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Our View: Oversight authority cannot be stopped

Συνέντευξη στο ΚΥΠΕ – Υπουργός Οικονομικών Μάκης Κεραυνός
Finance Minister Makis Keravnos

The government has been on the defensive after Finance Minister Makis Keravnos announced on Tuesday that the cabinet had approved the creation of an oversight body for professional service providers – primarily law firms and accounting companies. It was attacked by the Cyprus Bar Association (CBA) and its president while the accountants’ association (Selk), although more restrained, also expressed concerns about the body. Both complained that they had not been consulted before the government took its decision.

Deputy government spokesman Yiannis Antoniou argued on Wednesday that the government had merely submitted “a framework” and that there would be consultations with the CBA and Selk before it was finalised. Keravnos was less conciliatory, speaking a few hours later, saying that “when we are talking about oversight and there are such strong reactions, in my opinion, they do not leave a very good taste.” He added that the unified supervisory authority was an “issue that we should all be seeking because it is the only way to clear the name of our country, from rumours that persist to this day.”

President Nikos Christodoulides had said that a unified supervisory authority would be established last summer – after two professional service providers were included in US and UK sanctions lists for having sanctioned individuals as clients – as part of his government’s drive to clean up Cyprus’ reputation. Experts from the US have helped government efforts to tighten the country’s regulatory framework and anti-money laundering measures, the oversight body being part of this drive.

The CBA had expressed its opposition to the oversight body from the beginning and it has legitimate concerns. Its president Michalis Vorkas argued that the right of the CBA to supervise and regulate its members was enshrined in law and the creation of an oversight body to investigate lawyers would constitute a violation of the law as well as putting at risk lawyer-client privilege. He feared the unified supervisory authority, on which the Cyprus Securities and Exchange Commission would be represented, would seek confidential information from lawyers about their clients as part of its responsibilities. These are legitimate concerns.

The only argument supporting the government’s case is that the CBA, despite its protestations, does not appear to have exercised rigorous checks on its members, over the years. If it had, Cyprus would not have been linked so often to money laundering cases and sanction-busting until recently. Of course, it would be unfair to blame the bad reputation Cyprus acquired over the years on inadequate regulation by the Bar Association. The unit for combating money laundering, Mokas, has been resoundingly ineffective, as its poor record in uncovering illegalities perfectly illustrates.

While nobody should feel comfortable with the state interfering in lawyer-client relations, it is unlikely the establishment of the supervisory authority could be stopped. Of course its existence could be rendered unnecessary if the CBA and Selk carry out their regulatory roles stringently.

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