Chairman Dr. Axel Kravatzky speaks on the importance of Corporate Governance for the State Sector on CCN TV6 .
"Having no common standard cannot help collective action"
However, over recent years, with the advent of globalization and other emerging markets and the financial crisis, the region has seen a lot of pressure on their small economies leaving both the private and state sectors no alternative but to focus on diversification, competitiveness and the development of new and stronger markets.
In order to continue to attract foreign investors, and build strategic alliances, the Caribbean must quickly respond to the escalating attention on Corporate Governance as a prerequisite for those relationships to prosper. From Enron, to Lehman Brothers, to CLICO, Board of Directors are being held increasingly accountable for responsible leadership; and are under constant scrutiny by all stakeholders. More than ever, it is essential that Directors and Senior Executives have the relevant knowledge and capacity to perform effectively in this new environment.
Currently, the level of Corporate Governance disclosure in the Caribbean does not meet international best practice compared to other emerging markets and as such there is an urgent need to provide capacity building and training to Directors and Officers of both private and public sectors. To this end, the Caribbean Corporate Governance Institute (CCGI) was formed and for the last three years, it has been working assiduously to fill this key gap in the region.
The Institute has successfully developed a world class program, with an internationally recognized faculty, that focuses on strengthening Corporate Governance Leadership through Master Classes, and the Chartered Director Program.
Additionally, the CCGI, as a membership organization with a current presence in Trinidad and Tobago, Barbados, Jamaica, St. Lucia, British Virgin Islands, provides forums for networking as well as for discussions and education on the latest issues that impact the business environment.
Achieving the qualification of Chartered Director, means that a Director or Executive has demonstrated an internationally accepted level of competence in the key areas of Governance, Finance, Strategy and Leadership as it pertains to Board performance. The program provides an integrated system of learning which combines practical skills, knowledge and experience in a recognized and coherent framework which ensures that participants are also kept up to date on strategic issues and changes that affect organizations.
As such, the Chartered Director is equipped to make a valuable contribution to any Board through a breadth of knowledge and experience that will increase the quality of stewardship that is being demanded of Boards in today’s dynamic landscape.
This program has been developed under the direction of CCGI’s, Director of Education, Dr. Chis Pierce who works with policy makers, directors and Boards in Europe, the Middle East, Asia, Africa, the United States and South America. He was the Director of Professional Standards and Professional Development at the Institute of Directors in the United Kingdom.
To achieve Chartered Director status, one must complete the Certificate Program, the Diploma Program and the Final Chartered Director designation process. This in depth process ensures that Directors not only acquire the knowledge, but are able to put it into practice and be tested on such knowledge. Furthermore, Directors are taken through a peer-review process which allows a level of accountability within the local context. The Institute understands the busy schedules of its target audience, and as such designed a program that integrates a flexible schedule and learning modules including both in-person and online learning. The diagram below demonstrates the progressive process to achieve Chartered Director status. It begins with a Certificate Programme followed by a Diploma and Chartered Director Programme. At each stage there is a final assignment and examination process.
Certificate Program
The Certificate Programme is a carousel style certification and consists of four parts which can be taken in any order:
Part 1 - Corporate Governance Part 2 - The Board Part 3 - Strategy & risk Part 4 - Corporate Reporting
Part 1 - Corporate Governance
Part 2 - The Board
Part 3 - Strategy & risk
Part 4 - Corporate Reporting
Two Workshops Followed by an assignment and an examination
Requires Completion of Evidence-based assignment on Leadership at Board level.
So whether you are currently a Director, or aspiring to be one, or an Officer such as Corporate Secretary, COO or CFO in the public sector, private sector or family business, this program can certainly and progressively increase your effectiveness in your particular role. In so doing, it will not only expand your competencies but also magnify your eligibility and credibility for other Board opportunities.
The Chartered Director Program can move you, your Board and your organization from “Good to Great…..” and by doing so, contribute to stronger firms, stronger markets, and stronger economies.
