Apostolos Tomaras
The European Public Prosecutor's Office has launched an investigation into the construction contract of the Natural Gas Terminal (NGA) in Vasilikos, Cyprus. This development could have significant repercussions for both the incomplete project and the Republic of Cyprus, which may need to defend its reputation in European institutions.
This situation is particularly concerning for Nicosia, as it implicates various individuals, including political figures and public officials, in the project contract.
Already, the European Commission has sent a letter to Nicosia demanding the reimbursement of €68,608,438.46, which represents the European subsidy paid to date to ETYFA, the contracting party for the project. This amount is part of a €101 million disbursement of European funding. The letter highlights potential irregularities during the tender evaluation period for the LNG Storage and Regasification Terminal at Vasilikos, involving the consortium of China Petroleum Pipeline Engineering Co. Ltd., Metron Energy Applications S.A., Hudong-Zhonghua Shipbuilding (Group) Co. Limited, and Wilhelmsen Ship Management Limited. Allegations include violations related to the criteria for awarding the tender in December 2019 and the signing of a bilateral agreement in June 2022 when an additional €25 million was approved.
This situation is particularly concerning for Nicosia, as it implicates various individuals, including political figures and public officials, in the project contract.
The investigations
With the withdrawal of the Chinese consortium, a gap has emerged in the completion of the project. The European Public Prosecutor's Office has established a team of criminal investigators in Nicosia to scrutinize the files. It remains unclear if individuals have been summoned to the police offices in Nicosia, but sources indicate that this will likely happen soon. The European Public Prosecutor's Office has informed the Attorney General of Cyprus that it has jurisdiction over the investigation, preventing any conflicting actions.
Background to the investigations
The European Public Prosecutor's Office in Luxembourg is conducting its investigation based on information from the Auditor General of Cyprus, the European Court of Auditors, the European Climate Executive Agency, and CINEA. The investigation will cover the entire project and its components, evaluating any evidence that might justify the consortium's award. If the investigation reveals that the award should never have been made, criminal offenses could implicate all involved parties, including politicians, public officials, and entities from the project announcement to the tender evaluation and award. If the contract was legally awarded but subsequent delays, extensions, or unlawful fees incurred damages, then criminal liabilities will be limited to those specific cases.
Criminal proceedings
A critical aspect of the investigation is how to handle the case if evidence of possible fraud, misappropriation of EU funds, or corruption emerges. The European Public Prosecutor's Office deals exclusively with criminal offenses, not administrative infringements. If evidence justifies prosecution, individuals will be referred to Cypriot courts, specifically the criminal court. According to European legislative frameworks adopted by Cyprus (N.2(I)/2021 and 61(I)/2024), the European Public Prosecutor submits a prosecution proposal to a three-member Permanent Division in Luxembourg, which authorizes prosecution. The European Public Prosecutor then signs the indictment and files it before a Cyprus Court for trial.
Confiscation of property
In addition to criminal offenses, the investigation also covers potential financial losses since the project's inception. The European Public Prosecutor's Office can order measures such as freezing the assets of individuals or entities to recover sums drawn from European funds. This project has received €101 million in EU funding, with approximately €68 million disbursed. Until the investigation concludes, the remaining European funding is frozen. Under Cypriot law, an asset forfeiture order is issued after conviction but before sentencing, while a freezing order can be issued before or immediately after an indictment depending on the risk of funds being diverted from criminal activity.
This investigation into the Vasilikos contract underscores the importance of transparency and accountability in the use of public funds, with significant implications for all parties involved.
[Translated by Shemaine Bushnell Kyriakides]
