MANY factors influence the nature of governance implemented by a country or organisation. In a voluntary ’comply or explain‘ system like in Cyprus, people and culture play a more significant role than in a legalistic, rules-based system. This applies both in the public and private sectors.
Cyprus finds itself in crisis due to bad governance that was known and tolerated by everybody for decades. Therefore, a collective mea culpa is in order. This may also encourage Cypriots to work together and address our cultural idiosyncrasies that allowed bad governance to become so entrenched. Due to their deleterious results, these idiosyncrasies could be referred to as Cyprus’ Seven Deadly Sins.
Our first deadly sin is Cronyism. With people holding important positions based on who they know rather than what they know, the country’s overall performance is bound to suffer along with accountability. This social injustice and lack of meritocracy is so widespread, especially in the public sector, a law prohibiting such practice was passed by Parliament over a decade ago.
But the fact this law has never been utilised demonstrates our second deadly sin: Tokenism. Another pertinent example is the perfunctory nature of corporate governance implemented by our systemically important banking sector. The consequences have been ruinous. Trust in Cyprus and its institutions can only be restored by developing a reputation for integrity. This requires diligently following through on all our statements and commitments.
Even with the best of intentions, this will take time and brings us into conflict with our third deadly sin: Short-termism. For example, many industries in Cyprus were allowed to develop too fast and without adequate mechanisms to promote sustainability and manage risk. This was due to the pursuit of quick profits without any consideration of the future. This attitude eventually infected even our systemically important banking industry, with catastrophic results for the whole economy. Instead, we all need to behave as stewards of the nation’s wealth and consider the legitimate needs of future generations too.
Such a policy and practice requires ethical leadership that is contrary to our fourth deadly sin: Populism. Instead of courage and foresight, we prefer leaders who pander to powerful interest groups and placate mass hysteria. Unpopular but necessary decisions get delayed indefinitely, only exacerbating the problems requiring even harsher corrective measures. Our experience with the Troika is a perfect example.
But instead of taking responsibility and learning from our mistakes, we find it easier to blame everybody but ourselves. This leads to our fifth deadly sin: Scapegoat-ism. Despite our best efforts to divert blame, the bad governance that has been infecting our country for decades was made exclusively in Cyprus. This has permitted untold errors of commission and omission in both the public and private sectors, making our current predicament inevitable. It was only a matter of time.
The public and banking sectors are now being forced to endure sharp and painful contractions to ‘right size’ and reorganise. But this is only after years of empire-building and nurturing our sixth deadly sin: Client-ism. Cypriot society acquiesces to the wider civil-service and banking sectors being over-staffed and over-paid because most families have at least one person employed in one or the other. But this phenomenon is anathema to good governance since dependency is created on the very people and institutions society should be holding to account.
Due to our objectivity and independence being compromised in this way, we seek other means to redress imbalances within our dysfunctional system. More often than not, this manifests as our seventh deadly sin: Tribalism. This can take many forms including loyal allegiance to a political party or union, people from the same town or village, and friends or family. In any case, the result is a clique of co-dependents bound together by mutual commitments that conflict with the principles of good governance including, inter alia, fairness, accountability and transparency.
Since one of the greatest advantages of belonging to a ‘tribe’ is preferential treatment regarding employment, the loop is closed back to Cronyism for the cycle of bad governance to continue unabated.
It is obvious how these Seven Deadly Sins have shaped the nature of governance in Cyprus and characterises ‘the way we do things around here’. The question is: how do concerned citizens try to address these idiosyncrasies? Furthermore, can we develop virtues that facilitate exemplary governance to form the basis of our economic recovery?
A wide cross section of professional bodies, academia, civil society and individuals are collaborating on the ’New Governance for a New Cyprus‘ initiative. This includes formulating a ’Governance Charter‘ of ethics, values and principles the public are now demanding from systemically important, too big to fail or public interest entities. The intention is to reinforce this with new, or revised, laws relating to the personal liabilities of Directors. It is also being proposed that the appropriateness for Cyprus of a voluntary ’comply or explain‘ corporate governance system be reviewed. Importantly, a holistic approach to good governance is also being advocated, with each stakeholder group (e.g. shareholders, regulators, auditors, professional bodies, academia, media, employees, creditors, customers, civil society, general public etc.) exercising their rights, but also living up to their responsibilities, in order to contribute to the overall governance process.
Any organisation, institution or individuals interested in joining the initiative is invited to contact PetrosFlorides ([email protected]). PetrosFlorides is Regional Governance Advisor for World Vision International and Executive Officer of World Vision Cyprus. Petros 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