For more information about the Caribbean Corporate Governance Institute (CCGI) please contact:
Desiree Gobin-Seecharan CEO Caribbean Corporate Governance Institute #14 Alcazar Street Port of Spain, Trinidad & Tobago T: +1.868.221.8707 F: +1.868.221.5306 M: +1.868.774.3306 E: desiree.gobin-seecharan@caribbeangovernance.org
www.caribbeangovernance.org
Mrs. Marlene Street-Forrest, General Manager of the Jamaica Stock Exchange, (JSE) advised corporate entities to always operate at the highest standards by making disclosures that will enable shareholders to apprise the position of the company and to avoid the establishment of a false market in the Company’s securities. The JSE General Manager was speaking at the Caribbean Corporate Governance’s (CCGI) one-day workshop held earlier this month, to explore the issues of best practices and board accountability, disclosures, audits and evaluations within corporate entities. “The fundamental principle is that all persons invested in a Company’s securities must have equal access to information which allow investors to have a better understanding of a Company’s Corporate Governance Practices,” Mrs. Street Forrest said. She emphasised that in keeping the communication lines open, disclosure of information to shareholders should be timely, factual and balanced with sufficient details to enable investors and the general public to appreciate the true substance and importance of the information.
Uncertainty as to when to disclose will arise and must be governed by what is considered material and some general test in respect to issues that may have a significant change in the market price, volume or value of the securities and unusual trading,” Street Forrest pointed out. In speaking to Best Practices Mrs. Carolyn DaCosta, Company Secretary of Jamaica Money Market Brokers (JMMB), panellist at the workshop, warned that non-disclosure of critical information on financial and operating results can negatively affect the branding of a company. “Almost all corporate governance codes around the world, specifically require that Board of Directors provide information on the current affairs of the business and their future development and succession planning,” said Mrs. DaCosta. Other speakers at the workshop included; Mr. Dennis Brown, Director CCGI and Institute of Chartered Accountants (ICAJ); Mrs. Suzanne Ffolkes-Goldson, Attorney-atLaw, Lecturer, UWI, Mona Campus; Mr. David Hall, President, Institute of Internal Auditors Ms. Ann Marie Rhoden, Deputy Financial Secretary, Public Enterprises Division, Ministry of Finance and Planning; and Dr. Axel Kravatzky, Chairman CCGI. The Caribbean Corporate Governance Institute is a not-for-profit membership based organization that provides world-class training, professional development, and networking for Directors and Senior Executives. The Institute works closely across various stakeholder groups to establish and maintain appropriate corporate governance standards and guidance for organizations and investors operating in the Caribbean.
Michelle Persad, CEO of T&T Stock Exchange, Catherine Kumar, CEO of T&T Chamber of Industry and Commerce, and Axel Kravatzky, Chairman of the CCGI represent the three partner organizations and sign the MOU for Phase 2 at a press conference on 7 NOV 2014.
The Trinidad & Tobago Corporate Governance Code 2013 (TTCGC) was launched in November 2013 under the combined partnership of the Caribbean Corporate Governance Institute (CCGI), the Trinidad & Tobago Chamber of Industry & Commerce (TTCIC) and the Trinidad & Tobago Stock Exchange (TTSE). It is the first of its kind in the Republic and directed primarily to those companies with public accountability. The Code follows globally accepted best practices with specific consideration and much customization for the local economy and dynamics of the business society of Trinidad and Tobago.
A new Working Group was established in September 2014 and consists of a diverse team of industry stakeholders. Their focus is to facilitate Phase II of the Code Project and help to achieve the objectives of the TTCGC, which are to
The TTCGC is a partnership initiative between the Caribbean Corporate Governance Institute (CCGI), the Trinidad & Tobago Chamber of Industry & Commerce (TTCIC) and the Trinidad & Tobago Stock Exchange Limited (TTSE). The Project partners are the lead funders of the initiative, provide staffing resources as well as hold the copyright to the Code itself.
The Caribbean Corporate Governance Institute (CCGI) also serves as the Secretariat for the Project. Its primary function is to act as project manager for its various initiatives, coordinate research, meetings and correspondence as well as lead in the drafting or revision process.
The Memorandum of Understanding (MOU) sets forth the understandings and intentions of the three (3) parties and provides a framework for cooperation in respect of the Project.
By Joe Esau - Adapted from a presentation delivered at the Launch of the Caribbean Corporate Governance Institute on October 3rd 2013.
The practice of sound Corporate Governance requires the development of a culture of inclusion and transparency that is inculcated by the Chairman and the CEO. At GraceKennedy the outgoing chairman and former CEO drove a living culture of best governance practice that is now embraced by all business units as being positively integral to their objectives.
Sound Diversity criteria include ethnicity, age, functional expertise and experience, but gender has been the glaring absence in most Caribbean company boards.
