Auditor General Andreas Papaconstantinou speaks to CIReN about the Videogate fallout.
“In Europe, as a rule, such schemes (as the ISSB) are avoided, especially when they are staffed by persons, who have a first-degree relationship with the top of the executive branch.”
“As the Body’s work expanded and became more visible, the transparency and control mechanisms should have been strengthened.”
“We recorded the areas (from the video) that needed monitoring and planned future audits.”
“Our planning includes a special investigation into a large company that made donations while simultaneously negotiating a large contract with the state.”
“We have proceeded with an on-site inspection (of the new Archeological Museum) and a report is being prepared, which will be submitted to me soon”.
Interview with Kyriakos Pieridis and Christodoulos Mavroudis
(The transcript has been edited for brevity and clarity)
Nicosia, Friday 13 February 2026
Q. Even before the video was dropped, you were concerned about the Independent Social Support Body ISSB and the “special relationship” of the Body’s donors with the state. What exactly troubled you?
AP: In November 2025, we issued a special report on the Independent Social Support Body.
We chose to use the concept of “special relationship” in this report as we did not attempt to provide a strictly legal interpretation that could stand up in court. Our goal was to highlight the risks posed by this “special relationship,” without giving it a legal dimension and without claiming that there was anything illegal.
From a strictly legal perspective, the first lady was placed at the head of the Body by law, while the Supreme Court of Cyprus decided that contributions should not be made public.
We did not want, for example, to talk about a conflict of interest, as in the strict legal sense, such a thing is not documented. However, we wanted to underline the imperative need to strengthen the safeguards, especially when we found that in recent years revenues had tripled.
Q. Could the Body have been established differently?
AP: I cannot judge the motivation behind the donations. One might say that the first lady and the rest of the Board of Directors of the Body are giving their all; another, however, might view the whole effort with suspicion and make different associations.
As the Audit Office, our first concern was that, with the way the Body was structured, the first lady herself remained exposed. As the Body’s work expanded and became more visible, the transparency and control mechanisms should have been strengthened.
Q. How is public trust affected?
AP: A major businessman may make a significant contribution. He may indeed do so out of pure philanthropic motives; but he may also expect something in return. That return could come after six months, eight months, or even five years. In such cases, the connection is extremely difficult to prove.
Therefore, when the element of transparency is not strong, public trust is eroded—whether justifiably or unjustifiably. And this is the case, regardless of whether or not any illegality exists.
Q. What was your conclusion about ISSB and the “special relationship”?
AP: As the Audit Service, we had made it clear that, from the moment the political decision was made to establish the Body, we do not intervene in the question of whether or not it should exist. That is not our role.
However, from the moment the State chose to operate the Body, we suggested the introduction of specific safeguards in order to protect both public trust and the institutions themselves. This was our approach.
In writing the report, we spent considerable time demonstrating that those who made contributions also had transactions with the state. This, in itself, is not reprehensible. Usually, a large economic actor makes contributions to the country in which it operates and, reasonably, also has transactions with the state, which is the largest buyer.
We identified several cases where donors had contractual or other relationships with the State; however, we did not find any illegality in these transactions.
Q. Did you also refer to international practice regarding charitable funds and contributions?
AP: We also examined international practice. Without claiming infallibility, the research we conducted did not reveal a model that is fully equivalent to the Body’s fund. In Europe, as a rule, such schemes are avoided, especially when they are staffed by persons, who have a first-degree relationship with the top of the executive branch.
We have identified some examples, such as in the United Kingdom. There, charitable or other activities are developed around the British Royal Family. Taking advantage of the institutional prestige and the status it possesses, a company or a wealthy person may wish to be associated with this institution.
However, there is a crucial difference: the royal family does not exercise executive power. It is an institution with a symbolic and ceremonial role. One may choose to financially support an action and seek, for example, a public appearance or a photo opportunity with the king; however, the king does not make executive decisions or influence government actions.
