We do not care about the period before 2/01/2019, the Ministry of Tourism responds to the objections of the Audit Service that concern that time period .
The relevant excerpts included in the summary and in the main part of the Report include many references to the period before 2.1.2019, the date on which the Law on the Establishment of the Ministry of Tourism and the Appointment of the Deputy Minister of Tourism under the President and Related Issues Law ». These reports are not related to the responsibilities of the CTO either, of which the Ministry of State is an evolution.
The questions asked by the Electrical Service in its Report and how the Undersecretariat answers
With regard to the reports referred from the period of the commencement of the operation of the State Department onwards, the State Department makes the following comments:
Ayia Napa Marina
Rents are paid normally.
Rents are paid, without adjustment based on the consumer price index, due to the fact that the issue of adjustment is pending with the Legal Service for an opinion.
Marina St. Raphael
The Lessee has sent, on 12.2.2021, the audited accounts for the years 2017 and 2018, along with the calculation of the amount to be paid. The State Department requested additional information which was sent on 17.2.2021. The relevant rents are expected to be collected within the next few days. Regarding the rent of 2019, which had to be paid by 31.12.2020, we were informed that, as soon as the selected accounts are ready, they will be sent to the State Department for the relevant audit. It is noted that the State Department imposes interest on any delays.
The rents have been paid normally including 2020. We were informed that the Contractor has instructed his banking institution to pay the 2021 rent.
Register of receivables and other recurring receipts
The State Department maintains a relevant electronic register of rents for all Marinas, as well as a collection of receipts for rental rights of residential real estate in the Limassol and Ayia Napa Marinas.
Revenues from the Marinas are no longer credited to the “502- Rents” Account. From 2021, these revenues are credited to the separate Revenue Line, which has been created in the budget, under the name “Marines Rents and Revenues”.
Arrears of Larnaca marina
Concession of space by the Port Authority in Larnaca Marina.
The issue has become irrelevant since the Marina Concession Agreement for the integrated development of the Port and Marina Larnaca was signed on 4.12.2020 with a transitional period of a maximum duration of one year, ie until 1.3.2022.
Estates in Larnaca Marina.
Arrears of rental income in Larnaca Marina until 31.12.2020 have been reduced to € 41,187 of which € 3,356 is doubtful and its deletion is being forwarded to the Technical Deletion Committee. On 31.12.2020, in Larnaca Marina, 9 premises were operating, the management of which was assigned to 7 tenants.
Stores license agreements
The administrators have paid the due amount of the private Criminal evasion with number 1880/20.
Also, judicial measures have been taken to recover the amounts owed for the period 2016-2018 as well as judicial measures to recover the amounts owed for the period 2018-2020 and to issue a decree to recover the ownership of the B&C stores after the agreement License dated 12/09/2002 these stores should have been delivered to the then Manager of the Marina by 15.9.2003.
Regarding the lawsuit 83/2020, it is mentioned that a Decision of the District Court has been issued on 23.11.2020 with suspension of execution until 31.12.2020.
Contract with a specific group:
The case was set to be heard in the District Court on 14.5.2021. An order of compliance or suspension of the operation of the Recreation Center will be requested.
Mooring fees to be collected in Larnaca Marina.
(i) The new ERP boat management subsystem has been put into operation and significant statements are being developed that should be issued for the effective monitoring of receipts and debtors.
(ii) Advance payment of mooring rights.
In order to comply with the Circular of the General Accountant of the Republic no. 1696, corresponding amendments should be made to the relevant regulations KDP 124 of 2009, which regulate the payable Rights of the Larnaca Marina. However, this issue will become irrelevant given the concession, from 1.3.2022, of Larnaca Marina to a private investor and the relevant regulations will have to be repealed within the framework of the EU free market directives.
(iii) Boat sales in Larnaca Marina
The internal regulations for the sale of yachts have been prepared in accordance with the relevant legislation (attached as Annex 1). However, due to the pandemic, restrictive measures and measures to deal with the economic crisis, the sale of the seized boats has been postponed until next April 2021.
