Filenews 22 April 2023 - by Eleftheria Paizanou
Seven months after the informal veto of the oral agreement allegedly made by the State with Hermes Airports for the extension of the concession agreement for Larnaka and Pafos airports, as well as the rejection by the members of the House Standing Committee of a fund for the purchase of advisory services by an audit firm, which would conduct a study on the extension of the concession agreement, the Ministry of Finance returned to Parliament with a similar request.
The Permanent Secretary of the Ministry of Finance, George Pantelis, in a letter to the Director-General of the Parliament, Tasoula Ieronymidou, calls on the Finance Committee to release a budget of €191,238 for the purchase of advisory services.
The controversy
In July 2022, the Ministry of Finance had entered into an agreement with PWC, amounting to €192,000, to conduct a study for the extension of the airport concession agreement to Hermes, the valuation of specific claims by the company, as well as the granting of support for the submission of notification documents to the European Commission.
Last September, the members of the Finance Committee, in protest because the competent Ministry had concluded an agreement with this audit firm, without the Parliament first releasing the relevant funds, did not consent to the request of the Anastasiades Government. As the Director-General of the Ministry of Finance points out in the letter dated April 20, '23, "since the circumstances and reasons that led to this request still exist, please take the appropriate steps to secure the written consent of the House Standing Committee on Finance for the release of the €191,238 appropriations".
The recriminations
In January this year, the Audit Office had informed the Attorney General of the possibility of criminal or civil offences being committed in connection with the conclusion by the Ministry of Finance of two contracts with financial advisors (Ernst Young and PwC), one in November 2021 and one in July 2022, without the availability of appropriations and by direct award, without launching an open tender, in breach of the relevant public procurement legislation. In fact, the Office disputed the opinion made on the matter by the Attorney General, for whom he pointed out that he could not examine the matter objectively, so it would proceed with a complaint to the European Commission for illegal direct award.
In his opinion, Attorney General George Savvides had stated that the direct assignment to the financial advisor was fully legal and compatible with national laws and the acquis communautaire. This was followed by a letter from the Permanent Secretary of the Ministry of Finance, George Pantelis, calling on the Attorney General to investigate the possibility of an offence committed by the Auditor General, for the possibility of publishing false news and revealing state secrets.
Shadows in the oral agreement were seen by Odysseus
Last September, the Auditor General had identified shadows in the verbal agreement made by the state with Hermes to extend the concession agreement of Larnaka and Pafos airports by 5.5 years, i.e. until November 2036. Specifically, the compromise formula between the Government and the company provided for Hermes to construct the second phase projects (costing €150 million) provided for (anyway) in the initial contract, while the Republic will consent to an extension of the duration of the concession contract, in order to facilitate the financing of the company by lenders. Also, some compensation to the company for the period of the pandemic and the impact of sanctions against Russia will be eliminated.
The Audit Office believes that by extending the airport management period, the company will have a large financial benefit, which will reach €1.5 billion. A few hours after the heated debate, the then Ministers of Finance and Transport were annoyed and in protest had suspended their incentive plans for airlines to operate routes in Cyprus and subsidize tickets. After discussion and debate, the plans came back differentiated and were accepted by all.
