AG: 'Lawyers vouched for the character of their applicants, a criminal offense'

The extraordinary session of the Parliamentary Audit Committee is underway which will examine the findings of the Audit Service's report on the Cyprus Investment Program.

One of the issues being discussed is the practice of lawyers who signed as personal references for investors, guaranteeing their good character in order to acquire Cypriot citizenship through naturalization.  This practice, according to Auditor General Odysseas Michaelidis, is a criminal offense and punishable by law.

The Audit Service's report stated that in 12 of the 20 cases approved for naturalization after 8/18/2020, the persons who stated in Form M127 that they knew the applicant and vouched for his good character and loyalty were employees of the provider's office (lawyer) through which the application was submitted and in several cases, the provider's address was given as the official listed address in Cyprus. In the Form, the two guarantors were asked to state that they were not lawyers, agents or relatives of the applicant and that they knew him personally and could vouch for his good character.

The Chairman and the members of the Audit Committee had asked to be given more specific information about these cases. After all, as mentioned during the meeting, the Legal Service had also requested all the names that EY had at its disposal so that the investigation of cases could proceed.

Responsibilities to lawyers and for 'collective applications'

While presenting the findings of his report, the Auditor General also referred to several cases of naturalizations, which were promoted as collective applications by the law firms that represented them.

Specifically, during the meeting of the Audit Committee, Mr. Michaelidis stated that 75% of the applications up to 9/13/2016 were made in the context of collective investments, while the persons had no relation to each other. For these cases, he assigned responsibility to the lawyers who represented them.

Floor apartment 555 sq.m. in a tower, sold with reduced VAT
The Auditor General also made special reference to the inappropriateness of the control mechanisms of the Tax Department, which, as he said, did not plan to have a separate register for the applicants of the Cyprus Investment Program, in order to avoid the use of the reduced VAT in these cases.

As he said, the loss of €19 million from the VAT revenue concerns houses with an area of ​​more than 250 sq.m., while it was also mentioned in the case of a floor split in a tower in Limassol, with an area of ​​555 sq.m. worth €14.5 million, for the sale of which reduced VAT was charged.

[This article was translated from its Greek original]