A recent, highly critical audit report has exposed significant and widespread financial management failures within Cyprus’s Ministry of Transport. The comprehensive investigation, conducted by the nation's Audit Office, has revealed a concerning pattern of insufficient controls and accounting irregularities. These deficiencies have apparently persisted for several years, leaving the government uncertain about its financial obligations and vulnerable to substantial financial claims.
The extensive audit examined the ministry's operations during the 2022-2023 period. However, it traced the origins of current financial challenges back to public transport concession agreements that were initially established as far back as 2010. These crucial contracts, collectively representing hundreds of millions of euros across several districts, were designed to regulate the country's bus services. Unfortunately, the audit highlighted that the oversight of these considerable financial commitments has been alarmingly inadequate for over a decade.
A significant consequence of these issues is an ongoing legal dispute with five public transport operators. These companies are seeking over €59 million in compensation, stemming from disagreements related to the 2010-2020 contracts. Furthermore, the audit discovered that concessionaires involved in more recent contracts (2020-2022) consistently failed to submit mandatory quarterly financial statements. When these statements were eventually provided, the ministry inconsistently applied contractual financial penalties, thereby weakening accountability.
Internally, the ministry's control mechanisms were found to be notably weak. A serious breach of fundamental accounting principles was identified, where a single official was responsible for calculating contractor payments, verifying their accuracy, and authorizing their disbursement. This lack of separation of duties significantly increases the risk of errors and potential fraud. Moreover, due to inadequate record-keeping, the state cannot accurately determine its total financial exposure.
The financial impact extends to ordinary citizens through a flaw in the Road Transport Department’s vehicle registration software. This system has systematically overcharged drivers for late renewals, calculating a 10% penalty based on the full annual fee, even for shorter renewal periods. While individual overcharges might appear minor, the total amount unlawfully collected remains unknown and unaddressed. The findings necessitate urgent reforms to enhance internal audits, enforce contractual terms rigorously, and overhaul financial controls to safeguard public funds.