Q. There was a big debate in Parliament but without any conclusion…
AP: The issue was repeatedly discussed in the House of Representatives and strong disagreements were recorded, until a decision was made to make donors public. The government challenged the decision and appealed to the Supreme Court of Cyprus, which ultimately annulled the regulation.
We pointed out that there was a simpler solution, which would at the same time respect the Supreme Court’s decision. Just as every contributor has the right, by law, to remain anonymous, so too has the fund the right to establish internal self-regulatory rules.
This could be done without new legislation if the Body itself decided to establish internal regulations, according to which anyone who wishes to contribute is welcome, provided that for contributions over 20,000 euros, consent will be given to publish the donor’s name.
For smaller amounts, which mainly concern natural persons, we suggested not to burden the process with unnecessary administrative bureaucracy, so as not to discourage citizen participation.
I must note that this suggestion has now been adopted by the Body.
Q. How do you think this foundation should ultimately be handled?
AP: We have no political position on the issue. We will not take a position on whether or not the fund should exist.
However, from the moment it continues to operate — with whatever regulations are implemented — we will assess whether there are any risks and submit the relevant recommendations.
This is our institutional role.
Q. Looking back, if you had been engaged in ISSB’s structure from day one, how would you have advised those involved?
AP: First, the question of the usefulness of the existence of the Body must be answered. At the same time, we must be careful not to discourage private initiative. There are worthy private companies that are indeed willing to allocate funds for social responsibility. Let us not demonize such efforts. We must not stigmatize contributors, ultimately preventing them from contributing.
The problem in the case of the Body was that a hybrid fund was created, different from other private funds.
Here, however, the fund operates by law and the responsibility for its operation essentially falls on the state. That is why our role is clear: the fund receives donations and we simultaneously exercise controls to protect institutions and public trust.
Q. You say it was hybrid, the expression I used was “state created fund”…
AP: It was a “state created fund.” The Board of Directors consists only of ex officio public officials, while the regulation provides that contributions from the state are prohibited. All income came from private contributions, which makes its operation a hybrid situation, between public control and private financing.
Q. Could you not further investigate the transactions of donors with the state? For example, shipping companies. Their donations skyrocketed in 2023 and 2024, while in the previous period (2018–2022) they had not made any donations. In one case, you even refer to a shipping company that received a co-financed project of ten million euros. At the same time, a decree was issued regarding the tax regime of shipping companies. Did they benefit or not? How did you view this timing?
AP:You know, the state is, in any case, taking actions aimed at supporting companies and citizens. It is not in confrontation with them; it is trying to facilitate investments, strengthen the economy and mobilize more capital. After all, this is the duty of the state.
Therefore, it is difficult to prove illegality simply because the state took an action that benefits companies.
However, our planning — it is no secret — includes a special investigation into a large company (not a shipping company) that made donations while simultaneously negotiating a large contract with the state. There was a very sensitive parameter that could significantly differentiate the financial impact for the state.
Q. You did produce another report on a related problem — the lack of competition in the construction sector — correct?
AP: Yes, we issued a relevant report. The issue we identified concerns the state’s actions to prevent the creation of oligopolies that potentially abusively control the market.
A bad oligopoly problem consists of collusion between key “players”: e.g., one company places an artificially high bid so that the project ends up going to me; then, in a subsequent bid, the other company raises the price and I win; in this way, the “pie” is “shared” among a few companies.
Our report examines such phenomena and proposes measures to ensure competition and transparency in the market.
Q. Mr Auditor, it seems to me that a major risk stems from the market’s limited competition — with a small number of companies repeatedly transacting with the state and securing large public projects. One element builds on another, and then the video surfaced. Did that bring all your earlier warnings to the forefront?
AP: When the video was published, I called the directors of our agency and we discussed it in detail. We did not enter into the discussion about its authenticity or the reasons for its creation and publication.
We carefully reviewed the video from the perspective of the Audit Service’s responsibilities, to identify any issues that require intervention. Without being influenced by the prevailing atmosphere, we recorded the points that needed monitoring and planned future audits.
