Millions in COVID support went to non-beneficiaries

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Millions of euros in taxpayers’ money went down the drain as the government paid €45 mln in COVID aid to companies which were not entitled to financial support, according to the Audit Service.

According to the findings of Auditor General, Odysseas Michaelides, presented before the House Audit Committee on Thursday, some €32 mln was paid out to nearly 5,000 Cypriot companies and self-employed individuals who did not meet the criteria of the support scheme.

Another €13.8 mln was given to foreign companies registered in Cyprus without real economic activities.

For the €32 mln handed out to Cypriot companies, no procedures were initiated to recover the amount, while for foreign companies, €9.7 mln was recovered.

Michaelides told MPs that his findings revealed that the Finance Ministry had not followed the scheme submitted to the European Commission but applied a different set of rules.

“From a recalculation carried out by our Service, we identified payments of €32 mln to 4,751 entities which were not covered under the (EU) approved plan as they did not meet the criterion of a reduction in turnover in the year 2020 compared to (pre-COVID) 2019,” said Michaelides.

“We noted significant deviations during the plan’s implementation as approved by the European Parliament by the Ministry of Finance.

“These deviations constitute payments made to any non-beneficiaries as illegal state aid”.

Michaelides told MPs the budget for the support scheme was €200 mln, but in the end, €155.7 mln was spent.

“It is noteworthy that before the European Parliament even approved the plan, the Ministry of Finance had already handed out €99 mln (out of the €155.7 mln) without informing, even after the fact, the European Parliament”.

Furthermore, Michaelides referred to “blatant abuse” of the plan, noting that for some reason, which he did not understand, the ministry had calculated that a year had 375 days instead of 365.

He also referred to illegal state aid to companies while criticising that firms eligible for support did not receive it.

According to the Auditor General, 12,997 businesses in Nicosia, Limassol and Larnaca received €93.7 mln, and 5,432 businesses in Paphos and Famagusta received €30 mln.

Some 142 businesses in shopping malls received €8.7 mln.

Some 1,036 hotels and accommodation received €38.7 mln, 303 travel agencies received €19.8 mln, 5,666 retail businesses in Nicosia, Limassol and Larnaca received €23,686,275, and 483 private tutoring schools shared €660,216.

Beneficiaries of the plan were 30,000 companies/individuals, and the minimum amount of state aid was set at €1,000, with a maximum €300,000.

Hotel units and tourist accommodation were an exception, with the maximum state aid set at €800,000.

A representative of the Finance Ministry attributed the additional payments mainly to the unprecedented nature of the pandemic and the urgent pressure to support the economy.