President calls for corporate governance probe

Guyana Chronicle top story, Sunday 28 June 2009 - "President calls for corporate governance probe" - http://www.guyanachronicle.com/topstory.html

President calls for corporate governance probe

Looks like this is the lead. Put on one of the early pages

THE financial crisis triggered by bad corporate governance in the United States is more than lesson enough for the corporate sector in Guyana to be put under closer examination.

That’s the word from President Bharrat Jagdeo, who has asked the National Competitiveness Council (NCC) to place corporate governance here on the table.

At a press conference Friday, he agreed that Guyanese should go after the government on governance issues because they have a right to keep the administration on its toes.

But he argued that somehow, the corporate sector here gets “a free pass,” although some companies have been cited by the Securities Council for breaches.

The President said there should be adequate information about the dealings of these entities, including details about the visible and invisible compensation packages of the public companies.

“Have we examined…the public companies which have thousands of small shareholders? Is there adequacy of information about the dealings of these entities?” he inquired.

Mr. Jagdeo recalled that the Securities Council took some of the corporate entities to court, but that the media has never reported on the issues.

He charged that this was because “your editors rely for ads from some of these companies. So you don’t want to get in the bad books of some of these companies.”

“But you go and look at the public record and ask yourself whether this is serving the interest of the small shareholders who put their money and who expect shareholder’s value to be created, (and who) expect these companies to be run in a clean, efficient way (and) not…like private companies,” he said.

Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed.

The President noted that the crisis in the US was triggered because of bad corporate governance, with people “just investing a bunch of money in questionable instruments, largely because their bonuses were linked to high rates of return…getting maybe US$150M a year in bonus.”

He said that among other issues prevalent here, is the inter-locking directorate as well as “excessive inter-company transactions,” and that “maybe, legislation is needed to regulate in a greater way inter-connected party transactions, the inter-locking directorate which is so prevalent in our country.”

He noted that at a forum this week, the Canadian High Commissioner here was speaking about corporate governance, and the participants were talking about how the Central Bank must be strengthened.

“It’s gone right back to the government – not corporate governance, governance in the private sector – the Stock Exchange, self regulation, all of these things, compliance with the Companies Act, transparency in their accounts. Immediately it gets shifted back to the government – what is the Central Bank doing; this is the easy way out,” the President said.

He urged the media to delve deeper into corporate governance here.

The NCC is a public-private entity established to take ownership of the National Competitiveness Strategy (NCS), and act as the central point of policy leadership that will ensure ongoing development and implementation of the NCS.

Through a ground-breaking partnership approach between the government and private sector, a new draft of the NCS was developed and formally launched at the May 2006 Presidential Summit on Private Sector Development.