There appears to be a relationship of influence or even an expectation of benefit on the part of the donors in relation to their contributions to the Independent Social Support Agency, the Audit Service finds in its report, proposing the establishment of an internal procedure, where the Agency will accept contributions only from contributors who, at the same time as paying the contribution, will also give their consent for their contribution to be made public.
According to the EY report, the Independent Social Support Agency (Agency), which provides financial support to students who, due to extraordinary circumstances, face serious difficulties in continuing their university education, until 2022 had revenues and expenses that amounted to €0.5 million per year. In 2023 and 2024 the Agency's revenues had a significant increase of 500%, after reaching €2.5 million. A significant increase was also observed in expenses, which reached €1.6 million for 2024.
As the Audit Service notes, the increased income for the years 2023 and 2024 made it possible to help more disadvantaged students in 2024, which it characterizes as "particularly positive".
However, EY reports that from a check of the list of contributions received by the Agency, it was confirmed that a number of companies, in approximately the same period that had paid a contribution to the Agency, had or continued to maintain some form of financial relationship with the state.
In particular, he gives as an example a company that in the years 2023-2024 paid total contributions of €695,750, while during the same period it had negotiated and signed a long-term and large-sum contract with the state. Also, six shipping industry companies paid total contributions of €750,000 in the year 2024 (34% of the total contributions in 2024) while in the same year, the Council of Ministers made decisions regarding the tonnage tax. Furthermore, it refers to persons who were associated with the Cyprus Investment Program (CIP), who paid contributions/donations to the Agency, totaling approximately €685,000, during the years 2018 to 2024.
"There is a relationship, (or there appears to be a relationship) of influence and/or expectation of benefit," the Audit Service states, noting that the impression of discriminatory treatment is created, even if the contribution is demonstrably independent, while it may be perceived that the Agency is used as a means of communication.
As noted in the report, the specificities of the Body in question create a special relationship. "The wife of the President of the Agency is the current President of the Republic, who takes decisions that directly or indirectly affect the private companies - contributors", it is stated, while it is added that the specific relationship in question does not result from the responsibility of those involved, since the relevant regulations were determined by the Law in 2014 (Law 156(I)/2014).
It is added that the audit identified specific cases where significant contributions were paid by companies that had some form of economic activity with the state, such as for example a company that was consulting with the state for a contract of several million, at the same time it paid a contribution to the Agency. "These cases do not in themselves suggest intentionality. Nor is it unusual for private companies, as part of their social work, to support a charitable organization", notes the Audit Service, adding, however, that what is particularly troubling is the existence of factors, which alone or in combination, can undermine the public trust of citizens.
"Our Service considers that the Agency's existing operating and management system is not sufficient to ensure the institutional integrity required in cases where charity intersects with state power. We believe that more transparency is required", he underlines, proceeding with a relevant recommendation. "In any case, the final goal should be to strengthen transparency, in order to limit the risk that the benefits of the Agency's operation will be overshadowed by public questioning", it states.
The establishment of EY
———–
The Audit Service proposes as a measure that could significantly help in the matter of transparency, which does not conflict with the decision of the Supreme Constitutional Court, that the Agency's Management Committee establish an internal procedure where it will accept contributions only from contributors who, at the same time as paying the contribution, will also give their consent for their contribution to be made public. For purposes of practicality as well as substance, he notes, this can be applied for contributions greater than a certain amount, e.g. €20,000 per year.
According to the Audit Service, among the benefits of such an arrangement is that the Operator will immediately and voluntarily take a measure that will significantly enhance transparency and minimize any suspicion. He also notes that in this way no legislative regulation is required, even though the Parliament could, if it wishes, also regulate it legislatively.
He also notes that to a large extent, the contributions from natural persons will not be affected, since usually the amounts paid by them are below €20,000, while at the same time confidentiality is also maintained.
According to EY, it is common and best practice for most private companies that pay significant amounts, in the context of corporate governance, to publish their contributions for transparency purposes, so most companies will logically consent to the publication of their act. Thus, alignment is achieved by analogy with the Organization for Economic Co-operation and Development (OECD) which recommends, for ethical purposes, how businesses publish the amount and nature of their charitable contributions, particularly when they relate to government or public bodies.
"Our Service does not claim that the above solution is the only one. Perhaps the Agency and/or the state, after first judging the need to take protective measures, will consider, with the assistance of the Legal Service, other legal alternatives", states EY in conclusion.