Following are some interesting facts about women in the marketplace, and in business:
Among the T&TSE listed companies, women non-executive directors (NEDs) number 32, or 13% of the 250 directors; and 64% of the companies have 0 or one female NED. Our two largest conglomerates currently have no female NEDs. (Statistics exclude Berger Paints, National Flour Mills and L J Williams, which have very small capitalizations and are thinly traded).
I do not support board quotas in the Caribbean, which I think would be counter-productive. However, a cultural shift that recognizes “Women on Boards are Good for Business” would contribute greatly to our socio-economic development.
When the question of gender diversity is raised in filling board vacancies, the frequent response is to scan existing boards and claim that experienced women can’t be found. However, a well-structured nomination and appointment process that starts with identifying the board’s skills/experience gaps, then a genuine search for suitable, high-potential women, could bring surprising results. Those who deny the existence of suitably qualified women to fill board vacancies, in an environment where women represent the distinct and growing majority of graduates (including those from business schools), do so at the detriment of their companies and shareholders.
My board experience with women directors has been nothing but positive. This includes the following listed Companies:
These women board directors are powerful professionals, prepared for meetings, and are actively engaged in well-informed discussions; and that results in better decisions. Women also bring to our boards several critical sensitivities that men generally lack, including seeing the conciliatory window, without being weak.
In the end, we are left with the question as to why should we, in the Caribbean, not include qualified women on our boards, when they have such great influence on customers’ purchasing decisions and add exceptional value to Boards?
Photo credit: http://tribune.com.pk
MEDIA RELEASE:
INTRODUCING NEW AND RETURNING BOARD MEMBERS OF THE CARIBBEAN CORPORATE GOVERNANCE INSTITUTE
Port of Spain, Trinidad & Tobago - The Caribbean Corporate Governance Institute (CCGI) held its first Annual General Meeting on 24th January 2014 where new and returning Directors were elected to the Board of Directors. The newly appointed board comprises the following returning and new Directors:
Re-Elected
Dennis Brown
Accountant / Financial Consultant
Jamaica
Sharon Christopher
Deputy CEO, First Citizens Bank
Trinidad & Tobago
Leslie Clarke
Managing Director of Murphy Clarke Financial Limited
Axel Kravatzky (Chairman)
Principal Consultant and Director of Syntegra Change Architects Limited
Annette Rahael
Family Business Advisor
Marlon Edmund Yarde
CEO and General Manager, Barbados Stock Exchange Inc & Barbados Central Securities Depository Inc.
Barbados
Newly Elected
Clarence M. Faulkner
Managing Partner, Pension Management Interactive Inc.
British Virgin Islands
Fe Lopez-Collymore
Corporate Secretary, Guardian Holdings Limited
Arnold Niranjan
Partner, Advisory Services, Ernst and Young
The Institute acknowledges with gratitude the contribution and dedication from the following Founding Directors, who did not stand for re-election in order to facilitate the creation of a staggered Board where each Director may serve up to a total of two three-year terms:
Reshma Bissessar
Organizational Consultant and Director of Syntegra Change Architects
Ronnie Bissessar
Attorney at Law
Nigel Romano
Director, Finance and Corporate Planning, Caribbean Development Bank
Chief Executive Officer, Ms. Alex Kjorven shared with Members her decision to step down in March 2014, in preparation for her return back to Canada.
Baker Tilly Montano Ramcharitar Chartered Accountants were appointed auditors of the Institute. Dr. Axel Kravatzky, Chairman, in his remarks said “we have a highly capable and motivated team and we have many members who have expressed their desire to actively shape and contribute to the success of the Institute in years to come.”
Ms. Kjorven commented on the tremendous progress made within a very short period of time and provided insight into the educational focus for 2014. Amongst many milestones and highlights, Ms. Kjorven stated, “[We] closed off our first year with 91 Members across 5 Caribbean states, a national Code for Trinidad & Tobago, the addition of new staff and a renewed affirmation that our work was necessary and needed to expand in 2014.”
Further details are available on the CCGI website: www.caribbeangovernance.org
For questions or media inquiries, please contact:
Alex Kjorven Chief Executive Officer Caribbean Corporate Governance Institute 14 Alcazar Street Port of Spain, Trinidad & Tobago T: +1 868 221 8707 F: +1 868 221 5306 Email: info@caribbeangovernance.orgThis email address is being protected from spambots. You need JavaScript enabled to view it. Web: www.caribbeangovernance.org
The Caribbean Corporate Governance Institute (CCGI) was established in 2012 as a non-profit, membership based organization dedicated to advancing principles of good corporate governance across the Caribbean. Headquartered in Trinidad & Tobago, the CCGI aims to become a regional resource center for guidance and information, world-class director training and professional development opportunities.
