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Transparency Is Not Enough

Transparency Is Not Enough

Of all the principles underpinning good governance, transparency is probably the most widely advocated. “Sunlight is the best disinfectant” is the well-known quote from US Supreme Court Justice Louis Brandeis that refers to the benefits of openness. Though essential, however, transparency on its own is limited by the assumption that honour and shame will serve as corrective mechanisms against excessive self-interest. Experience tells us this is a big assumption.


The recent appointments to the boards of Cyprus’ semi-government organisations (SGOs) provide an interesting case study. The so-called ‘spoils system’ (i.e. “to the victor go the spoils”) has been openly, widely – and quite unashamedly – practised in Cyprus for decades. 


This is how seats on the boards of SGOs have traditionally been allocated. If transparency were the only criterion for good governance, successive governments could have argued they have always been in compliance, given the openness about using this system.


It could have been further argued this has always been done with the tacit approval of an electorate fully aware of ‘the way we do things around here’.


But the Cypriots have recently had a rude awakening. Most neutral observers would agree that decades of cronyism and tribalism (that underpin the spoils system) are a significant contributing factor to the inefficiency of the State that is now bankrupt. 


Moreover, the Cypriot public is now painfully aware of its vulnerability to any incompetence and/or corruption by the powerful elite (whether in the public or private domain). This has brought home the realisation that without real accountability, the impact of transparency may be limited.


So, to whom should SGO board appointees be accountable? This takes us to the heart of the governance debate surrounding alternative models. Two examples can be used to illustrate: in broad terms, the ‘shareholder model’ prioritizes the interests of an organisation’s owner(s) whereas the ‘stakeholder model’ takes a more holistic view to consider all those impacted by the organisation’s actions. 


This is a particularly relevant discussion given the pending denationalisation of Cyprus’ SGOs. It could also serve as a means of providing “more light and less heat” to an issue that promises to polarise society even further. With the roadmap for denationalisation providing 2-3 years for preparation, sufficient time exists to gain a broad consensus on three key governance questions: (1) To whom is accountability owed? (2) How can the stakeholders be empowered to exercise their rights properly? (3) To what extent should the needs of remaining stakeholders be addressed?


Even with transparency and accountability, still more is required. For authority to not be used brazenly whilst answering only to an exploitative few, any system of good governance should incorporate the principle of probity (honesty, fairness, justice, etc.). 


Probity helps redress the balance between the powerful and the powerless through sound ethics and values. Importantly, however, what is fair and just should not be determined only by the same powerful actors and stakeholders that probity is trying to guard against!


Again, the SGOs provide interesting insight. Political parties and unions are the two most powerful stakeholders and they have also set the agenda to date. This can be illustrated by the political appointments to the boards, and the recent admission by one SGO to being “overpopulated” and able to operate perfectly well with fewer people (it is highly likely this applies to other SGOs too). 


The question is whether other stakeholders – especially paying customers – also approve of SGOs being such gracious – not to mention generous – employers. Probity requires that their opinion be given an adequate hearing. This is especially important in a monopoly environment where the opportunity to patronise only a preferred supplier does not exist.


The principle of sustainability is also critical for comprehensive good governance. This includes the economic, social and environmental arena in which an organisation operates. Unfortunately, the Cypriot cultural idiosyncrasies of cronyism and short-termism have weighed heavily on SGOs with the growing financial crisis exposing their inefficiencies. Wider public support is also being severely tested as the growing ranks of the unemployed start to question the value for money offered by SGOs. 


It is time for Cyprus to introduce comprehensive good governance to chart a better future.

Petros Florides is Regional Governance Advisor for World Vision International, and Executive Officer of World Vision Cyprus. He is also on the board of the Institute of Directors (Cyprus), co-founder of the Cyprus National Advisory Council for the Chartered Institute for Securities & Investments, co-founder of the Institute of Risk Management Cyprus Regional Group, and a Chartered Management Accountant. The views in this article represent those of the author and not any other individual or organisation. 


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