Get­ting rid of fraud, ten years on

E DII TO RII A L

Financial Mirror (Cyprus) - - FRONT PAGE -

Dur­ing the ACCA’s cen­ten­nial cel­e­bra­tions a decade ago, marked in Cyprus to­gether with the lo­cal ac­count­ing body, ICPAC, the then-chef ex­ec­u­tive Allen Ble­witt ad­mit­ted that “there is no per­fect an­swer to stop­ping fraud.”

Re­fer­ring to the ac­count­ing scan­dals of En­ron, WorldCom and Par­malat, Ble­witt had added that “with the best will in the world, with the best reg­u­la­tory struc­tures in the world, it is still pos­si­ble that an in­di­vid­ual can com­mit fraud.”

How­ever, he con­cluded that “reg­u­la­tion and re­spon­si­bil­ity are twin halves of the same is­sue,” and that “re­spon­si­bil­ity is a cor­ner­stone of the pro­fes­sion, whether we are talk­ing about trans­parency or in­tegrity. Ap­pro­pri­ate cor­po­rate gov­er­nance is part of best prac­tice, ap­pro­pri­ate fi­nan­cial re­port­ing and au­dit.”

At the time, even the ACCA in­tro­duced a change to its code or prac­tice whereby any mem­ber of staff could re­port cases of mal­prac­tice of lack of cor­po­rate gov­er­nance di­rectly to the chair­man.

So, have we learned any­thing from the land­mark de­ci­sions in­tro­duced ten years ago?

Judg­ing from the grow­ing num­ber of cases of tax fraud and em­bez­zle­ment that are pop­ping up like mush­rooms all over the place, as well as the avalanche of bribery re­ports only re­cently reach­ing Trans­parency In­ter­na­tional Cyprus, it would seem that fraud still goes on. Worse still, whereas pro­fes­sion­als in Cyprus used to balk at lev­els of cor­rup­tion in neigh­bour­ing coun­tries, it turns out that we are not too far be­hind after all.

How can a sew­er­age con­tract be over­val­ued by at least 30 mln euros and no-one got a sniff of the stink go­ing on? How can prop­erty zones get redrawn and no­body no­tices any­thing sus­pi­cious? How can pub­lic ser­vants get away with cov­er­ing up tax eva­sion? It is clear that fraud and cor­rup­tion goes un­pun­ished be­cause of the lack of trans­parency and re­spon­si­bil­ity.

Had we had trans­parency all this time, such as the doomed “whistle­blower” leg­is­la­tion, then a lot of the stink would have cleared up a long while ago and the new­com­ers in pub­lic ser­vice would be cau­tious not to err in their du­ties. And if we had even a speck of re­spon­si­bil­ity in our conscience, then more than half of our politi­cians and pub­lic ser­vants would have re­signed their posts a long time ago and gone home.

This is what the At­tor­ney Gen­eral, the Jus­tice Min­is­ter, the Pres­i­den­tial Com­mis­sioner for Re­form and the Pres­i­dent him­self should be deal­ing with, and not their petty dif­fer­ences with oth­ers that be­lit­tle them.

With­out trans­parency, re­spon­si­bil­ity and proper cor­po­rate gov­er­nance, no for­eign in­vestor in his right mind would con­sider pump­ing money into Cyprus, know­ing full well that the present en­vi­ron­ment car­ries a high level of risk. Those who have in­vested are will­ing to take that risk, but this should not be the ex­cep­tion, but rather the rule.

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