Longstanding problems

The arrests of portfolio investment company officials for embezzlement, as in the case of Domus Investments, may be unusual but not unforeseen. They do, however, demonstrates that checks currently being made on listed companies are thorough and effective, given that the issue emerged after auditing by the Capital Market Commission. Earlier there were nothing more than suspicions. The case of Ipirotiki, whose main shareholder committed suicide leaving behind enormous debts, black holes that reveal a particularly negative picture, is more complicated. Other listed companies have crumbled, too, which may have made less noise but the outcome was the same. In all cases the responsibilities of market monitoring include spotting problems in time and imposing sanctions. With the suspension of those stocks, as decided by the stock market’s president, the cycle of missed opportunities for investors and the market is complete. A new cycle is opening, that of court battles and of prolonged devaluation of companies and any assets they may have. The lack of the appropriate institutional framework to allow cases to be closed quickly aggravates the situation. Outstanding issues are usually prolonged because neither side wants to fulfill its responsibilities. Shareholders believe they have ownership, banks have loans that could be paid back, employees have rights from their work, and suppliers have credit to be returned. In fact, though, no one has anything tangible, but they maintain their hopes: Shareholders will have a company, banks and suppliers will be paid back and employees will continue to work. In most cases none of these hopes comes true, but by the time they are proven false beyond doubt, the responsibility of those who funded and trusted but were deceived will have been forgotten.

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