State failing to recover misspent pandemic support funds

The state has been unable to recover funds erroneously allocated to businesses during the coronavirus pandemic three years on, it emerged on Friday.

Of a total of €940 million spent, the ministry of labour had conducted follow up checks on an amount of €12 million which was set to be recovered. To date only a portion of this has been returned.

The recovery of the entire joint state-EU sponsorship amounting to a whopping €62.6 million had been examined, Philenews reported.

Reportedly, checks by the audit service for the year 2020 revealed that a number of recipients of moneys handed out for work suspensions during the pandemic never provided supporting evidence for their claims.

Within the three categories of recipients, for full work loss, partial work loss, and the self-employed, eight, six and 23 per cent, respectively, did not file the required information to prove their eligibility for the funds.

Corresponding amounts received in the three categories were of €1.7 million, €80,000 and €1.2 million.

The audit service had expressed the opinion that these amounts should be reconsidered and recovered, and the ministry agreed with the opinion of the audit service.

The €12 million to be recovered included amounts that, according to the results of the audits, went to non-eligible beneficiaries, as well as claimants who failed to respond to requests for information.

Others included cases determined ineligible for one-off grants in retrospect following systematic checks.

Of the total amount flagged for recovery, €4.2 million has been collected, the return of €500,000 has been offset, and €3.7 million appealed, resulting in an outstanding €3.6 million, receipt of which is pending.

The auditor general’s report, prepared for the labour ministry, stated that the sponsorship plans had been in effect from March 16, 2020 to October 30, 2021, during which applications were submitted and processed through the social security service’s electronic portal.

At the time, special plans for partial work suspension received 24 per cent of the total expenditure, the plan for hotels and tourist accommodation 19 per cent, and the plan for full work suspension 16 per cent. 

The one-off sponsorship to small businesses amounted to 17 per cent of the total, with more targeted plans making up the remaining 24 per cent.

In June last year MPs examined the matter with Auditor General Odysseas Michaelides having said the handling of the dispersals had been “sloppy”. At the time he told the House audit committee that the cost to the state of wrongly disbursing the money came to €32 million.

“We sent one plan to the European Commission and implemented another,” he said.

Michaelides referred to the findings of an investigation ordered in late 2021 by the then finance minister, according to which 503 businesses were identified that did not meet the criteria of the support plan and were given subsidies totalling almost €16 million.

He said no effort had been made to recoup the money. His office had sent a report on to the finance ministry in September 2022, he said, and almost a year later officials were “still looking at it.”

Commissioner of state aid control Stella Michaelidou blamed the lack of diligence on “huge time pressures” during the pandemic.

On behalf of the finance ministry, Andreas Karaolis, had said it had been an unprecedented project which “had to proceed without many bureaucratic procedures”.

But Akel MP, Christos Christofides had questioned whether the free-flowing handouts had to do with the pre-election period. Parliamentary elections took place in May 2021.