Cypriot Economic Crisis – Crime and Punishment Great Expectations or Realistic Possibility?
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Abstract
For many an ancient Greek tragedy, a precondition for the arrival of the effect of catharsis (renewal and restoration), is the attribution of nemesis, the just punishment for wrongdoings, arrogance and hubris before the Gods. Wrongdoings, arrogance and hubris were palpably present in the Cypriot economic crisis, in the banking as well as the fiscal sectors of the economy, but catharsis has yet to arrive.
As the people and the society slowly come to grips with the effects and consequences of the catastrophe, a number of burning questions are on every sufferer’s mind which this article will discuss and strive to provide meaningful answers from a legal practitioner’s perspective: Why did the legal and regulatory system prove unable to prevent such a catastrophe by allowing the banks to fail in so many respects? Is the arsenal of the legal and regulatory system strong enough to enable it to rise to the challenge of doling out just punishment? Are people’s expectations for the punishment of those who are to blame, fanned by politicians’ rhetoric, too high? What changes and improvements to the legal and regulatory system are necessary so as to substantially reduce the likelihood that similar failings will occur in the future?
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Keywords
Cyprus economic crisis, corporate governance, legal system, punishment, personal responsibility, corruption
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Central Bank of Cyprus Directive for the Professional Conduct of Banks when Offering Investment or Ancillary Services and when Performing Investment Activities, Regulatory Administrative Decision 558/2007.
Central Bank of Cyprus Directive on ‘The Framework of Principles of Operation and Criteria of Assessment of Banks’ Organisational Structure, Internal Governance and Internal Control Systems’ of 2006–2012, Regulatory Administrative Decision 460/2006.
Constitution of the Republic of Cyprus.
Criminal Code of the Republic of Cyprus, Cap. 154.
Cyprus Stock Exchange Corporate Governance Code. Available at: [http://www.cse.com.cy/el-GR/regulated-market/listing/corporate-governance], retrieved 14 December 2014.
Financial Services (Banking Reform) Act 2013 (chapter 33), UK.
Independent Broad-based Anti-Corruption Commission (‘IBAC’) Act 2011 of the State of Victoria, Australia.
Independent Commission against Corruption Act 1988, New South Wales.
Insider Dealing and Market Manipulation (Market Abuse) Law of 2005, Law No. 116(I)/2005, as amended, Republic of Cyprus.
Investment Services and Activities and Regulated Markets Law of 2007 as amended, Law No. 144(I)/2007, Republic of Cyprus.
Public Offer and Prospectus Law of 2005, Law No. 114(I)/2005, as amended, Republic of Cyprus.
The Central Bank Directive on Governance and Management Arrangements in Credit Institutions, which came into force on 8 August 2014.
The Central Bank Directive to authorise Credit Institutions on the Assessment of the Fitness and Probity of the Members of the Management Body and Managers of Authorised Credit Institutions of 2014.
The Prevention of Corruption Law, Cap. 161, as amended, Republic of Cyprus.
Transparency Requirements (Securities Admitted to Trading on a Regulated Market) Law of 2007, Law No. 190(I)/2007, as amended, Republic of Cyprus.
R. v. Christopher McQuoid [2009] EWCA Crim 1301 (10 June 2009), UK Court of Appeal, (Criminal Division).
CySEC decision of 30 September 2013 regarding administrative sanctions imposed on Mr Efthimios Bouloutas [in Greek]. Public Information, Announcements, announcement date 10 October 2013. Available at: [http://www.cysec.gov.cy/en-GB/public-info/announcements/], retrieved 5 December 2014.
CySEC decision of 30 September 2013 regarding administrative sanctions imposed on Bank of Cyprus Plc and Board Members [in Greek]. Public Information, Announcements, announcement date 4 October 2013. Available at: [http://www.cysec.gov.cy/en-GB/publicinfo/announcements/], retrieved 5 December 2014.
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CySEC decision of 28 April 2014 regarding the imposition of administrative fines to Cyprus Popular Bank Public Co Ltd, to its Members of the Board and to other persons (investigation regarding Greek Government Bonds) [in Greek]. Public Information, Announcements, announced on 5 June 2014. Available at: [http://www.cysec.gov.cy/en-GB/public-info/announcements/], retrieved on 2 December 2014.
CySEC decision of 28 April 2014 regarding the imposition of administrative fines to the Bank of Cyprus Public Company Ltd, to its Members of the Board and to other persons (investigation regarding Greek Government Bonds) [in Greek]. Public Information, Announcements, 5 June 2014. Available at: [http://www.cysec.gov.cy/en-GB/public-info/announcements/], retrieved on 2 December 2014.
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“Cypriot Economic Crisis – Crime and Punishment: Great Expectations or Realistic Possibility?”. 2017. Cyprus Review 27 (1): 249-90. https://cyprusreview.org/index.php/cr/article/view/67.