General Comment for Larnaca Marina:
Regarding the Larnaca Marina in general, the Ministry of State has set up an ad hoc committee (in which an employee of the Internal Audit Unit also participates), which was given instructions such as recording assets, liabilities and any outstanding issues, so that the State Department is in the best way ready during the process of handing over the Marina to the private investor, to whom the offer for the unified development of the Marina and the Port of Larnaca has been awarded by the Ministry of Transport, Communications and Works.
Larnaca marina receipts
The Accounting and Financial Management Directorate of the State Department will take all appropriate actions, which result from the Financial and Accounting Directives (LLS), as well as circulars related to these remarks.
Tender Documents for consultant / designer for marina and cruise ship reception infrastructure in Paphos
Regarding the recommendation of your Service “such as the Ministry of Tourism announcing a tender, which was limited to the market of consulting services, in order to study whether the combined development is possible, in order to avoid a possible unfair predisposition to reach the solution of combined development, in order to reap greater economic benefits. If the Project was judged to be legally, technically and environmentally acceptable, as well as financially viable and the approval of the Council of Ministers was secured, to proceed with the announcement of a second tender for the purchase of consulting services for the preparation of relevant documents to find an investor. and fully implemented by the State Department, but something that is not mentioned in the summary, while for this an extensive analysis is made in the main part of the report.
Supervisor of Paralimni Marina
There is no comment.
Location of the Entrance and Administration Building of Marina Paralimni
The recommendation applies.
Application for Transfer of Pleasure Boat Docking Management License
The relevant excerpt mentions that the Evaluation Committee decided to submit a recommendation to the Undersecretary, for simultaneous (in the sense of successive) granting of a mooring space permit and transfer. It is also stated that company E, after paying the fees, proceeded to the granting and transfer of the license to company St. The report, however, does not specify that before the issuance and transfer of the license, a relevant Decision of the Council of Ministers dated 29.7.2020 and no. 89,867.
Specifically, following a relevant Proposal of the State Ministry, the Council of Ministers, among other things, decided (a) to amend the relevant decree no. 5098 and dated 13.7.2018 with reference to “……… (the company F is mentioned)” in replacement of the company “……… (the company E is mentioned)”, after the transfer of the management license of the berth of yachts is completed and ( b) authorized the Deputy Minister of Tourism, after granting the permit for the management of the berth of pleasure boats to D. (company E is mentioned) “, to transfer it to” …… .. (company F is mentioned) “.
Company application for the issuance of a license for the management of the berth of yachts
Regarding the reports that are mentioned from the period of the commencement of the operation of the State Department onwards, the State Department has the following comments:
Regarding the comment on the expected legal guidance from the Legal Service of the Republic regarding the payment of the annual management fee, it is noted that the State Department, in addition to the letter dated 4.12.2019, sent to the Legal Service letters on the subject, on 13.4.2020 and on 3.12.2020 without receiving an answer until today. It is noted that the position of the Legal Service may require the amendment of the Law on the Management of the Docking Area of Pleasure Boats (L46 (I) / 2007).
Therefore, the State Department is generally studying the possible need for amendments / additions to this Law, and will promote the issue after the relevant position of the Legal Service on the issue of payment of fees.
Competition 14/2019 “Competition for the Provision of Brand Development and Creative Advertising Services”
There is no comment.
Competitions for the design, construction and decoration / equipment of the stands of the Ministry of Tourism in international tourism fairs
There is no comment.
Control of Foreign Offices – Horizontal control of GE
Budget: During the preparation and submission of the budget for the year 2021, the expenses have been rationalized based on the real needs of the Offices.
The savings, which appear in the budget of foreign offices, are mainly due to the non-filling of vacancies and certainly not to a misjudgment of the budget. The above fact will appear in both the 2019 and 2020 budgets. The long delay in filling the vacancies is due to three main reasons:
j. Reassess the role and importance of each office and the positions required. The Undersecretariat terminated the operation of the Office in Dubai and very soon in Italy. The operation of the remaining offices is still in force, however any new restructuring decision will be considered if and when there are particular reasons.
ιι. In the process required to determine the payroll of staff, which is done by the Ministry of Foreign Affairs.
ιιι. In 2020, due to a pandemic, the State Department did not recruit in order not to employ staff that would not actually work.
