Odysseus says audit has always been respected in the Attorney General’s body

Auditor General Odysseas Michaelidis said on Tuesday during the final day of cross-examination by the Supreme Judicial Council that if there was an institution the Audit Office had given too much respect to, it was that of the Attorney General. Justice Minister Giorgos Savvidis was removed from his post.

He added that the audit department always exercised great care and showed due respect to the institution and the Attorney General himself, adding that he never considered that there were personal differences, noting that by registering the suspension request, the Attorney General reduced the institutional and personal differences.

It is noteworthy that the final day of questioning was postponed twice due to obstruction by Council members.

The proceedings will continue at 9am on Friday, July 19. Lawyers for both sides will make oral submissions and will also submit written submissions to the Council. The Attorney General reserves the right to make oral submissions in reply.

International SAI standards and European regulations

Picking up where the previous meeting left off, Advocate General Dinos Kallis asked Mr. Michaelidis to point out to him where the international SAI standards are published in the Official Journal of the EU or CD.

In response, the Auditor General said that EU Member States are obliged to establish audit services that comply with the standards of the International Organization of Supreme Audit Institutions, which are included in the section on the European Commission website regarding enlargement. He added that this requirement was made in the accession member states and mentioned the corresponding requirements that have been identified and the response that the candidate countries will take compliance measures.

He added that the SAI standards would not amend the Republic of Congo’s constitution, but the legal framework of the member states could not guarantee its principles, forcing the committee to urge compliance measures.

In response to this position, Mr. Kallis submitted that these standards have not been published in the Official Journal of the European Union, and therefore they are not part of European law, nor have they been published in the Official Journal of the Conference on Disarmament.

Furthermore, when asked if he was a member of the Cyprus Institute of Chartered Accountants, Mr Michaelidis replied that he was not and that there was no need to do so. He added that an EY survey of the qualifications of Auditors General in other EU countries showed that the only Auditor General with professional certification was Ireland.

Check EY naturalization criteria

Later, when Mr Kallis asked about EY’s audit of the naturalisation programme between 2014 and 2020, the Auditor General said a comprehensive audit was conducted at the Department of Home Affairs in October 2016, when audit standards were not adequately applied and EY members reviewed the naturalisation files and considered at that time that there were no issues that required further investigation.

He added that between late 2018 and early 2019, international media published articles on various aspects of the scheme, and in early 2019, the then-chairman of the Environmental Movement raised questions with EY, which in July 2019 decided to examine the scheme in depth, asking the Home Office to provide a complete list of all provider offices and the naturalizations processed by each office.

He added that in November 2019, the Council of Ministers decided to appoint the Kalogirou Commission and the EY began to control the actions of the then PtD and a large number of naturalized persons. He added that the then PtD reacted but eventually allowed the control of 42 naturalized persons.

When asked how he found out that the scheme was not significant to KD’s revenue, Mr. Michailidis said that initially the scheme was small in scope as revenue but became significant or corrupt when it became clear that the scheme contained abuses of power.

In response to Mr. Kallis’s remarks that the Nicolatos Committee spoke of negligence and inattention on the part of EY, the Auditor General said that EY had pointed out a huge conflict of interest issue in its statement because a member of the Nicolatos Committee was, as he said, the Assistant Auditor General who had inappropriately communicated with members of EY who conducted the audit in 2016 but were not called as witnesses, and who played an active role in EY’s actions prior to 2015.

Mr Kallis claimed that the Auditor-General wanted to discredit the committee despite showing respect since its announcement, to which Mr Michailidis replied that he categorically rejected him and considered his presence on the Nicolatos committee to be helpful in the information it collected from its members, adding that the issues adopted by the committee were a result of the findings of the EY investigation.

Misconduct Complaints

Mr Kallis then submitted to Mr Michailidis that his misconduct was caused by his comments during the period between the promotion of the complaint and the publication of the ACA’s conclusions.

The Auditor General responded that of the seven statements tendered as evidence, five were responses to threats conveyed by the Attorney General and the Assistant Attorney General regarding the complaints, adding that what we are experiencing now is a continuation of those threats.

He added that the other two incidents related to his interview with RIK, in which, as he said, there were no issues and no accusations.