Q. The reports of “cash” beyond the campaign finance limit?
AP: The issue of cash is different. It is known that in election campaigns cash is used to avoid recording certain expenses. This happens in various ways.
Although we audit the expenses of politicians and candidates, in practice there are transactions or activities that are difficult to detect. For example, if someone organizes a campaign party or event with cash expenses, these are not easily recorded in the audits.
Q. Dinner parties?
AP: If you organize an event with fifty people, where food and drinks are provided, the costs can amount to at least a thousand euros. It is equivalent to a contribution of a thousand euros, but it is not recorded anywhere.
It is obvious that it is impossible to detect such activities at every event or candidate’s home. In practice, many candidates operate in this manner.
Q. The advertisements, the giant posters?
AP: There is a way to control advertisements. Private advertising companies are obliged to provide our service with their revenues for the last three months of the election campaign.
Q. Are campaign expenses monitored as they occur, or are you relying solely on post-election disclosures?
AP: We receive the data retrospectively. However, we are considering the possibility of conducting more targeted checks, especially now that the election campaign is commencing.
Q. What is the most important lesson drawn from this experience, in terms of transparency and procedures?
AP: Safeguards, education, culture and accountability – there is no other way. But that doesn’t mean we should be led into inaction.
For example, if a Department Manager considers that the highest priority is to protect themselves and not be exposed, they may become more hesitant to deliver results, as they will think twice about every action.
I don’t mean to do anything illegal (in order to produce results), the market is difficult and the economy requires a good balance between protection and efficiency.
That is why we, through our audits, try to operate rationally and with moderation, recognizing that many times issues are not simply black and white.
Q. In relation to your report on the ISSB, did you ultimately have access to the names of the donors?
AP: They provided us with the information we requested. However, I would like to clarify that the term “check everything” does not exist. Our work consists of targeted investigations, based on our responsibilities.
Each organization is responsible for its proper functioning. If there is suspicion of irregularities, it can appoint its own officer or hire external consultants for additional audits. The Audit Service carries out its own audit for what it deems necessary and when it deems appropriate.
Therefore, the frequent argument “but we gave everything to the Audit Service” does not mean that upon completion of the audit everything is absolutely clean. We do not put a stamp “one hundred percent audited”.
Of course, if the sample reveals suspicion of illegality, the matter is referred to the Prosecutor’s Office.
Q. In government contracts, do you often observe projects whose budgets inflate significantly by the time they are completed?
AP: Through the special report we compiled, it appears that project budgets often inflate. However, we must be careful in interpreting the increases.
For example, a project may start with a budget of fifty million and eventually reach seventy million. The crucial question is: Why did the budget inflate? Is it the result of a failure in the state’s planning, which requires adjustments, or is it due to incompetence or poor execution by the contractor?
Q. Delays of works, contractors’ demands? Do you see a trend?
AP: We see a trend of increasing project costs. However, we did not find a consistent pattern. The analysis of several bids revealed that, in many cases, the responsibility for the increase in costs lies with the project coordinator.
For example, in the implementation of a road, the contractor submitted a clarification question, but it took eight months to provide a response. The contractor is still paying employees and covering expenses, while delays often affect the critical path and the implementation schedule. In other cases, intense disagreements led to the blocking of the entire project.
A good practice is to have an arbitrator who makes a binding decision. If the contracting authority or the contractor still disagree, they can go to court and claim damages, without affecting the implementation of the project.
Q. What else do you have ahead of you? You told us you will specifically review the project for the Archaeological Museum…
AP: We have proceeded with an on-site inspection and a report is being prepared, which will be submitted to me soon.
A few days ago, we published an announcement regarding all the reports we plan to issue until the parliamentary elections. This is the first time that the Audit Office has implemented such a schedule.
We have prepared a program for the entire year and announced the reports that will be published up to forty days before the May elections. In this way, I believe that we are strengthening the citizens’ sense of trust in the work of our Service.