The EU’s anti-fraud office (Olaf) is investigating Cyprus’ fisheries department over a tender which the audit office on Friday said contained “unacceptable” conditions and cost €1.5 million more that the lowest bidder. All the while, the project has been hit with delays.

According to the audit office, the matter has also been reported to the anti-corruption authority and transparency commissioner for possible criminal offences including abuse of power.

Olaf’s investigation concerns the purchase of an oil recovery vessel aimed at responding to marine pollution incidents in Cyprus’ exclusive economic zone (EEZ).

The tender was called in June 2022 with the weight attributed to the technical parameters put at 70 per cent, and financial cost at 30 per cent.

The audit office said the 70 per cent “was excessively high”.

In total, four offers were submitted, two of which were ruled out due to technical reasons, and their financial offer not examined.

As such, the most expensive tender was selected amounting to just over €7m.

“Is the vessel offered by the expensive supplier so much better, that it deserves us paying €1.5m more? If the answer is substantiated in the positive, then the purchase was beneficial. Otherwise, it means there was a misappropriation of public funds.”

In its own evaluation, the audit office said the cheaper tender at €5.8m was the clear winner. Putting the matter to the director of the fisheries department, the response it said it received specified the technical aspects of the tender were not weighed “with strict economic criteria.”

This is because the benefits of averting disasters in the ecosystem and the impact on people could not be measured in pure monetary terms, according to the fisheries department head.

The audit office slammed the fact that since the tender was awarded to the company, it requested three extensions and was granted two.

“The contractor blackmailing that he would terminate the contract if the extension was not approved is unacceptable.”

Nonetheless, it was used as a reason by the fisheries department to agree an extension should be granted.

The audit report also slammed the fact that after the first extension, the fisheries department secured approval from the European Commission to extend its eligible proposals until March 2025.  

“Negotiating extensions after the tender was signed is unacceptable,” the report said. Instead, this should have happened before tenders were called, allowing for more participants to get involved.

There was also a clause added afterwards, which specified that if an extension was not granted, the contractor would be released from his contractual obligations.

The audit office branded this as unacceptable as it was not included in the initial tender, and there was no prior approval obtained for this.

“This, in our view, is an abuse of power by the fisheries department.”

The report also details a separate tender aimed at offering a digital services platform for citizens, co-funded with 70 per cent from the EU and 30 per cent by Cyprus’ government.

It identified criteria in the tender process which “were not objective”.

Additionally, the evaluation committee “requested consultancy services from a firm which had a special relationship with two of the three agents which submitted tenders.”

The tender was eventually offered to one of the companies which had a relationship to the consultancy firm. It was also the company which submitted the highest bid.

Specifically, it was €740,000 more than the lowest bidder.

This project too has been beset by delays which the audit office warned could result in the loss of EU funding. The fisheries department head told the office they had sought advice from the legal service.