Restructuring and reorganization study: Evaluation of Foreign Offices is done on an ongoing basis and the criteria that are taken into account are the strategic importance of the market, the prospects it presents and the efficiency of the employees. In general, the effort is to make the best possible use of available funds.
In the context of the above evaluation, the following decisions have been made in the last two years, which overall have led or will lead to significant savings
j. Closing of offices in Milan and Dubai
ιι. Abolition of a clerk position in the London office
It was decided on a trial basis not to fill the position of Director of the London office (The pandemic delayed the filling of the remaining vacancies and consequently the evaluation of the results of the operation of the office without a Director).
ιιι. Abolition of one more position in Amsterdam, in which it has been gradually reduced within 5 years, the staffing from 5 people to 2.
ιν. Repatriation of Head of Office in France and operation of the office without a Director (also in an experimental stage)
n. Abolition of clerk position in the French office.
νι. Abolition of the position of Marketing Officer in the Moscow office.
νιι. In the Polish office there will be a suggestion for the replacement of the vacant position of Head of Office, with the position of Sales Officer.
Payment of a grant of € 260,000 to a private company for the organization of two golf tournaments
From the examination of the content of the special report, we have found that there are no clear, essential issues concerning this issue, which were analyzed extensively in our two letters dated. 30.12.2020 and 28.1.2021. As a result, a complete and accurate picture cannot be given from the report. We therefore consider it absolutely necessary to repeat them briefly.
First of all, the report makes no reference to the procedure followed by the State Department for the approval and payment of the sponsorship, except for fragmentary reports. The whole process was analyzed extensively and specifically, especially in our letter dated. 28.1.2021.
Indicatively, the statement that the entire amount of expenses of the tournament was subsidized is not correct since the total expenses of the event were less than those that were subsidized, while this amount did not include other expenses such as promotion, which the Ministry had explicitly determined from the beginning that was to subsidize. Also, as we already mentioned in our two letters dated 30.12.2020 and 28.1.2021, for the selection of the expenses that were finally covered by the sponsorship, a specific methodology was followed, which is analyzed in detail in our two letters, for which, however, no reference is made in the special report of your Service. It is repeated indicatively that, in order to confirm the realization by the tourist center-sports accommodation of the works that were included in the expenses determined by the State Department to cover the sponsorship, a delegation of the State Department made an on-site visit and requested the assistance of golf. It is reiterated that the Head of the Accounting and Financial Management Department also took part in the delegation of the State Department, for whom your Service in its report continues to report on a position which it initially formulated on the total cost of the event.
Secondly, the report does not mention the benefits that Cyprus gained from the holding of the tournaments as well as the fact that, if the sponsorship was not granted, the event would not take place in Cyprus, as a result of which these advantages would not have been obtained. Consequently, your Service still treats this event as if it were an ordinary event, which had to be funded under the State Department's Incentive Plans, and as if the country did not need such a promotion, in the midst of a catastrophic year for Cypriot tourism due to the pandemic. In other words, you are essentially arguing that the State Department should manage in exactly the same way, small events of 5000 spectators and world-class events that bring to our island multiple benefits such as their promotion by international channels with a huge number of viewers per day.
This conclusion is drawn from specific references contained in the report, as well as based on the fact that the report makes no reference to specific data and references, which we had included in our letter dated. 28.1.2021, as follows:
“The State Department Incentive Plans for the subsidization of events and actions carried out, among others by private bodies, use specialized formulas that take into account specific factors, mainly that the event or event can contribute to the arrival of tourists and, consequently, in the extension of the tourist season. In this case, the calculation of the grant amount based on the specific mathematical formula was absolutely expected to lead to a low grant rate since, due to the constraints created by the pandemic, tourist arrivals included only athletes, support staff, etc. who would have participated in the event, which are recorded in detail in our previous letter.
We consider, however, that it is not correct to evaluate this event, both for the purpose of calculating the amount of funding and more generally, as if it were a simple event that should be subsidized based on, for example, the degree of its contribution to tourist inflows and in the extension of the tourist season, ignoring the unique, diverse and important benefits created in other sectors by holding for the first time such a large sports event in Cyprus. These benefits were recorded in detail in our previous letter, but it does not appear that these have been taken into account by your Service in the preparation of the report “.