He also said the goodwill of the auditor general was clearly mentioned in the anti-graft body’s findings, adding that EY subsequently issued a notice stating that the assistant attorney general was not charged with corruption. He pointed out that my position is that this case highlights the conflict of interest in the assistant attorney general’s case and I want the attorney general to make a statement on the handling of conflicts of interest.

On the referral process for complaints and the Auditor-General’s role as a mediator, Mr Kallis submitted that the Auditor-General had a duty under the law to protect the complainant or the person named in the complaint from providing information on how their identity could have breached whistleblowing legislation even if their identity was disclosed publicly.

In response, Michailidis rejected the allegation, adding that EY confirmed the nominal complaints, which had been forwarded to the anti-corruption body and the Attorney General decided to start proceedings that same day.

He added that EY handled the complaint in an exemplary manner and complied with all aspects of its obligations.

Mr. Kallis claimed that the Auditor-General disclosed in the announcement information about a case that he had not made public in fulfillment of his confidentiality obligations, and Mr. Michailidis said that this specific case was the finding of an investigation by EY regarding the decision of the Assistant Attorney-General to suspend the prosecution of five natural person shareholders of a company that had contracts with the State between 2015 and 2020. He added that EY had a duty to communicate the finding and that it should not be interpreted as an accusation.

When asked by Mr Kallis whether he had suggested in specific statements that Mr Savidis had given unfair advice vis-à-vis his predecessor, Costas Cleridis, Mr Michailidis said his statements were in response to allegations of “subordination” to Mr Cleridis, as he said, of having a partnership with EY in practice when it faced threats and questions about its power, and of strengthening EY’s role with his advice, as he claimed, which had been overturned by the current Attorney General.

In response to Mr. Kallis’s statement that he did not want to accept Mr. Savvidis’s opinion, the Attorney General replied that the Attorney General’s opinion was very important because all members of EY wanted to be professionals, they respected them and paid attention to them, but this meant that their audit opinion would be consistent with it.

Reacting to Mr. Kallis’ claim that the Auditor General was abusing the Attorney General by accusing him of “criminal offences” and that this was not an audit opinion, Mr. Michailidis said he rejected the claim and argued that the Attorney General and the Assistant Attorney General accused him of calling them corrupt, adding that he had never made such allegations.

Mr. Kallis then submitted that the Attorney General was not responsible for the conduct of the Auditor General, as he said that the Auditor General, even if he felt aggrieved, should act with integrity, fairness, awareness of his mission and special weight. In his position, even if he thought the Attorney General’s conduct was inappropriate, he would not blame him.

Mr. Michailidis rejected this and said he believed that if there was one institution that the Audit Office respected more, it was the Attorney General, adding that even if he voluntarily placed himself between EY and the government (under control), EY’s pragmatic approach was to do everything possible to involve the Attorney General in the dispute.

He added that Ernst & Young’s statements had been careful, especially in targeting the Attorney General, that independent institutions must be respected, and that there was no way for him to take action against him even if the Attorney General spoke to him in an insulting and derogatory manner and demanded he comply with his public statements or threatened him.

He added that the audit department always exercised great care and showed due respect to the institution and the Attorney General himself, adding that he never considered that there were personal differences, noting that by registering the suspension request, the Attorney General reduced the institutional and personal differences.

Mr Kallis also submitted that the Auditor General should have shown restraint like a government official even in his defence and claimed that the Auditor General had eroded his own institution and tried to deconstruct that of the Attorney General.

In response, Mr. Michalides refuted the claim that he had eroded the institution of the Auditor General, noting that EY had upgraded both inside and outside Cyprus and could proudly adopt modern auditing standards and was now a professional service, as reflected in society and among international peer services, for example.

He also rejected allegations of attempts to deconstruct the Attorney General’s institution, saying the Attorney General is responsible for the image of his institution and he believes it is unfair to accuse another institution that performs its duties and defends its independence in accordance with international standards.

Finally, he denied the allegation that the EY defense had escaped the measure, arguing that no single statement incriminated the attorney general.

At the end of the meeting, Council President Antonis Liatsos thanked both parties for their cooperation and contribution to the expedited completion of the process, adding that their positions in the procurement are now as expected, subject to the reservation of the rights of the parties.

The process will continue at 9am on Friday, July 19. Lawyers for both parties will make oral submissions and will also submit written submissions to the Council. The Attorney General reserves the right to make oral submissions in reply.

Source: KYPE