Cyprus Mail
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U-turn on ‘name and shame’ list

The House Ethics committee at work

By Angelos Anastasiou

WITH THE business world warning the move could be disastrous to the entire economy, politicians yesterday started backing away from a prior decision to indiscriminately publish thousands of names of persons and companies that transferred funds abroad before March 2013.

In a statement issued late yesterday, ruling DISY party asserted that the indiscriminate publicising of names and transactions would “not serve the purposes of the Ethics Committee and would hurt the country.”

“In a well-governed state that aspires to becoming an international business centre, such indiscriminate disclosure could not be possible, whereas transactions by ‘politically exposed persons’ being lost in a multitude of regular transactions would also fail to serve the purpose of the House probe and render its final report incomprehensible to the public,” the statement concluded.

Opposition AKEL also had second thoughts. On the heels of DISY’s statement, the communist party said the House probe should list only politically exposed persons who transferred funds abroad.

In the statement, AKEL claimed as its own the idea of refraining from indiscriminately publishing thousands of names – even though earlier in the week militant AKEL MPs had threatened to leak the entire list of 11,000 names should the ethics committee’s final report shy away from publishing all.

Given that DISY and AKEL MPs have a majority in the House ethics committee, it’s likely that the en masse publication of all the names will be avoided.

On Wednesday, the House Ethics committee came to a unanimous decision to include the names of everyone – people and companies – who moved money out of the Cyprus banking system from June 2012 until March 15, 2013, when deposits over €100,000 in the island’s two major banks were converted to help recapitalise the banks, in its probe into the causes of Cyprus’ economic meltdown.

The list, totalling close to 11,000 names, features the names of those who received low-interest loans, as well as those who have had loans written off by banks. The implication appeared to be that those who moved funds out shortly before the haircut on deposits may be suspect of having acted on inside information that was not available to the general public, and that anyone who secured favourable terms on their loan may be suspect of contributing to the collapse of the banking system.

Predictably, not everyone named is guilty, or even suspect. In fact, one might expect that most individuals – and companies – that moved funds to other jurisdictions either related to legitimate transactions that took place in the normal course of doing business, or were motivated by the uncertainty that pervaded the Cyprus economy during the period leading up to the March 2013 showdown. Indiscriminately publicising their names would constitute unfair treatment of all those who acted lawfully and in good faith, critics argue.

But an even greater risk looms large, threatening to strike another decisive blow to the flailing economy. In recent years, international business in Cyprus has been a critical driver of economic growth and although many foreign companies have sustained substantial losses during the bail-in, their predicted mass exodus never materialised – yet. To be sure, no foreign business was happy to have part of its assets seized, but seeing its name on a public ‘list of shame’, to boot, may well be the final straw.

Yesterday, the Cyprus Chamber of Commerce and Industry issued a statement warning caution as “foreign clients of banks, accounting and law firms have voiced concern and disagreement to such action by the House,” while the Banks’ Association pointed out in its own statement that publicising the list would be simply illegal, and raised the need to protect Cyprus’ reputation as a business-friendly environment, which would not be the case if such blatantly hostile action was taken.

“The evidence submitted to the House committee is subject to confidentiality obligations and its publicising violates the constitutional right to privacy of individuals and businesses,” the association said.

“Additionally, publicising a list of 11,000 transactions to destinations abroad vilifies people who made such transfers as part of their normal personal or business activities. Finally, we emphasise once again that this would damage our banking system’s credibility, as well as trust towards Cyprus as a business centre, especially at a time when our country has undertaken a continuous and intense effort to stabilise the economy and attract new investments.”

The association also pointed out that the only competent authority to decide on the prosecution of any suspicious transactions, and thus the lifting of the privacy caveat, was the Attorney-general.

Meanwhile, the Institute of Certified Public Accountants (ICPAC) also weighed in with its own statement, reiterating the concerns of other business associations, and advocating patience.

“We wish to stress that we respect and fully support the efforts made by the competent authorities to bring the issue of Cyprus’ economic collapse to justice, including the aspect of cash outflows,” the statement said. “But prudence mandates that we await the findings of comprehensive investigation before coming to any conclusions.”

ICPAC’s director Kyriacos Iordanou told the Cyprus Mail that the fact that cash outflows from only three banks – Bank of Cyprus, Hellenic Bank and failed Laiki Bank – were examined was also significant.

“It makes no sense to indiscriminately publicise information relating to these three banks only,” he said. “Others may have made similar transactions from any of the rest of the banks operating in Cyprus, but their names would not appear in any list.”

Christodoulos Angastiniotis, head of the Cyprus Investment Promotion Agency (CIPA), was equally critical.

“This is obviously populism at work,” he said. “Companies are allowed to pay their suppliers and conduct business free from harassment.”
“There is no sense in this decision.”

Against this backdrop, yesterday’s comments by President Anastasiades upon his return from an official visit to the United Arab Emirates – in search of foreign investment – seemed ironically symmetrical. “In evaluating this visit, I want to believe that the effort that has been made will bear fruit,” he said.

The political parties that made the decision to make the names public never considered the risk to the economy – or maybe they just made a self-serving decision that seeks to paint them as radical truth-seekers, as opposed to irresponsible populists. Whatever the case, they are treading dangerous waters, say detractors. Publishing names could achieve little more than satisfying the crowd’s appetite for blood.

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