Millions wasted on Covid support plan

Over €30 million in pandemic support was disbursed to almost 5,000 beneficiaries who did not qualify and no effort has been made to recover the money, MPs heard on Thursday.

While 4,751 ineligible individuals and corporations did get support, others who did qualify were denied, Auditor-general Odysseas Michaelides said.

He said the handling of the support plan had been “sloppy.” The cost to the state of wrongly disbursing the money came to €32 million, he told deputies at the House audit committee.

Michaelides referred to the findings of an investigation ordered in late 2021 by the then finance minister, according to which 503 businesses were identified that did not meet the criteria of the support plan and were given subsidies totalling almost €16 million.

He said no effort has been made to recoup this money. In fact, he added, his office had sent a report on the issue to the finance ministry in September 2022. Almost a year has passed and officials say they are “still looking at it,” he said.

“We have said that there is an amount of over €30 million, which was given and is not in line with the approved framework of the European Union and the commissioner for state aid control has explained that these amounts must be returned,” Michaelides said.

Analysing his report at length, he said there had been issues of “misunderstandings and serious weaknesses” in the way the support plan was implemented, describing the work as “sloppy”.

Michaelides said the budget for the support scheme had been set at €200 million, and the number of beneficiaries was estimated by the finance ministry at 30,000 businesses and self-employed workers. In all, €155.7 million was disbursed.

“We sent one plan to the European Commission and implemented another,” he said, explaining that the money was to go only to businesses and self-employed workers whose economic activity was under full or partial suspension due to Covid decrees.

However, some businesses that were under no obligation to suspend activities but because they were affected by the restrictions, received the support as well. This was a large number, the audit chief said.

He also said some miscommunication between the finance ministry and the tax department resulted in the proper audits not being carried out before payment of the grants, which resulted in large numbers not ultimately qualifying but receiving a handout. His calculations put this at €32 million given to 4,751 entities and persons who were not legally entitled.

As an example, Michaelides said that in 15 cases involving hotels, an error was made by overestimating the amount of support to the tune of €984,330 which, he added, was recovered by the state. In another example, he said there were 139 cases involving companies with international, not local activities. So far, he added, €10 million has been recovered in 96 cases but efforts to have the rest returned have either stalled or not even begun.

Commissioner of state aid control Stella Michaelidou, who was also at the committee said the pandemic conditions had been unprecedented and at the time pressures to implement the provisions of the plan were huge.

“But this does not mean that the amounts should have been given out before their final approval or that they [the state] should continue to act with a wrong methodology,” she said.

She said she agreed with the findings of the auditor-general and that in terms of eligible beneficiaries it was not acceptable for someone who was not entitled to receive any aid.

On behalf of the finance ministry, Andreas Karaolis, said it was “an unprecedented project which had to proceed without many bureaucratic procedures” and that it had been challenging.

Some MPs put the issue down to failings within the public service in general and a lack of ability on the part of government agencies to perform their role adequately. But one Akel MP, Christos Christofides said he wondered if the free-flowing handouts had anything to do with the fact they were rushed thorough during a pre-election period. Parliamentary elections took place in May 2021.