February 22, 2011

Corporate Governance : Where Art Thou?

The company where I am an independent non-executive director sent me to a corporate governance half-day course on Friday to refresh us on the Malaysian Code on Corporate Governance. It was a very basic course where we told what we need to make sure as we govern the company which we are supposed to oversee.

Since at the start of the session, I have a bone to pick with the speaker. He is a senior partner of an audit firm in Kuala Lumpur. Well-known and well-respected (the firm, not him). As he starts the session, you can see that he was just going with the flow and not really trying that hard to give any input on what he is quoting from the Code. Of course, he did say at the earlier part that his firm helped in amending part of the Code in 2009 after all the corporate crisis which toppled huge conglomerate like Enron, which resulted in the closure of Arthur Andersen, a well-known audit firm then.

Another issue which I had with him is his way of siding with whatever the management is well-known to do. Not really giving a solution. More like agreeing to the fact that we have problems like family business which still thinks they own the company and government link conglomerates which can't decide against government policies even if the shareholders (especially the minority shareholders) will suffer due to that decision.

As there were a few VIPs in the audience (including my chairman who was a former mayor), he keeps on shooting of names which I consider to be skewed to the western countries while ignoring any mention of Malaysian companies. He did mentioned Sunrise Berhad as an example but ignore other good company with good corporate governance. I was looking for him to quote Singaporean company, at the very least but he failed to do so. Although he did say the term 'corporate governance' was coined by western authority after the failure of their companies, he fail to look at the success (or the failure) of Malaysian companies. He seems to be too afraid to thread on one of the toes of the VIPs in the audience. 

When he finished his presentation, and when he asked for questions from the audience, I brought up two matters :

1) His lack of examples from Asia or Malaysia specifically which he answered that we do have a few companies but he wants to bring worldly issues to our intention (while he did used the word 'China-man company, which is so much closer to home);

2) I suggested for him to suggest to Bursa Malaysia to ask for all public listed companies to take at least one director from two institutions which has tried to initiate a pool of independent directors. Those institutions are Minority Shareholders Watchdog Group (MSWG) and Malaysia Alliance of Corporate Directors (MACD). Maybe in the end, if there are too many corporate fraud why not all public listed companies are required to take any independent directors from the lists these two institutions have compiled.

On my own personal note, as much as I realised the need for accountants to be in audit committee, remuneration committee, nomination committee and the Board of Director proper, all other professional professions seem to be secondary. I wonder whether these two institutions MSWG and MACD will recognised the need for other professionals like lawyers so they can advice in legal matters (I did give inputs in court cases which happens in our company) or if the company deals with education, a senior educator. I just hope they realised that different company need different perspectives from different persons.

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