De­cline and Fall of the Dem­a­gogues

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This ar­ti­cle could have been en­ti­tled ‘The Bon­fire of the Van­i­ties’ (with apolo­gies to the book’s au­thor Tom Wolfe) as it too is all about ruth­less am­bi­tion, po­lit­i­cal sleaze and ram­pant greed. How­ever, as van­ity in oth­ers is re­garded in Cyprus as some­thing nor­mal and ac­cept­able, even praise­wor­thy, and the more so the higher an in­di­vid­ual claws their way up the dem­a­gogic lad­der, call­ing this ar­ti­cle ‘The Bon­fire of the Van­i­ties’ would have been a waste of wit.

Dis­man­tling Sov­er­eign Cor­rup­tion

As noted in my 2013 book Cor­po­rate Risk and Gov­er­nance*, for a very long time Cyprus has suf­fered from a per­ni­cious form of cor­rup­tion that goes far beyond petty and even grand cor­rup­tion, namely ‘sov­er­eign cor­rup­tion’. Wide­spread col­lu­sion oc­curs over a very long pe­riod be­tween, on the one hand, un­eth­i­cal com­pa­nies and their bosses (for ex­am­ple, those en­gaged in whole­sale cheat­ing of cus­tomers, sup­pli­ers and/or the tax­payer) and, on the other hand, party hacks across the po­lit­i­cal spec­trum and of­fi­cials of suc­ces­sive ad­min­is­tra­tions and lo­cal au­thor­i­ties. This is to the detri­ment of the pub­lic in­ter­est in gen­eral and par­tic­u­lar classes of per­sons or cor­po­rate en­tity or par­tic­u­lar in­di­vid­u­als and or­gan­i­sa­tions. If the gov­ern­ment fails to rad­i­cally cor­rect the tainted sys­tem and the col­lu­sion, it cre­ates an im­pres­sion that cor­rup­tion has be­come an ac­cepted and in­sti­tu­tion­alised fact, i.e. an in­stru­ment of state pol­icy. That is sov­er­eign cor­rup­tion.

Prior to 2013, it was unimag­in­able that any gov­ern­ment in Cyprus would ever change this cor­rupt sta­tus quo since they were all as­sumed to be ‘up to their necks in it’ for rea­sons of per­sonal gain, greed, lust for power and, no doubt, a good old dose of van­ity. No one wanted to rock the boat, no one wanted to de­rail their own gravy train and no one had the courage to take on the pow­er­ful dem­a­gogues who were the big­gest pa­trons, driv­ers and ben­e­fi­cia­ries of the cor­rupt sys­tem. How­ever, a com­bi­na­tion of the na­tional fi­nan­cial cri­sis of March 2013, the EU/IMF/ECB bailout terms and the im­me­di­ate ar­rival of a new gov­ern­ment un­der Pres­i­dent Ni­cos Anas­tas­si­ades ap­pears to have pro­vided an almost unique op­por­tu­nity for the cor­rupt mould to be bro­ken. The new Pres­i­dent made it clear through nu­mer­ous pub­lic state­ments that this was pre­cisely one of his poli­cies and one that would be car­ried through. Many thought it was just a po­lit­i­cal PR stunt with­out any like­li­hood of im­ple­men­ta­tion but, after a some­what fal­ter­ing start, we be­gan to see clear ex­am­ples of in­ves­ti­ga­tions, ar­rests and crim­i­nal pro­ceed­ings against very se­nior ex­em­plars of the cor­rup­tion.

The Gath­er­ing Storm

Let us con­sider the grow­ing list of scan­dals in Cyprus that have hit the head­lines in the past year or so that in­volve in­di­vid­u­als who ar­guably could be de­scribed as dem­a­gogues. They are dem­a­gogues not only be­cause they are recog­nised as be­ing from the pa­tri­cian class of wealthy and pow­er­ful Cypri­ots, but also be­cause of ar­ro­gant state­ments and be­hav­iour of some of them in the face of pub­lic scru­tiny and dis­ap­proval. Typ­i­cally, judg­ing by their words and ac­tions, they be­lieve them­selves not only to be un­touch­able and un­ac­count­able but also to have a right to be so be­cause they are who they are. Sound fa­mil­iar? Re­mem­ber the no­to­ri­ous Amer­i­can busi­ness­woman Leona Helm­s­ley who in 1989 was con­victed of fed­eral tax eva­sion and sentenced to 16 years in prison? She was quoted in ev­i­dence as say­ing ‘We don’t pay taxes. Only the lit­tle peo­ple pay taxes’.

Here is a short list of re­cent cases in­volv­ing se­ri­ous al­le­ga­tions against erst­while pow­er­ful in­di­vid­u­als in Cyprus:

- The con­vic­tion in June 2014 of Akis Le­fkari­tis, a se­nior fig­ure in the Le­fkari­tis pe­tro­leum business, for sex­ual ex­ploita­tion of un­der-age girls. Sentenced to 12 years in prison. It is widely be­lieved that his preda­tory be­hav­iour had been known for years by the au­thor­i­ties but had been ig­nored be­cause of his pow­er­ful sta­tus.