On November 26th 2013, the Caribbean Corporate Governance Institute, the T&T Chamber of Industry & Commerce and the T&T Stock Exchange Limited, formally released the very first Trinidad & Tobago Corporate Governance Code.
We were joined by Senator the Honorable Larry Howai, Minister of Finance and the Economy as well as guest speaker Andrew Johnston, Group Executive, Allied Electronics Corporation Limited and Member of the King III Committee of South Africa.
View the Minister's speech:http://www.finance.gov.tt/content/sp131127091049.pdf View Andrew Johnston's speech: Click to download.
Visit the T&T Code page of the Secretariat to download an electronic version of the Code here: http://www.caribbeangovernance.org/codes-guides/ttcgc
Below are selected images from the Launch Event on Tuesday evening at the Hyatt Regency in Port of Spain.
Project Partners with guest speaker Andrew Johnston.
Minister Larry Howai speaks on the importance of corporate governance in state-enterprises.
Axel Kravatzky, Chairman of the Carribbean Corporate Governance Institute, following his opening speech to introduce the genesis of the Code Project.
Catherine Kumar, CEO, T&T Chamber of Industry & Commerce was host and moderator for the formal presentations.
Alex Kjorven, CEO, Caribbean Corporate Governance Institute, provides overview of the Code development process and insight into its practical applications.
Guest speaker Andrew Johnston, Group Executive, Allied Electronics Corporation Limited, and Member of the King III Committee of South Africa, spoke on his experience with the King Code of Governance and his reflections on where the T&T Code fits in the global landscape.
Wain Iton, CEO, T&T Stock Exchange Ltd. provides closing remarks and a vote of thanks to all those involved in making the T&T Corporate Governance Code a reality.
The formal presentations were followed by a cocktail networking reception.
Below is an extract from the Trinidad & Tobago Corporate Governance Code which is scheduled to be released on November 26th, 2013 at a launch event held at the Hyatt Regency from 5-8pm. Click here for more information or to RSVP for the event.
FOREWORD: A MESSAGE FROM THE CHAIRMAN
The development of a Trinidad & Tobago Corporate Governance Code (“TTCGC” or “the Code”) is a partnership initiative led by the Caribbean Corporate Governance Institute, the Trinidad and Tobago Chamber of Industry and Commerce and the Trinidad and Tobago Stock Exchange. It is the first of its kind in the Republic and directed primarily to those companies with public accountability.
A Working Group was established in January 2013, consisting of a diverse team of industry stakeholders, to oversee the drafting and development of the Code, with the Institute acting as the Secretariat. By November 2013, the Committee, after many drafts, meetings and consultations with external stakeholders, arrived at what is now the Trinidad & Tobago Corporate Governance Code 2013.
The Code follows globally accepted best practices with specific consideration and much customization for the local economy and dynamics of the business society of Trinidad and Tobago. The objectives are to enhance business governance and performance, strengthen transparency and efficiency in the market, and improve the overall investment culture in Trinidad & Tobago. The Code is easy to understand, providing recommendations and guidelines for good corporate governance with a balance between costs and benefits of implementation. In this way, it provides the structure through which the company’s objectives are set along with the means of attaining them and monitoring performance.
There is little doubt that strong corporate governance and transparency are critical for the success of every organization. At the highest level, it provides many benefits including:
The standardization of best practices may be approached in various ways. One approach is on a statutory basis where companies comply or face legal sanctions. The other approach, and probably the preferred one, is by way of a voluntary code of principles and recommended practices where companies are asked to apply the recommendations or explain their reasons for deviating from them. The Code embraces the latter approach in the expectation that it will encourage voluntary adoption by those institutions to which it is directed, namely companies with a public accountability, while encouraging broader level acceptance of the spirit of each Principle and how it may further the best interests of the company.
The objective of the Code is not to replace existing legislation or regulations but rather to bolster those statutory directives and provide recommendations that are meant to fill the knowledge gaps on how best to manage an organization. By striving towards these higher aims, organizations are better equipped to succeed in an increasingly global playing field, and overall market conditions rise to reflect a more competitive outlook.
