In the 6th Century AD, Emperor Justinian undertook the noble enterprise of saving, in writing, all the laws of ancient Rome. His famous “Code” includes the Roman definition of justice: ”the constant and perpetual will to render every man his due”.

Since it is rare for any earthly “will” to be constant, let alone perpetual, Justinian clearly refers to will of a different order, which unstable human institutions seek merely to emulate.

Being rendered one’s “due”, whether by human or divine agency, is the working of natural law. It applies to reward and retribution alike, enforces accountability and there is no escape.

In an earlier article I noted that successive phases of commercial life are hallmarked by defining terms such as “compliance”, “governance” or “sustainability”, and once the word is lodged in public consciousness, nothing will shift it. But it always arrives too late, the damage having been done.

Today’s emblematic expression is “risk management”, a concept that has always been implicit in commercial life but lacked the celebrity status it enjoys today. But again, it’s too late. The horses have bolted.

Theory and practice

We are told, for example, by Jean-Claude Trichet of the European Central Bank (ECB) that allowing Greece to default on its bonds would bring down the banks holding those bonds. But just take a step back. All those banks, including the ECB itself (whose charter forbids it to take on bad debts), were replete with “risk committees” whose primary duty was to vet proposals – in advance of lending.

a third of Greek incomes are generated in the “underground” economy

Those committees knew full well that a third of Greek incomes are generated in the “underground” economy; that tax evasion is rife at every level, businesses and even professionals treating payment of taxes as a voluntary activity; that bribery and corruption represent an essential life-support system; and that each major political party is beholden for its survival to powerful trade unions.  The sort of borrower you would be happy to lend your own money to? Never mind risk, where’s the governance?

And as for that dreaded Greek “default”: by any normal reckoning it has already happened. Even as a student I learnt that if a debtor gives notice to any creditor that he will have to suspend repayment of his debt, that notice itself can amount to an act of bankruptcy. So who’s kidding whom?

A predictable Nemesis

As Justinian would say, justice demands that the Greeks be rendered their due – and asking the ECB to conjure up still more fake money can only make it worse. Even Mervyn King, our own cautious central banker, publicly warned that pumping more “emergency funds” into Greece will resolve nothing, because the problem is not liquidity. It’s solvency. In a word – they’re bust, and the latest self-flagellation vote by their parliament will change nothing. Those who wilfully fudged the rules when inviting Greece to cheat its way into the euro-club are likewise receiving a generous dose of justice.

If those risk committees had done what they were paid to do, and said “no” to Greek offerings, Greek debts would have been lower because its thriftless state sector would not have been able to borrow its way out of deficit. Its government and people would have been compelled, far earlier, to face the consequences of dissipation that now afflict them with a vengeance.

As ever, the problem is double standards. Take our new “Bribery Act”: its stringency is unprecedented, and there will be prosecutions. Acquiescence in the passing of a trifling inducement, or failure to institute a sufficiently rigorous vetting procedure, will be potential criminal offences. Yet our legislators are still smarting from the indignity of having to account for their own “expenses”. Will they uphold the Act’s standard of moral purity when ritually doling out loans and aid to some of the world’s most repressive regimes, and trace where the money is actually going?

Or leave it to justice?