- The con­vic­tion in Septem­ber 2014 of a for­mer Gov­er­nor of the Cen­tral Bank of Cyprus, Christodou­los Christodolou, on six counts of tax eva­sion which he ad­mit­ted. Fined EUR 13,500 and sentenced to five months’ im­pris­on­ment. In state­ments sur­round­ing the trial, he im­plied that he was be­ing un­fairly treated as half the pop­u­la­tion en­gages in tax eva­sion.

- The on-go­ing trial of Theodoros Aris­tode­mou, chair­man and MD of Aristo De­vel­op­ers, his wife, an em­ployee and a mu­nic­i­pal en­gi­neer for al­legedly al­ter­ing ti­tle deed doc­u­ments in the Land Reg­istry to in­crease the area of land plots us­able for de­vel­op­ment. Fur­ther in­ves­ti­ga­tions con­tinue. Aristo is for­mer chair­man (while chair­man and MD of Aristo) of the Bank of Cyprus and re­signed on ill-health grounds in 2012 prior to the near col­lapse of BoC in March 2013. Unan­swered ques­tions re­main about his BoC ten­ure, in­clud­ing pos­si­ble con­flicts of in­ter­est and the pro­bity of a per­sonal BoC loan of over EUR 200 mln.

- The on-go­ing trial in Greece of a for­mer Cyprus In­te­rior Min­is­ter, Di­nos Michaelides, on cor­rup­tion charges al­leg­ing the laun­der­ing of bribe money.

- The on-go­ing trial of nu­mer­ous in­di­vid­u­als al­legedly in­volved in the CYTA Pen­sion Fund land fraud, in­volv­ing ramp­ing of land value, ma­nip­u­la­tion of in­vest­ment de­ci­sions, bribery and cor­rup­tion. De­fen­dants in­clude Stathis Kit­tis, for­mer CYTA board chair­man; Char­alam­bos Tsouris, for­mer CYTA board mem­ber; Orestis Vasil­iou, for­mer sec­re­tary gen­eral of the CYTA em­ployee union; Ni­cos Lil­lis, busi­ness­man and foot­ball club chair­man; an AKEL of­fi­cial and a Land Reg­istry of­fi­cial.

- The on-go­ing in­ves­ti­ga­tion and pros­e­cu­tion of nu­mer­ous in­di­vid­u­als al­legedly in­volved in bribery, cor­rup­tion and fi­nan­cial ir­reg­u­lar­i­ties con­nected with the Paphos Sew­er­age Board. Th­ese in­clude the Mayor of Paphos Sav­vas Ver­gas (now re­signed), an AKEL Deputy, an AKEL Coun­cil­lor, an EDEK Deputy, the CEO of Med­con Con­struc­tion and the MD of Neme­sis Con­struc­tion. Thus far, Ver­gas has ad­mit­ted re­ceiv­ing bribes. Fur­ther charges are pend­ing.

With such a grow­ing list, maybe some dem­a­gogues do in fact have feet of clay. Some signs of their be­lated hu­mil­ity would cer­tainly not go amiss. Let us hope that ex­em­plary sen­tences are handed down to those con­victed. A pal­try five months in Christodolou’s case makes it look as if the ju­di­ciary are still part of the sov­er­eign cor­rup­tion. I hope I am wrong.

Who Next?

It is start­ing to look as if the clean­ing of the Augean Sta­ble is gain­ing a mo­men­tum that will spare no one hav­ing even a whiff of cor­rup­tion about them.

There are still plenty of big shots and big or­gan­i­sa­tions await­ing the ex­quis­ite in­ves­ti­ga­tory ‘tor­tures’ of the Au­di­tor Gen­eral and it is a fair bet that, as 2015 rolls on, yet more cases will be re­vealed to the pub­lic. But, as Au­di­tor Gen­eral Odysseas Michaelides has stated clearly, the re­quire­ment for hon­esty and in­tegrity tran­scends all lev­els of per­son and or­gan­i­sa­tion and so even lesser dem­a­gogues are likely to come un­der the mi­cro­scope.

For ex­am­ple, there are plenty of ex­am­ples of very du­bi­ous civic projects and trans­ac­tions in the vil­lages where pub­lic trans­parency on the award­ing of con­tracts and the costs of projects has been de­lib­er­ately blocked by the lo­cal coun­cil. Lo­cal res­i­dents and tax­pay­ers are, ap­par­ently, not en­ti­tled to know. For ex­am­ple, how much did the new coun­cil of­fices cost to build? Who were the bid­ders, what were their bids, why was a par­tic­u­lar bid suc­cess­ful, did prior due dili­gence ex­clude any bid­der on the grounds of fam­ily or other con­nec­tions with coun­cil of­fi­cers? In­deed, were coun­cil of­fi­cers re­quired to de­clare any con­nec­tions they may have had with bid­ders or any fi­nan­cial in­ter­est in the land or the bids?

Sim­i­lar ques­tions might arise over, say, a new civic ceme­tery as well as why the pur­chase price of the land was so high, what al­ter­na­tive sites were con­sid­ered and why build­ing a wall round it cost hun­dreds of thou­sands of Euros. The fi­nan­cial pro­bity in all such cases surely war­rants in­ves­ti­ga­tion.

Roll on 2015!

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