Filenews 3 July 2022 - by Eleftheria Paizanou
European sanctions imposed on Russia over the invasion of Ukraine last February leave Russian businessmen and Russian legal entities out of public procurement (and) in the Republic of Cyprus. The Treasury has issued a circular on the actions to be taken by the contracting authorities in the tendering of public contracts.
According to the sanctions in place, it is not allowed to award a public contract to an economic operator if he is a Russian national (natural person) or a legal person or entity or body established in Russia. The ban also applies to a consortium in which a Russian body participates. It is also forbidden to award a public contract to a legal person, entity or body whose ownership rights are held directly or indirectly, at a rate of more than 50%, by a person from Russia. In addition, natural or legal persons or bodies that, regardless of their nationality or registered office, act on behalf of or at the behest of a person or entity from Russia are not allowed to participate in public procurement. At the same time, the prohibitions concern natural and legal persons, when, regardless of their nationality or registered office, they submit an offer for a contract that will be executed at a rate of more than 10% of the contractual value by a subcontractor, supplier or other supporting body from Russia. It is worth noting that the existing contracts affected by the sanctions should be terminated by October 10, 2022.
The exceptions
The Treasury of the Republic, as the competent public procurement authority, may proceed, in exceptional cases, to approve the award or even the continuation of the execution of public contracts in violation of the limits set by the European Union. In particular, exceptions may be granted by the Treasury for the award or continuation of the execution of contracts for the operation, maintenance and management of radioactive waste, the supply and reprocessing of fuel and the safety of civilian nuclear capabilities and the continuation of the design, construction and commissioning required for the completion of civilian nuclear installations; as well as in the field of research and development.
In this regard, within two weeks of the date of granting the authorisation for an exemption, each Member State should inform the other Member States. According to the Treasury, for public procurement procedures, the value of which is within the EU thresholds, no penalties apply.
What will apply to existing contracts
Based on the circular of the Treasury, for the purposes of compliance of the Republic with the European sanctions, the contracting authorities should proceed to a series of actions. In particular, for existing contracts, contracting authorities should send letters to the contracting economic operators, in which they will be sent self-declarations, which they should send signed within the regular time limit, as well as the additional declarations of subcontractors or any other supporting bodies. In fact, in case of doubts in relation to the self-declarations, the contracting authorities may request any information they deem appropriate from official registers in order to check and verify the correctness of the declarations. Moreover, if the contracting economic operator or subcontractor or other entity falls into the categories mentioned above, the contract should be terminated by 10 October, while in the meantime the necessary steps will have to be taken to award and sign a new contract. For subcontractors or support entities affected by the sanctions, the contracting entity may request that they be replaced by other entities that are outside the sanctions before the termination of the contract.
Contracts to be evaluated
In relation to procurement procedures where tenders have already been submitted and are being evaluated, contractors will be able to request an exemption invoking the Regulation. It should be noted that the solemn declaration will state that he is not a Russian national or a legal entity based in Russia and is outside the sanctions decided by the European Union last April. In the event that the contractor or subcontractor is affected by the penalties, then the contract is not signed and the same procedure is followed as for a disqualified contractor, without withholding any deposited participation guarantee, by awarding to the next ranking tenderer, who does not fall under the penalties. In the case of a subcontractor or other entity which is not subject to the penalties, it is recommended that the successful tenderer replace them within a reasonable time limit in order to assess them before the tender is rejected. As regards procurement procedures, where tenders have not been submitted, the documents of the award procedure should be amended. In particular, for the new procurement procedures, the tender documents should be configured in such a way that they are included in the required certificates that the contractor must provide a solemn declaration.
From July 5, the bans on trusts
In addition to the bans on public procurement, as of 5 July, the provision of fiduciary services to persons with a connection to Russia has been prohibited. Nationals of a Member State or a natural person holding a temporary or permanent residence permit in a Member State shall be exempted from the prohibitions. At the same time, however, trustees who have already started the procedures for terminating the provision of such services by May 10, 2022, are given the opportunity to complete their procedures by September 5, 2022, if they receive a relevant permission from the competent authorities.
In addition, trustees will be able to continue providing such services, for other reasons, if they are given approval, provided that they do not accept or have resources. Furthermore, the competent authorities are given the opportunity to grant permission for the operation of trusts, the purpose of which is the management of occupational pension schemes, insurance policies or share distribution plans to employees, charities, etc.
As regards the prohibition on the provision of accounting services, audit services, including statutory auditing, bookkeeping or tax advisory services, or business and administrative advice or public relations services to the Government of Russia and to legal persons, entities or bodies established in Russia, this measure has been targeted following exhortations to the competent institutions of the European Union. This prohibition excludes the provision of services intended for the exclusive use of legal persons, entities or bodies established in Russia owned or controlled exclusively or jointly by a legal person, entity or body established or constituted under the law of a Member State.
There are many consequences of sanctions, but .....
There is no doubt that there is no member of the European Union that has not been affected by the economic sanctions imposed on Russia as a result of its invasion of Ukraine. And the influence is due to the economic activities and the connection that many European countries have with Russia. In fact, as time goes by and the war continues and sanctions remain in place or are tightened, the economic impact on the Member States will be greater. However, regardless of the economic benefits that Europe has from Russia, sanctions on Moscow had to be imposed, as punishment and pressure for the withdrawal of its troops, since unlike any country, whenever it smokes and without consequences, will invade other countries in the way I want. Let us not forget that Cyprus has been in the position where Ukraine is today for 48 years. Even if the same sanctions were not imposed on Turkey.