In the 2013 World Economic Forum’s Global Competitive Index, Trinidad and Tobago ranked 118th out of 148 in Ethical Behaviour of Firms, 116 out of 148 in Efficacy of Corporate Boards and 111 out of 148 in Protection of Minority Shareholders’ Interests.
In 2011, a report by Syntegra Change Architects Ltd. found that the majority of corporations in Trinidad and Tobago disclosed less than 40% of the items recommended by International Standards of Accounting and Reporting (ISAR). The reporting requirements, even of regulated and listed companies, were the absolute lowest of all emerging and frontier markets surveyed by UNCTAD in 2010; out of a benchmark of fifty-one items relating to corporate governance, only five were required to be disclosed. This is against the backdrop of a survey by McKinsey & Co. in 2002 that global institutional investors were prepared to pay a premium of up to 40% for corporations that apply superior corporate best practices in countries where poor corporate governance poses a high risk to investments.
The introduction of a Code of Corporate Governance is therefore long overdue.
Experience has shown that the more corporations are encouraged to have such a structure in place the greater the opportunity to attract investment and increase its competitiveness in the field. The core values of any Code therefore must be fairness, transparency, responsibility and accountability, all of which feature prominently in this Code.
In the current economic climate, it is necessary for organizations to embrace these globally accepted best practices if corporate Trinidad and Tobago is to become an efficient and competitive player in the global market.
I am indeed grateful to the three partnering organizations for galvanizing efforts and building the foundation for this initiative and to Mr. Richard Frederick, International Corporate Governance Consultant, who provided guidance on the best approaches for undertaking such a task in Trinidad & Tobago. I record my thanks and appreciation to all the members of the Working Group for devoting time and effort in the interests of improving corporate Trinidad & Tobago, without remuneration or reimbursement of expenses.
It is important to recognize all the individuals who took part in the consultations and who commented on the draft versions of the Code, including our international colleagues and those who commented at the request of the Global Corporate Governance Forum.
I thank the Caribbean Corporate Governance Institute, who, under the dedicated leadership of its Chief Executive Officer, Mrs. Alex Kjorven, researched and prepared the first working draft of the Code, and convened the numerous Working Group meetings. Finally, I owe a debt of gratitude to Syntegra Change Architects Ltd. for introducing me to this project and lending their expertise and research, which catalyzed the collective effort in bringing about the transformation we are seeking.
Roger Hamel-Smith Retired Justice of Appeal, Supreme Court of Trinidad & Tobago Chairman of the Trinidad & Tobago Corporate Governance Code Working Group
The following post is a speech delivered by Mrs. Rani Narace, Executive Chairman, TRINRE and Member of the Caribbean Corporate Governance Institute on September 20th, 2013 at the Making the Transition Leadership Conference. The conference took place at the Hilton Trinidad Conference Centre and was organized by NEM Leadership Consultants. The seminar series focuses on leadership, planning and development whereby persons at executive and leadership levels are encouraged to engage in critical thinking and to excercise foresight. This year's theme was Leaderhip Matters: Inspire your Leaders.
Did you know that throughout history "good leadership is one of the most valued and one of the most mysterious of human activities, wrapped up in a notion of charisma, that diversely bestowed magnetism and talent with which some people have been graced – almost magically it would seem to win the staunch devotion of others and to get them to work together."? These words were taken from the book Executive Leadership authored by Elliot Jaques and Stephen Clement, who challenge that notion as simply incorrect and further dispel the belief that, and I quote "if you are born with only a limited amount of God–given leadership personality, then you must rest content with giving only a limited amount of leadership in your lifetime." End of quote.
When you think about it, wouldn't you agree that many times, we confuse the biography of the leader with the actual act of leadership – so intent are we to idealize leaders, leadership and their many "followers". As someone poetically describes it, it's like portraying leadership as something "that is a golden chalice that we are continually chasing, filling out surveys, following prescriptions so that we can reach leadership nirvana" (Simon Western).
I want to use this provocative beginning stimulate an answer to today's question- Corporate Governance- Leadership challenge or trait? I propose to share with you some more thought provoking research and perspectives on leadership, traits, and corporate governance, and I will attempt to draw some conclusions for your consideration.
I find this argument very very interesting that since leadership does not take place in a vacuum but in relationships with people, and given that there is no social construct as a leader-follower role relationship, then there can actually be no such thing as a leadership role per se. There are for example, parent-child role relationships, manager-subordinate, teacher-pupil, doctor-patient role relationships. So why then is there no leader-follower relationship? because apparently the genesis of leading and following came from Anglo-Saxon terminology that meant the same thing - going along together. So that infers that leading and following are synonymous with each other. The concept of leader having followers came much later.
