By Poly Pantelides
DECADES OF bad governance have nearly devastated Cyprus and must give way to a binding system of regulations, the head of a new initiative working to introduce vital legal and cultural codes of practice has said.
Petros Florides, a chartered accountant by training and a co-founder of the National Advisory Council for the Chartered Institute for Securities and Investments, plans to take to parliament bills outlining a new governance regime.
“The new attorney general himself has just said that corruption is endemic,” Florides said.
“Everyone now is saying the same thing. There is no one who can actually defend the status quo.”
When the new attorney general, Costas Clerides, was sworn in last month he said that corruption was no longer a rare phenomenon in public life. Clerides said the crisis was “institutional”, and that the deterioration of values was “widespread”
The president himself has pledged to root out corruption, and an agreement with Cyprus’ international lenders in March is now obliging authorities to finally modernise and update an antiquated system of governance that has been long past its sell-by date.
Just yesterday, the deputy government spokesman reiterated that the one single demand stemming from the public is “zero tolerance of corruption”.
“Everyone understands and agrees that it’s bad governance that’s put us here and we need to fix the system so to speak,” Florides said.
The thought is to introduce sanctions for those entities such as the banks and the semi-governmental organisations that are considered systemically important.
The term Florides uses is public or private ‘systemically important, public interest entities’. These are institutions that are important to the public and whose obligations and duties need to be defined and raised to stricter standards.
Florides is putting together “a loose coalition of the willing” consisting of stakeholders who want to discuss change.
One of the bodies that Florides belongs to, World Vision, will also fund a quantitative and qualitative survey to engage the public. The public has not been asked often enough what kind of governance they want to see, he said. The feedback from the public and the ongoing dialogue will see the creation of a universal governance charter that will inform draft laws which lawmakers will be called on to pass.
Florides’ push comes in the wake of unprecedented public exposure of just the types of bad governance he and others want to curtail.
Government officials have been called to explain their actions in a series of public enquiries. Ministers have been brought to justice over actions and inactions leading to the 2011 Mari munitions’ blast that killed 13 people. Officials in semi-governmental telecommunication authority CyTA, including its chairman, have been arrested for a dodgy land deal in which former ruling party AKEL has been implicated, and bankers are being sued by the public and investigated by authorities for their role in the crisis which led to Cyprus’ bailout in March.
The public got a rare glimpse into how the banks operated during a series of open hearings on the economy by a panel appointed by the President to investigate the reasons behind the near-financial meltdown. Former bank executives described years of bad practices that implicated the whole system: government officials, politicians, and the bank executives themselves.
Although some of the banks’ practices are now subject to criminal investigations, a lot of what the banks did was not strictly speaking illegal. Handing out a loan to a high-up party member without sufficient guarantees of getting it back may be bad risk management, but it can be arguably within the letter of the law, if not its spirit.
With the banks, there was a “catastrophic failure of governance”, Florides said.
One safety precaution that was in place to check the banks and other bodies was a voluntary ‘comply or explain’ regime that among others, asks banks to explain when they ignore the regulator’s recommendation.
“It’s failed,” Florides said. “I don’t think there’s anyone who doubts that… We need to move to something else: there’s no point trying it again and hoping it’s going to work this time round.”
Systemic entities need to be forced to “comply with non-negotiable thresholds” describing their legal obligations in terms of risk management and company values and ethics, Florides said.
“We need a law, a way to say, ‘you should have done this, you didn’t and you are responsible’.”
Florides’ initiative is one of several proposed by groups within academia and civil society who all want to move towards the same goal. For example, Transparency Cyprus works towards anti-corruption and is pushing for greater transparency and accountability in the public sphere. The former rector of the University of Cyprus, Stavros Zenios, has launched a movement called freedom or “Eleftheria” in Greek to promote political dialogue.
While all these groups say they can see a growing awareness of the need to change the status quo, there are plenty with vested interests in seeing it continue.
Florides is aware of the hurdles. It might take a minimum of five years to change an organisation structure and it could take whole generation to see change “but we have to start the clock somewhere,” said Florides.
He said that if the conversation had taken place ten years previously, during the height of the financial boom, “we would have been laughed out of the room quite frankly”.
“But now, there is nobody who can actually say that the way we do things around here, the system of governance we have in Cyprus works and we are successful,” he added.
“The important thing is to engage as many people as we can.”
Any organisation, institution or individuals interested in joining the initiative is invited to contact Petros Florides ([email protected]). Petros Florides is regional governance advisor for World Vision International and executive officer of World Vision Cyprus. He is also on the board of the Institute of Directors (Cyprus), a co-founder of the National Advisory Council for the Chartered Institute for Securities & Investments, a co-founder of the National Advisory Council for the Institute of Risk Management, and a Chartered Management Accountant.
