Dr Axel Kravatzky, Chairman of the Caribbean Corporate Governance Institute Photo: Andre Alexander
T&T is still trailing other countries in the region in corporate governance practices, says Dr Axel Kravatzky, chairman of the Caribbean Corporate Governance Institute (CCGI).
“In terms of disclosure requirements, T&T before the Corporate Governance Code was established, was the country with the lowest disclosure requirement in the world. The international benchmark is 51 items, and T&T had five items. So now with the code and all voluntary aspects, with recommendations and guidance it comes to 30. If you compare that with Jamaica, it is 31 in law. In Barbados, it is over 40. T&T is moving forward but the disclosure standards are still on the lower side,” he told the Business Guardian last Friday.
He said strong corporate governance practices are important for an economy as investors look at how companies are run.
“They are looking to see if you have standards in place as opposed to anything goes. Only the United States has legalised such a code. In other countries, they either comply or there are applied codes which make it mandatory to disclose but it does not tell you that you must do things a certain way.”
He said the Minister of Finance has called on all state enterprises to adopt the Corporate Governance Code.
“We are monitoring which enterprises adopt it. What we are finding is that a lot of organisations are using the code as reference and a lot of them are preparing to bring themselves up to speed.”
Although he does not have statistics as yet on how many companies are using the corporate governance code, he said there are encouraging signs that more and more companies are using it.
“We have a working group that is examining this. The tell-tale signs are: what does your annual report say; does it make a reference to what standard you are using?” he asked.
He said developing accountability in T&T’s corporate sector and steering clear from acts of corruption will not be a “quick fix” and it will take time.
“This is a sustained effort. Our institute is committed to working in the long run. Organisations that are well directed and in which there are clear aims will perform higher than those that do not.”
Kravatzky spoke to the Business Guardian last Friday at the Guardian’s Office, St Vincent Street, Port-of-Spain.
The CCGI was registered in 2012 in T&T and became operational in 2013 and has 153 members from Caribbean countries.
Chartered Director Programme
He also said the CCGI Chartered Director Programme provides directors and board members with the professional training to help their companies and businesses run efficiently.
This programme allows board directors to acquire professional training for boards and become members of a professional society similar to how chartered accountants and other professionals do it in their fields.
“The big item in 2013 for the CCGI was the development of the T&T Corporate Governance Code together with the T&T Chamber of Industry and the T&T Stock Exchange. Then in 2014 was the development of the Professional Development Programme. Last year, we launched it with a Certificate in Corporate Governance and the certificate is the first in a three-step process to qualification as a chartered director. Now we are launching the second cohort in May,” he said.
He said in April the institute had the inspection visit of the Accreditation Council of T&T.
“We are seeking registration as a first step and then accreditation of the course. It is a two-step process there and we are now awaiting the decision of the council. They want to know if we have an educational system in place that has quality management standards in place. Is the exam process in such a way that the person who is examining is not the same person who is teaching it? We believe we have met all the criteria,” he said.
The director of education at the institute is Dr Chris Pierce, who was previously the director of professional development and standards at the Institute of Directors in London.
“It is not the same programme as the Chartered Director Programme in the UK but it has the same structure and we are utilising similar qualification criteria. But the content is at a global level where there are specific legal and best practice guidelines for the Caribbean. When you do this you know what the standards are in T&T and how it compares internationally.”
He compared the course to similar programmes in the UK and Canada.
The UK programme offers 13 days of training, while Canada’s programme offers 12 days compared to the CCGI’s nine days.
“Ours is nine days face-to-face not including interviews and portfolios. The cost to do it with the CCGI is US$7,000 compared to US$21,916 with the UK and$17,177 with the Canadian course. The $7,000 covers step 1 and step 2 of the certificate and diploma programmes. We think that this is very high quality and it is built for the long run.”
He said the aim is that people who qualify as chartered directors will demonstrate that they have the knowledge, the skills and the experience.
“As a director of a company who engages in this programme you are demonstrating to your stakeholders that you are a professional and successful because you have professionals directing it. In the same way there are chartered accountants, why not have professional qualifications for directors as well. Frequently when you look at boards some people wonder what qualifies that person to take on the responsibility. Now you can have the answer. The person may not be a subject matter expert but if you are a non-executive director you know how to direct and control the organisation. Before you would have to go to the UK, Canada or South Africa and now you can do it in the Caribbean.”
He said a graduate of this course can be trusted to be on a board.
“The person will act with independent judgment, the person will compare options before he or she makes decisions and take decisions in ethical and transparent ways. They also have the full knowledge of how organisations work.”
On May 26, another set of professionals for the chartered director programme will be launched.
“Also, on May 27, we have a corporate governance master class specifically on the topic on ethics and corporate responsibility. This is not part of the chartered programme, this is more in depth,” he said.
Organisational risk
Kravatzky said the graduates of this programme are qualified to deal with the risks in their organisations.
“A risk is any event that will prevent you from achieving your objective. In order to know what to look for, you need to know how your organisation works, what is its business model and its value chain. Where do you create value and everywhere you create value you must make sure that nothing interferes with it. If you cannot create a business model for your organisation, then you are not in a position to manage risk,” he said.
As a qualified director, he said the candidate will know how to draw up a business model and analyse a value chain.
T&T, like many other countries, has directors who lack the skills necessary to make a proper contribution on boards.
“T&T—as all the other countries in the region—have important business to conduct in public and private.
However, the business schools do not give these qualifications. You go to the universities and other areas and they do not give you that. They give you other valuable things. The skills and knowledge to operate as a board director is the entire body of knowledge you need and, as in other professions, this is the place where there is a professional code of conduct. It is the same way there are schools for chartered accountants.”
Given the nature of T&T’s economy as a small developing country, he said professional training for board members are now even more important.
“It is important for small island economies where you have a one degree of separation, that you have professional standards that you can refer to. A lot of board members are under tremendous pressure in public and private institutions. If you are not sure of what you are doing or you do not have a professional background, then it means you are taking all the pressure.”
Published: Thursday, May 21, 2015 -
http://www.guardian.co.tt/business-guardian/2015-05-21/moving-forward-tt%E2%80%99s-disclosure-standards-still-low