The Association for Investors (PASECHA) yesterday described a recent decision by the Supreme Court, which threw out a fine imposed by the Securities and Exchange Commission (SEC) on a listed company, as “a bomb under the protection of investors”.
The SEC was told by the Supreme Court that they were not entitled to fine Aspis Holdings because some SEC members had not been hired according to correct procedures.
The Supreme Court judge said that the positions were not advertised properly because there was no mention the required qualifications.
Furthermore, there was no explanation of how the hired members met the legal requirements for the posts, the court ruled.
The SEC had in 2009 issued an €80,000 fine to Aspis for market violations. But the company argued that the SEC members lacked the experience and training to be qualified to issue the fine.
The Supreme Court agreed with Aspis.
PASECHA said the development had opened the way for many more listed companies to challenge fines set for them by the SEC.
It said unless the government acted to shore up the problem, Cyprus was likely to remain exposed. Both domestic and foreign investors would stay away from the market if the loophole continued to be exploited, it said.
But this SEC scandal is only one of many recent incident of a similar nature.
The Supreme Court ruled in May that the appointment of Competition Commission (CPC) chairman Costakis Christoforou, was illegal and thus so was the €42.9 million collusion fine imposed on fuel companies in 2009 by the CPC.
More recently the procedure used to hire four people for the needs Cyprus’s EU presidency were challenged when it was revealed that nepotism was at work. The head of the secretariat Andreas Moleskis was subsequently forced to resign. Ombudswoman Eliza Savvidou ruled this month that the hiring mechanism was seriously flawed.
We all know that nepotism is a way of life and always has been so there are no surprises there but the challenges to it are growing. Nepotism aside however, how many more public bodies have flawed hiring mechanisms due to simple incompetence in drawing them up, and how many more companies and individuals will start challenging their decisions?
PASECHA called on the government, before hiring new appointments, to take an opinion from the Attorney-general in order to avoid such negative developments – especially in cases such as the SEC where fines can be negated.
Is the call likely to be heeded? Probably not, at least until some semblance of meritocracy takes root in the public psyche.