Third, the State Department disagrees with the positions of your Service that the “Decision of the Council of Ministers, dated. 15.3.2019, which approved specific criteria for sponsorships granted by the Ministry of Tourism, we consider important that the whole rationale of the Decision was the establishment of specialized criteria for transparency purposes “and that it excludes any other actions from the granting of sponsorships by the provided that they meet the criteria laid down in this Decision.
Fourth, the report does not mention the reasons why the State Department did not address the State Aid Control Commissioner. We summarize below what is mentioned on the subject in our letters dated. 30.12.2020 and 28.1.2021.
Article 87 (ex Article 92) of the EC Treaty states that “aid granted in any form by States or through State resources and which distorts or threatens to distort competition by favoring certain undertakings or certain industries, in so far as they affect trade between Member States'. By law, an aid constitutes state aid when it meets all of the following conditions:
(a) Concerns transfer of State Resources
(b) It constitutes a financial benefit for the beneficiary
(c) Based on selectivity
(d) Creates a distortion or threat of distortion of competition to the extent that it affects trade between Member States of the European Union.
As we mentioned in our letters dated 30.12.2020 and 28.1.2021, the State Department had not addressed the State Aid Superintendent in order to assess whether the granting of the sponsorship constitutes firstly state aid and secondly whether it constitutes compatible state aid for the following reasons:
(a) the main benefit of the event would be obtained by Cyprus. The benefits that the Republic of Cyprus has gained from the realization of the tournament are explained in detail in our letters dated. 30.12.2020 and 28.1.2021.
(b) the Undersecretary decided to subsidize only the costs of carrying out this event, which mainly concerned the fulfillment of the specifications set by the PGA for both the organization of the tournaments and the fulfillment of the conditions of the health protocols
(c) the state sponsorship was not to have any effect on intra-EU trade as the tournaments would be held without spectators, so the sponsorship was not intended to attract tourists to the unit, who would otherwise be directed to it. Cyprus or other Member States. Regarding the possible distortion of competition by attracting participants in the tournament, it should be reiterated that Cyprus and this accommodation and sports center were selected by the organizing authority before the issue of sponsorship was raised, for reasons that did not the concession of state sponsorship (these reasons are analyzed in detail in our letters dated 30.12.2020 and 28.1.2021). Consequently, the granting of the sponsorship was not a factor in the selection of the specific accommodation and sports center, and consequently did not lead to any distortion of free competition in the EU, which, in fact, did not currently function as a free competition area and unimpeded cross-border trade due to international pandemic control measures, which mainly directly or indirectly affected the tourism sector as they aimed to prevent human trafficking in order to reduce the risk of coronavirus spread. In our two letters it was also clarified that the State Ministry would subsidize the organization in any part of Cyprus, no matter what.
For the reasons mentioned above, we consider that the sponsorship does not constitute state aid as defined in the “Law on the Control of Public Aid 2001 (30 (I) / 2001)”. In any case, following the relevant recommendation of your Service, the State Department will contact the Office of the State Aid Superintendent to find out whether the grant granted constitutes state aid and, in the event of a positive response, whether it is compatible or incompatible state aid under the relevant legislation, as well as the actions to be taken by the Ministry in this case.
It is reiterated that the State Department cannot understand what they offer to the transparency, which your Service invokes in the report and why it is necessary, since your Service has not reached something reprehensible, to include a reference in the report, which is included. both in the summary and in the main text, that “It is noted for the sake of transparency that the said director of the company is a first degree relative with a person who is closely related first degree to the President of the Republic. It should be emphasized, however, that no evidence has come to our notice that indicates any intervention of the President of the Republic himself in this case “.
Finally, the State Department considers your comment that “we consider it unacceptable for the State Department to subsidize 100% of the eligible costs of an event” to be completely inappropriate. Obviously, you have not realized the size of the event, nor the huge costs of its realization, nor that no company in Cyprus could cover these costs, in the midst of a pandemic. Apparently, you also did not realize that in 2020 the country's tourism industry has suffered a reduction in revenue of 90%, which naturally makes it impossible to hold events without the significant support of the Ministry, which of course is decided after thorough and serious assessment of its importance exclusively for our country.