Filenews 8 June 2023
So far, no effort has been made to recover the €32 million given to 4,751 people who did not meet the conditions of the State Aid Scheme for Enterprises and Self-Employed Persons implemented during the coronavirus pandemic, the Auditor General of the Republic, Odysseas Michaelides, said on Thursday, pointing out also that some citizens and businesses that were not beneficiaries received sponsorships and some others who were, did not receive.
Mr. Michaelides also referred, inter alia, to the findings of an investigation ordered in 2021 by the then Minister of Finance, according to which 503 businesses were identified that did not meet the criteria of the Plan and were paid grants totalling almost €16 million and to the fact that no recovery actions were taken.
Presenting his Special Report for the year 2020 on the State Aid Scheme for Enterprises and Self-Employed Persons, before the House Standing Committee on Development Plans and Public Expenditure Control, the Auditor General stressed that the Report was handed over to the Ministry of Finance for comments from September 2022, adding that almost a year has passed and officials report that they are still "seeing it".
We, he continued, have said that there is an amount of more than €30 million, which was given and is not in line with the approved framework of the European Union and the Commissioner of State Aid, has explained that these amounts must be returned.
Analyzing his Report extensively, Mr. Michaelides noted that minutes were not kept, there were issues of misunderstanding and serious weaknesses in the way the Plan was implemented, describing all the work done as "sloppy".
The Commissioner of State Aid Control, Stella Michaelidou, said that conditions were indeed unprecedented and the time pressure to implement the provisions of the Plan was great. However, he stressed that this does not imply that "the amounts should either have been granted before their approval or they should continue to act with the wrong methodology".
He also agreed with the findings of the Auditor General and stated that as far as eligible beneficiaries are concerned, it is not acceptable for someone who was not entitled to receive any aid. It indicated that the methodology should also take into account the cumulation factor for companies and enterprises.
On behalf of the Ministry of Finance, Andreas Karaolis said that this was an unprecedented plan that had to proceed without many bureaucratic procedures. He said that managing the Plan was challenging, as the conditions were unprecedented. Mr. Karaolis briefed on the steps taken by the Ministry of Finance for the implementation of the Plan and said that the findings of the Auditor General are being examined.
Presentation of the Report and Comments
Mr. Michaelides stated, among other things, that the budget of the Plan was set at €200 million, and the beneficiaries were estimated by the Ministry of Finance at 30,000.
The relevant amount, he continued, was included in the Budget of the Ministry of Finance and the amount of actual expenditure amounted to 155.7 million euros. He also stated that according to the Plan, the Ministry of Finance was responsible for its management, while payments were made by the Tax Department.
The Auditor General stressed that "we sent one plan to the European Commission and another we implemented", indicatively stating that according to the approved plan, the eligible beneficiaries included only businesses and self-employed persons whose economic activity was under full or partial suspension of operation in accordance with the Decrees of the Ministry of Health and the Ministry of Finance during the implementation of the Scheme included as eligible, economic activities for which, although there was no obligation to suspend their activities by the Decrees of the Ministry of Health, it considered that they were negatively affected by the restrictive measures, due to the nature of their activities. It stated that these derogations resulted in the payment of sponsorship in a large number of affected cases, which "constitutes illegal State aid".
In addition, he said that the non-recording of the procedure decided, including the separation of responsibilities and responsibilities between the Ministry of Finance and the Department of Taxation and the failure of the competent officers of the Tax Department to be informed by the Commissioner of Taxation, in relation to the checks they had to carry out before the payment of grants, again resulted in the payment of significant amounts to non-beneficiaries.
He also noted that for the calculation of the average turnover for 2020, the actual number of days corresponding to the turnover for 2020 was not used, but the days corresponding to the submitted tax returns for 2019 of each business were used and, as he said, payments of €32 million were detected to 4,751 persons who were not in compliance with the Scheme.
Mr. Michaelides pointed out that due to the weaknesses, errors occurred in the payment of sponsorship amounts. He said that for 15 cases involving hotels, an error was made to overestimate the amount of sponsorship totalling €984,330, which was recovered. In addition, he said, 154 companies were identified that received a total grant amount of €13,826,575, which did not meet the necessary conditions of the Scheme and 139 cases of them concerned companies of international activities. He noted that almost €96 million was returned from 10 cases.
He added that in July 2021, the Minister of Finance appointed an investigating officer to conduct an Administrative Investigation at the Tax Department to ascertain the reasons for incorrect payments to non-beneficiaries in the context of the implementation of the Scheme, and identify any responsibilities.
As he said, according to this survey, 503 businesses that did not meet the criteria of the Plan were identified and they were paid sponsorships totalling almost €16 million. He noted that no action was taken to recover the amounts wrongly paid, nor was there a corresponding investigation for the Ministry of Finance, which was responsible for the management of the Scheme.
CNA
