Transparency and Accountability: Civil society calls for reforms

Stavros  A.  ZENIOS  

University  of  Cyprus  

Senior  Fellow,  The  Wharton  School,  USA  

Transparency and Accountability: Civil Society Calls for Reforms

Key  points  

¤   We  were  wronged  

¤   We  were  wrong      

We  were  wronged:    Impact  of  Greek  PSI  on  eurozone  countries    

!! Cyprus! Greece! Germany! Belgium! France! Portugal!! ! ! ! ! ! !%!of!GDP! 23.03! 11.65! 0.14! 0.56! 0.25! 0.25!Source:!EBA!and!author’s!calculations.!EBA!data!available!at!http://www.eba.europa.eu/documents/10180/15935/CY006.pdf!

!

We were wronged: ad hoc bail-in

¤  Directive 2014/59 issued in 2014.

¤  Article 44 -scope of bail-in: ¤  Exempts covered deposits

¤  Accrued salary

¤  Pension benefits

¤  Liabilities arising from the provision of goods or services that are critical to the daily functioning of the creditor.

¤  Capital controls

Cyprus bail-in detrimental to notion of common currency.

We were wronged: unfairness of the bail-in

¤  Bailed-in depositors of BOC contributed €3,806mil in cash and received shares at €1.00 per share.

¤  CPB contributed net assets €425mil and received shares at €0.503.

¤  Capitalization of BOC was €371,95mil and received shares at €20,66.

¤  81.5% bailed-in depositors, 18.1% ex-CPB, 0.4% BOC shareholders.

¤  82.7% bailed-in depositors, 9.2% ex-CPB, 8.1% BOC shareholders.

Fail the John Rawles “veil of ignorance” test.

We were wronged: narrative of money laundering

Spiegel, 5 November 2012 German Secret Services Secret report

Basel Institute of Governance AML Index

Cyprus 4.93

Holland 5.03

Germany 5.80

Financial Action Task Force

Narrative of money laundering

Is it true? No it is not!

Fits Noam Chomsky theories.

We were wrong

Shadow economy

Political corruption

Cronyism

Shadow economy

Shadow Economies All over the World Policy Research Working Paper 5356, The World Bank

Country % GDP

Switzerland 8.5

USA 8.6

Singapore 13

Ireland 12

Italy 21

Greece 24

Cyprus 25

EU-27 18.5

Political corruption

¤  GRECO Report of Council of Europe 2011

¤  Transparency in party financing

¤  Eight significant recommendations

¤  Only 2 partially complied by 2013

Don’t get mad, get even.

Transparency Now!

¤  Petition

¤  5000 signatures

¤  Public pressure –TV, radio, newspapers, social media

¤  Elections challenge

Approved by Council of Ministers, February 2015.

Cronyism

¤  Electoral reform: Horizontal Voting

Active citizens: Regenerate, Reform, Reveal

E-petitions

Conclusions  

¤   We  are  fixing  our  mistakes    

¤   EU  InsLtuLons  should  fix  theirs      

Βιβλιογραφία

Zenios,  S.A.,  The  Cyprus  debt:  Perfect  crisis  and  a  way  forward.hXp://papers.ssrn.com/sol3/papers.cfm?abstract_id=2233239  

Zenios,  S.A.,  Fairness  and  reflexivity  in  the  Cyprus  bail  inhXp://papers.ssrn.com/sol3/papers.cfm?abstract_id=2409284