So based on this premise, Jaques and Clement offer the intriguing view that leadership is actually a process that is performed as part of being in the role of managerial leader or political leader, and that being the case, "everyone is capable of exercising effective leadership... so long as they value the role, have basic requirements for it, and so long as that role is properly structured and the organization has proper instituted practices."
So many, if not all of you here today are in managerial leadership roles, and may be responsible for other managerial leaders. Would you agree, or at least be prepared to consider that if your organization had better instituted practices that you and your teams would be able to perform more effectively and by doing so, be regarded as better leaders?
And if there is no such thing as leadership per se, then leadership traits can't apply. How many times have you been haunted or taunted by yourself, or your manager, or your subordinates about the leadership traits that you have, don't have, or should have? How many books have we all read, seminars and conferences attended on leadership; and of course beautiful quotations. I personally agonize over this every day and I am constantly looking at leadership development for my team!
Let's examine a world-renowned figure. Was Winston Churchill a great leader? During World War II, he was acclaimed for his charisma, great leadership presence, communication and personality. He was able to set a clear direction for Britain and galvanize the citizens around his plans. As a wartime commander Prime Minister, he was extremely effective. Did you know that he was not nearly as successful pre-war, or post-war? As a peace time Prime Minister, his efforts failed and he was unable to move Britain or the British people forward. What happened? Did he get injured in the war and suffered a personality change? Did he get tired of the job? What is evident is that his leadership success as wartime commander was not transferable to Britain in peacetime; because his role and requirements for the role were so different. Is it reasonable then to rush to label people either good or bad leaders?
Let's now look closer at home. For years Lawrence Duprey was admired for his bold moves and success in growing CL Financial into the empire that it became. What happened? As the conglomerate grew in scale and complexity, the requirements for the role of Chairman obviously changed, so too for the structure and practices of the organization which needed to be redesigned in order to protect shareholders and policyholders against any self-interest and whimsical decision-making of management.
In case you are still not prepared to accept that there's no such thing as leadership traits – let me share the research conducted on the study of identical and fraternal twins to determine whether leaders were born versus made. Using a behavioral genetics approach, they concluded that the life context, in which one grows up and works in, is much more important in determining whether and how your leadership will emerge during your career. They also concluded that these leadership qualities are more or less embedded by your 20's. This raises the question of the possible futility of leadership training as we know it.
So if we were instead to re-direct our focus and attention from the elusive grand leader to role clarity and a leadership process that requires basic competence and a framework of practices, are we then describing or making a case or indeed establishing that there is clear correlation between good governance and leadership? I think we are.
According to Adrian Cadbury, leading corporate governance expert and author, "The main governance issues are those of power and accountability. They involve where power lies and what degree of accountability there is for its exercise". He notes that "the fundamental reason why corporate governance has so recently moved into the economic and political agenda worldwide has been this rapid growth in international capital markets, as countries wishing to attract investment need to convince potential investors that reliable governance structures are in place."
By the way, the word "governance" has Latin roots and means "to steer".
Corporate governance distinguishes the governance of publicly held corporations from government of nations and according to a former President of the World Bank – The governance of corporations is now as important in the world economy as the government of countries.
The sheer size and economic power of some global companies rival that of some small nations, fuelling the emergence of corporate governance codes for these public companies which are really codes of best practices for board effectiveness and corporate accountability, including policies such as whistle blowing. An important distinction between leadership and corporate governance is that the latter has rapidly emerged as a prescriptive response, and is defined by the OECD (the Organization for Economic Co-operation and Development) as a "set of relationships between board, management, shareholders and other stakeholders. Corporate governance provides the structure through which the objectives of the company are set and the means of attaining these objectives and monitoring performance are determined."
According to Sir John Harvey-Jones: "if the Board is not taking the company purposefully into the future, who is? It is because of Board's failure to create tomorrow's company out of today's that so many famous names in British industry continue to disappear. The Board is the link between shareholders and managers. The Board is at the center of the governance systems and the Chairman of the Board is critically responsible for the performance of the Board".
