Cyprus Auditor General faces removal after publishing report on abuse in passport sales

Cyprus’ Auditor General Odysseas Michaelides could be removed from his position as he is at loggerheads with the government following the publication of a report which casts further doubt on Cyprus’ citizenship by investment programme.

This comes at a time when both Cyprus and Malta’s so-called “golden passport” schemes are under scrutiny by the European Union, which launched infringement procedures against the countries in October, with the Commission arguing that the programmes are in violation of EU law.

In the first part of the infringement proceedings, the Cypriot and Maltese government were given a two-month timeslot to reply to the letter of formal notice. If the replies are not satisfactory, the next step is for the Commission to issue a reasoned opinion on the matter, a Commission spokesperson explained to The Shift.

Now, in the latest development, a report put together by Michaelides’ office alleges a possible abuse of power by Cypriot politicians who were involved in granting citizenship to 18 executives of a casino project and 60 investors of an online video game platform who did not meet the criteria to receive passports.

Michaelides now faces political backlash after high-ranking politicians have suggested that he may be called to Cyprus’ Supreme Court, which could potentially force his removal from office to answer for what government spokesperson Kyriacos Kousios described as “indecent” behaviour, as well as for “overstepping his authority”, the OCCRP reported.

Kousios said that by releasing the report, Michaelides’ decision “violates the provisions of the Constitution, disdains institutions and, unfortunately, damages the prestige of the institution he was called on to serve”.

In Malta, numerous passport holders have also been linked with money laundering, fraud or tax-dodging crimes. These include Israeli businessman Anatoly Hurgin, who is charged with fraud in the US and fraud, smuggling and money laundering in Israel; Liu Zhongtian, an aluminium billionaire indicted in the US on allegations of avoiding close to $2 million in American tariffs; Boris Mints, a billionaire facing fraud charges in the UK; and Mustafa Abdel Wadood who pleaded guilty to conspiracy and fraud charges, among others.

In the name of transparency, the Auditor General defiantly published the report despite instructions by the Attorney General for him not to do so, as reported by the Cyprus Mail.

In a tweet following the publication of the report, Michaelides accused the authorities of attempting to prevent the report’s publication. He wrote: “Transparency is the main enemy of corruption. And the EV (Auditing Office) of each country is a key tool of transparency and accountability. Corruption rates are falling and instead of increasing transparency, we are trying to prevent EV from publishing its reports”.

Η διαφάνεια είναι ο βασικότερος εχθρός της διαφθοράς. Και η ΕΥ κάθε χώρας βασικό εργαλείο διαφάνειας και λογοδοσίας.
Οι δείκτες διαφθοράς κατρακυλούν και αντί να ενισχύσουμε τη διαφάνεια, προσπαθούμε να εμποδίσουμε την ΕΥ από τη δημοσιοποίηση των εκθέσεων της. https://t.co/LqBdSr1hi0

— Odysseas Michaelides (@OMichaelides) November 30, 2020

Speaking to journalists on Thursday, the Auditor General told reporters that “there are serious issues to be investigated” and that corruption and abuse could not be ruled out.

Despite the reports, the Cypriot government continues to defend the economic viability of issuing golden passports, OCCRP wrote.

Such a position is also echoed by the Maltese government, with Prime Minister Robert Abela and disgraced former Prime Minister Joseph Muscat also having defended the scheme’s economic viability in recent days.

On Friday, Muscat told the public inquiry board looking into the assassination of journalist Daphne Caruana Galizia that he “did not object” to passports firm Henley and Partners taking legal action against journalists in Malta in order to “protect the interests of the country”.

“Without the IIP scheme, people would be suffering today, (the scheme) was in the national interest,” he said, ignoring accusations of corruption.

Cyprus suspended the controversial programme in November following revelations by Al Jazeera which showed how public officials bypassed safeguards to provide citizenship to convicted criminals. Meanwhile, Malta has replaced the scheme with a revamped version, with minor adjustments.

Parliamentary Secretary for Citizenship Alex Muscat has said that Malta will “defend its position” on the scheme even if it has to be taken to the European Court of Justice.