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By Rakis Christoforou BBA, CPA/ABV/CFF, CGMA, ACFE
The present economic and financial crisis has created a unique opportunity for the government to proceed with structural changes, including the implementation of the necessary Anticorruption Measures to ensure transparency and good regulation.
Suggested Anticorruption Measures
1. Consider the recent suggestions of Transparency International Cyprus for the implementation of a National Strategic Anti-Corruption Action Plan in the first instance, the setting up of an Independent Commission against Corruption (ICAC), and the appointment of an Anti-Corruption Commissioner. The ICAC ought to have investigative authorities and be staffed with competent investigators in the field of corruption.
In order for the government to have political stability and electoral accountability the general public will need to trust those in authority, including elected politicians and high ranking public officials. Thus, those in authority and power will need to set the ‘tone at the top’ for a society where principles such as meritocracy, integrity, competence, ethical behaviour and impartiality of government institutions are practiced.
2. Proceed with a Whistleblower Protection Act
A whistleblower is a person who tells to someone in authority about alleged dishonest or illegal activities (misconduct, wrongdoing) occurring in a government department or private company or organisation. The alleged misconduct may be classified in many ways; for example, a violation of a law, rule, regulation and/or a direct threat to public interest, such as fraud, health/safety violations, and corruption.
The parliament must implement a Whistleblower Protection Act so that an employee or other third party will not be dismissed, retaliated or treated unfairly because of whistleblowing. If he is, he can then claim unfair treatment –and will be protected by law as long as certain criteria are met.
3. Introduce regulation for the preservation of evidence and especially electronic evidence
Many cases that are now investigated by government authorities (i.e. Ministry of Justice and CySEC – the Securities and Exchange Commission) or other third parties cannot be tried in court because of the lack of evidence and especially digital evidence. This is so because the accused party may be abusing the system by claiming that it does not have the evidence requested when in fact it did or should have but destroyed it later in the process. This situation needs to be resolved in a similar way like the court case Zubulake vs UBS in the U.S. in 2006.
The case has set important practices relating to both the legal and technical aspects of electronic discovery, as the relevant communication among interested parties was available in digital form. The main issues raised were:
The scope of a party's duty to preserve digital evidence during the course of litigation or even when first acknowledged that a chance of litigation exists;
The imposition of sanctions for the spoliation of digital evidence.
4. Implement new regulations against bribery and other wrongdoings
Bribery is occurring when a person offers, gives or promises to give a "financial or other advantage, or favour" to another individual in exchange for "improperly" performing a "relevant function or activity" (this is actually an exchange of “favours” involving a wrongful act). The offence of being bribed is defined as requesting, accepting or agreeing to accept such an advantage, in exchange for improperly performing such a function or activity. Financial or other advantage "could potentially encompass items such as contracts, non-monetary gifts and offers of employment or promotion".
Bad practices, nepotism and favoritism are a major source of problems in Cyprus since our Independence in 1960. Above Acts alone, though may not solve the problem, will impose an additional burden for those who want to continue such practices.
The passing of such regulations is expected among other things to be given some attention abroad and will help attract international investors.
More than ever, the present crisis in Cyprus demands an approach that also accounts for Anticorruption measures. It may be the best chance that we have as a country for curing some of the long-lasting ills of our society. It remains, therefore, fundamental that the government rises to the occasion, grasps this unique opportunity, and implement, if not all, at least some of the measures suggested above at the first stage.
This could be the key factor for the government’s accountability and trust among its constituents, international investors and foreign governments. It will definitely help towards regaining much of the government’s damaged prestige.
Rakis Christoforou is a Certified Public Accountant (CPA), Accredited in Business Valuation (ABV) and Certified in Financial Forensics (CFF). He is the Vice Chairman of The committee of Economic Crime and Forensic Accounting (ECFA) of The Institute of Certified Public Accountants of Cyprus (ICPAC), member of AICPA (American Institute of Certified Public Accountants) and ACFE (Association of Certified Fraud Examiners).
