationality of paying the €700,000, the attorney-general’s office had no authority to agree to the payment of the amount without the approval of the European Commission.”

The attorney-general’s own view was that their out-of-court settlements are not subject to audit. And in correspondence with the Commissioner for State Aid Control, the attorney-general accused the former of “institutional impertinence”.

Elsewhere the dossier flags the fact that since 2015 the attorney-general’s office has been receiving services from a foreign law firm, for which services up until the end of 2021 it did not pay the due VAT amounting to €2.7 million.

The same matter had been brought up in a previous report, the Audit Office said.

In 2022 the attorney-general’s office had revenues of €627,000 and expenditures totaling €59.9 million. Amounts receivable at the end of 2022 stood at €10.5 million.

According to the latest available data cited in the report, the attorney-general’s office employed a total of 227 people, of whom 136 were full-time.