With a growing attention from multilateral agencies, how are we as a region responding? In 2003, a decade ago, there was a Caribbean Corporate Governance Forum held in St. Kitts, in which twenty-four countries in the region participated. The report admitted that the "Caribbean voice" was missing from the worldwide debate on corporate governance and cited challenges faced by the Caribbean as, and I quote, "embedded in the evolution of the historic and economic development of the region's societies, these being:
1. The judicial systems are poorly equipped to address healthy governance practices; 2. The ownership structure of the corporate sector is very complex (I'm not sure what that means); 3. There is an interlocking relationship between the government and the financial sector; 4. Governments often intervene and interface with Boards and this has hindered their effectiveness.
Interestingly, it mentions, "that Caribbean governments need to lead by example and adopt good corporate governance practices and that the private sector also ought to be the catalyst for building the effective demand for corporate governance. So the push would come from regulators and the pull would come from business associations, companies, shareholders, investors and banks.
So where are we today? What has happened since that forum ten years ago?
Well, CLICO happened and it reverberated throughout the region; Hindu Credit Union happened; Motor and General Insurance Company and Citizen Insurance all happened. So are these examples of poor corporate governance, or poor managerial leadership? I say both.
You will recall that corporate governance was really designed for listed companies to ensure effective oversight by Boards for the best interest of all stakeholders, particularly external shareholders. So what about unlisted companies?
It is a fact that the business sector locally, regionally and globally is made up primarily of small and medium sized enterprises owned by single individuals or families. There are only thirty-four companies listed on our own stock market; so the rest are unlisted companies that employ thousands of employees and serve even more customers. Of course there are also huge local and international and transnational companies that are privately held like CL Financial and SM Jaleel. Sustainability of these companies is critically important not only for their economic value, but also for their contribution to society.
This is confirmed by the Institute of Directors in the UK that says "good corporate governance in unlisted companies is not primarily about Boards and external shareholders, or more about rigid compliance with formal rules and regulations, it is more about establishing a framework of company processes and attitudes that add value to the business and help build its reputation and ensure long term continuity and success."
While I was President of ATTIC, I got a firsthand understanding of the issues that plagued several general insurance companies which led to their eventual demise. I know that the new insurance legislation has forced attention on corporate governance and this is a good thing. Having said that, regulators must not be so invasive as to cross the line into the management of companies and this Bill has such tentacles. Historically, when regulators react to crises, stifling overregulation becomes the easy and popular solution which in turn has a deleterious effect of over focusing companies on too much rigorous compliance, escalating costs and reducing resources that could be better spent on business strategy and risk management.
Fortunately at TRINRE, our evolution was different. From the time I was appointed by the parent company in 2001, as Executive Chairman, our Directors were all both competent and independent and because my mandate was to turnaround the company, it was essential to build trust and instill confidence with all the stakeholders – the then Supervisor of Insurance, brokers, customers, the public at large. A reputable board in our case was and continues to be the heart of our governance strength. We were also very privileged to have on our board until recently, Dr. Axel Kravatzky, who is now the Chairman of the Caribbean Corporate Governance Institute (CCGI). His commitment must be commended for advancing corporate governance and I encourage you to support the CCGI.
So here we are – Corporate Governance – Leadership Trait or Challenge?
Having started with Jaques and Clement's view that everyone with basic requirements is capable of being an effective leader in organizations with properly instituted practices; followed by findings that say that the trait theory of leadership is not proven by research, then it seems logical to conclude that corporate governance is neither a leadership trait nor a leadership challenge. It is the bedrock upon which business strategy must be built for sustainable success. Let's keep in mind that Governance may be the latest mantra but governing has been here from the beginning of time – it's about being wise and responsible and when these work in sync, transparency and accountability would naturally be derived.
As I close, I'm faced with a dilemma. I'm compelled to consider new insights; fresh new qualitative research on the causes of the 2008 financial meltdown. Discussions and focus groups with over three hundred business leaders across three continents identified that the CHARACTER of the leader played a prominent role in business leadership and governance. It recommends that character be considered as highly as competence in the recruitment of directors and executives. Ladies and Gentleman have you assessed your character lately?
In light of this new revelation, I must ask your indulgence to re-open the discussion at another time, because surely you will ask how was character defined. There are three components – values, virtue and inescapable... traits. So until we meet again, I ask you to consider the possible impact on your organization if leadership were to be treated as a process and corporate governance as an essential foundation towards its implementation.
Let me end by thanking Nigel at NEM Consultants and the CCGI for the opportunity to share the spotlight with a wonderful team of professionals on such an important topic.
