FinancialMirror.com
October 24 - 30, 2012
6 | OPINION
Did Christofias foil an economic Coup? EDITORIAL Judging from the anger on his reddened face during various public appearances over the weekend, one might believe that President Christofias had foiled an attempted economic coup d’etat to topple his financially-fit regime. How else can one explain the fury with which the island’s chief executive unleashed a new round of attacks on the island’s banks and the former central bank governor, in particular? How come he has only now realised that there had been an issue of the then-Marfin Egnatia bank moving its operations out of Cyprus? Was he told only last week that Cypriot banks were buying Greek bonds when the Germans were dumping them?
CIIM, CFA seminar on the role of the director The Cyprus International Institute of Management and the Cyprus Fiduciary Association will present a one-day training seminar on ‘The Role of the Director’, an introduction to the role, duties and legal responsibilities of a nominee director acting for client companies. The seminar will take place on Thursday, October 25, at Hilton Hotel Nicosia and it is open both to CFA member and to anyone interested to attend. The cooperation between CIIM and CFA for this seminar emerged from CIIM’s role as the official training provider of Institute of Directors programmes in Cyprus and CFA’s role in regulating the sector of professional activities provided by fiduciary service providers and firms providing advisory services in managing private companies in Cyprus. The seminar is addressed to anyone involved with the provision of directorship services, as well as senior administrators/corporate officers and managers. It will take place from 9am to 1pm. The fees for CFA members are 75 euros per person and 150 euros for non-members. A special discount applies for groups of three or more. The seminar will be presented by Paul Munden, an experienced commercial law barrister and chartered director. Over the last ten years Paul has served as CEO and general counsel of the Business Link operation in London. He is currently the lead tutor at the IoD responsible for designing the governance and director roles and responsibly elements of the internationally recognised chartered director qualification syllabus. For registration contact CIIM Executive Education on 22462246 or by e-mail at execedu@ciim.ac.cy.
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Did all this just happen to coincide with the confidential briefing he had from the incumbent governor about the as-yet incomplete report by Pimco? Why all this fuss now, when the banking scandal has been brewing from last year, but all past Finance Ministers had assured the public that Cyprus banks were robust? Could it be that there is another inquest pending that he plans to ignore once again? Or is he aware of the report’s conclusions and just wants to drum up support and redirect public anger away from the inevitable austerity measures? Before accusing others of whatever they had allegedly done, perhaps the president ought to consider what he had or hadn’t done – he did not heed to calls that Cyprus banks seek direct aid from the ECB, but instead dragged his feet (on the advice
of his economic circle, no doubt) to “go with the flow” of the rest of the EU politicians who have delayed the creation of any bailout fund for fear of sacrificing their own banking supervision independence. Christofias also accused all sane voices of unfairly criticising his administration for all the ills that hit the Cypriot economy. And he refuses to consider drastically cutting back on public sector spending that has spiraled out of control during the past four and a half years of his term in office. Perhaps the president ought to deal less with the banking sector and more with how his administration plans to resolve the economic crisis. Unless he plans to pass the responsibility (and then the blame) to the next president in five months’ time.
Governance and succession in family-controlled businesses Your article on Wednesday, October 17, on the Cheung Kong corporate empire and the Li Ka-shing family was fascinating as it highlights the whole issue of governance, succession and continuity in family-controlled businesses. While many family businesses remain small and in private control, a significant number grow to become mega corporations that rival those PLCs etc in public ownership. They share the same kinds of risk and control issues but with some additional ones at board level such as sibling and inter-generational LETTER TO rivalries, a tendency for dominant joint CEO/chairmen to thwart good governance, Non-Executive Directors being ignored or even not appointed and minority shareholders’ interests being sidelined. Hong Kong examples include the succession battles over SJM Holdings (the Stanley Ho family), Sun Hung Kai Holdings (the Kwok family) and Yung Kee Holdings (the Kam Shim-fai family). The FrouFrou Biscuits case in Cyprus in 2007 was a local example of family boardroom battles and dubious governance (see Financial Mirror articles passim). Regarding succession and continuity, there are arguments for maintaining family control of the boardroom, such as their close understanding of the company’s history, standing in the community, traditions, culture and how to get things done, the family’s network of contacts and relationships and the fact that they are not beholden to remote, overseas owners. Such factors are very important in a place such as Hong Kong and an outsider, especially one not from Hong Kong, would struggle for years to successfully replace the controlling patriarch or matriarch of a family owned corporation. Even a close family member would probably find it difficult for a time and there is evidence from drops in share price that markets do not like such transitions. Nevertheless, as your article indicates, in Hong Kong at least, many of the oligarchs of the family owned corporations have developed a degree of maturity in dealing with control, governance, succession and continuity. More and more corporate patriarchs are welcoming back their sons
(and daughters), loaded with MBAs and some corporate experience in the West, to take on senior executive positions and be groomed as successors-in-waiting. This was abundantly evident from the contribution of several corporate leaders and their sons to the discussion and debate on Family Businesses at the 2nd Asian Corporate Governance Conference in 2007 held in Hong Kong. In view of the significance of such issues to many parties, I have included a chapter on Family Businesses, Governance and Risk in my forthcoming book “Corporate Risk and Governance” (Gower, ISBN 978-1THE EDITOR 4094-4836-5, due out in 2013). Ultimately, it is unlikely that those large corporations which are traditionally family owned and run will be able to survive in the long term unless they accept a realistic degree of professional management (including risk management) and this implies bringing in outsiders as it is unlikely that the number of qualified family members will ever be sufficient. The days of large corporations being run by amateurs (gifted or not) are over. Such a change may be unwelcome by dominant joint CEO/chairmen in family controlled large businesses who often regard the company as their private plaything and the company’s money as their own. I have heard it said that many family-controlled businesses in Cyprus are like this. A few months ago, the judge made this very point about “who’s money is it?” in sentencing Asil Nadir to 10 years’ imprisonment for how he stole his company’s money and thereby caused the collapse of Polly Peck International before hiding from justice in north Cyprus for 17 years. Moreover, as a result of their growth and transition to large corporate status, family firms will be exposed to a number of risk-laden issues which, if they fail to manage competently, can adversely affect corporate reputation, market confidence, access to capital, share values and, ultimately, survival.
Kind regards Dr Alan Waring (contributor of The Risk Watch column)
Bravo Makaria-Andri Dear Sir I read with great interest the Q&As you published in your 1000th edition with respect to the views of the four main presidential candidates on the economy. Some were clear, others were vague, immature even. However, what impressed me most is that a week after you asked them all to comment on the (delay) Transparency and Private Assets Declaration, aka “Pothen Esxes” of all politicians, only Makaria-Andri Stylianou came forth revealing her
household income and assets. Was she smart or is this the true ethical standard of a struggling single parent? In any case, in the past I recall that only Greens MP Yiorgos Perdikes had the guts to declare his income and has been badgering the remaining 55 deputies to do the same. It’s a shame that MPs, ministers, high-ranking government and presidential palace officials and other public officers refuse to declare their interest. What do they have to hide? M. Georgiou (Mrs) Strovolos
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