Thank you for listening.
(Photo above, left to right) Kurt Kisto, Executive Director (Caribbean), IADB, Sharon Christopher, Deputy CEO, First Citizens Bank, Norman Christie, Regional President, BPTT and Joe Esau, Chairman Agostini's Ltd.
Left to Right: Sharon Christopher, Deputy CEO, First Citizens on a panel with Norman Christie, Regional President BPTT, and Joe Esau, Chairman, Agostini's Ltd.
Kurt Kisto, Executive Director (Caribbean), IADB speaks with Norman Christie, Regional President, BPTT (left).
Roger Hamel-Smith, Director, Beacon Insurance Company and Chairman of the T&T Corporate Governance Code Working Group.
Axel Kravatzky, Chairman, CCGI in his welcome remarks.
Left to Right: Dwayne Rodriguez-Seijas, Director, PwC with Marlon Yarde, CEO, Barbados Stock Exchange and Alex Kjorven, CEO, CCGI
Left to Right: Joe Esau, Chairman, Agostini's Ltd with Ronald Harford, Chairman, Republic Bank Ltd.
Alex Kjorven, CEO CCGI speaks with Senator Anthony Viera, Independent Senator and Partner, Mair & Company (left) and Ian Macintyre, Chief Parliamentary Counsel (right).
Cocktails following formal presentations.
The Caribbean Corporate Governance Institute (CCGI) celebrated its formal launch on 3 October 2013 from 5.00pm – 8.00pm at the Hyatt Regency Trinidad. Proudly sponsored by PricewaterhouseCoopers the Launch event attracted interest from the business community and included distinguished guests such as:
- Senator the Honourable Anthony Viera, Independent Senator - Mr. Kenneth Gordon, Chairman, Integrity Commission of Trinidad & Tobago - Mr. Ronald Harord, Chairman, Republic Bank Limited - Justice Sebastien Ventour, Deputy Chairman, Integrity Commission of Trinidad & Tobago - Ms. Michelle Cross-Fenty, Country Representative, Inter-American Development Bank - Dr. Thackwray Driver, Chief Executive Officer, The Energy Chamber of Trinidad and Tobago - Mr. Ian Macintyre, Chief Parliamentary Counsel, Ministry of the Attorney General - Ms. Eleanor Donaldson-Honeywell, Solicitor General, Ministry of the Attorney General - Ms. Catherine Kumar, Chief Executive Officer, T&T Chamber of Industry and Commerce - Mr. Wainwright Iton, Chief Executive Officer, Trinidad and Tobago Stock Exchange
Ms. Alex Kjorven, CEO of the Caribbean Corporate Governance Institute, in her opening speech reaffirmed that the "launch event marks only the beginning. We hope to see the brainpower and influence present here this evening be emboldened and synchronized towards achieving tangible improvements in the way organizations and markets perform".
Featured speakers at the evening included acclaimed business professionals, namely: - Ms. Sharon Christopher, Deputy Chief Executive Officer, First Citizens Bank Limited - Mr. Norman Christie, Regional President, BP Trinidad & Tobago - Mr. Joe Esau, Chairman of Agostini's Limited and the CCN Limited - Mr. Kurt Kisto, Executive Director (Caribbean Constituency), Inter-American Development Bank (moderator)
Ms. Sharon Christopher painted a very compelling picture of the role of Corporate Governance in the evolution of First Citizens Bank over the past few decades, emphasizing their commitment to board education and the importance of company-wide training and re-training on codes of conduct and other best practices. Mr. Norman Christie shared a palpable lesson he learned from past experience with regards to identifying weaknesses in governance and implementing improvements. He spoke very poignantly about BPTT's role in shaping the corporate governance landscape in the region through a balance of leading by example, providing encouragement and incentive. Mr. Joseph Esau spoke candidly on the toxic patterns of cronyism he has witnessed over the years and provided indisputable evidence in favor of gender diversity on all boards.
Other speakers included Dr. Axel Kravatzky, Chairman, Caribbean Corporate Governance Institute and Mr. Marlon Yarde, Chief Executive Officer, Barbados Stock Exchange.
During the event, it was announced that First Citizens Bank would become the Institute's very first Founding Sponsor. Providing a financial backbone to support operations, Founding Sponsors share the same ideals towards effective governance and will become the Institute's allies in promoting corporate governance in the region.
The evening ended with a networking session where guests were treated to a cocktail reception.