Home' Trinidad and Tobago Guardian : October 10th 2013 Contents BG24 | COMMENTARY
BUSINESS GUARDIAN www.guardian.co.tt OCTOBER 2013 • WEEK TWO
What s the first thing
that comes to your
mind when you hear
the term "corporate
term is, at best,
fuzzy, for the average small and mediun enter-
prise (SME, much less the average person on
the street. The recent ClicoO fiasco certainly
reminds us of the importance of this business
term. Poor corporate governance practices can
lead to financial scandal and instability. How-
ever, many unfortunately assume that corporate
governance is only relevant to large companies
like Clico and has nothing to do with the SME.
Without it, a company can flounder. With it,
a company can benefit immensely.
Corporate governance can be briefly
described as the rules, regulations and struc-
tures used to manage a company. It includes
how boards supervise the administration of
the company. In the end, the aim of corporate
governance is optimum performance. Corpo-
rate governance also ensures that companies
remain transparent in their operations and
accountable to shareholders.
This will benefit the company in the long
run as a transparently run company is likely
to bolster public confidence and boost invest-
ment opportunities. CEO of Pakistani firm,
Kashf Microfinance Bank, Roshaneh Zafar,
said it best when he declared, "Corporate gov-
ernance is about shining a light through the
Does size matter?
Corporate governance does not discriminate.
Its implications matter to all involved in the
business sector. It s just as important to the
large insurance firm as it is to the general con-
tractor as it is to a state-run company.
One of the misconceptions regarding cor-
porate governance is that it produces little
benefits or little tangible benefits to the average
company. There are several advantages, both
tangible and intangible, of practising good
corporate governance. These gains are far
reaching for all, for the state owned enterprise
to the family owned business to the private
Real benefits of corporate
If a company practises good corporate gov-
ernance, it becomes more transparent. By
being more transparent, it gains greater public
confidence and the trust of its stakeholders.
When trust is bolstered, it is easier for a com-
pany to raise capital for future investments.
Additionally, good corporate governance pos-
itively impacts upon the company s public
image or brand. A transparent and publicly
accountable company is likely to have a strong
public reputation which will in the long term
encourage more business.
Another benefit of good corporate gover-
nance is that it reduces wastage. If a company
diligently follows ethical business practices, it
will greatly reduce any inefficient use of com-
pany resources. This also has the extended
effect of reducing risks, mismanagement and
corruption. When a company acts in a manner
that it is publicly accountable, it is less probable
that employees will misuse their positions of
authority. This will greatly reduce the risk of
conflict of interest, fraud and corruption.
Transparent business also shows fairness to
Good corporate governance does not only
benefit private and family-owned businesses.
It also benefits the state overall. According to
10 Focus published by the International Finan-
cial Corporation in 2012, Stijn Claessens and
Burcin Yurtoglu indicate that when more com-
panies, including state-owned enterprises,
adopt good corporate governance practices,
there is a more transparent financial system
which leads to an increase in the gross domestic
The authors also assert that good corporate
governance practices bolster a country s bank-
ing system. They found that in countries with
more limited development of the banking sys-
tem (private credit to GDP ratio below 30 per
cent), the average growth rate has been about
2.7 per cent from 1990-2010, whereas coun-
tries with a more developed banking system
have experienced growth rates exceeding 3.2
How can you get involved?
The Energy Chamber is implementing a
project aimed at strengthening corporate gov-
ernance in T&T with funding support from
the IDB. The project seeks to build institutional
capacity of targeted companies, strengthen
corporate governance practices by documenting
and disseminating information and models
on international best practices. The project
focuses on developing practical guidelines on
corporate governance standards, training/sen-
sitisation workshops targeting CEOs and senior
management members, a sensitisation cam-
paign and an evaluation exercise to ascertain
how companies respond to the guidelines.
The Energy Chamber is currently hosting
a series of one-day workshops on corporate
governance entitled: Stronger Corporate Gov-
ernance: Better Business Performance and
Each session is specifically tailored to meet
the needs of different stakeholders such as
family-owned businesses, private companies,
board of directors and state-owned enterprises.
Refer to Table 2.
The Energy Chamber recently hosted two
corporate governance workshops: on September
17 and October 1, 2013. Both part-sponsored
sessions were well attended. On September
17, the workshop targeted NGOs, civil society
and watchdog groups and the October 1 session
targeted senior management personnel.
At the latter session, British Deputy High
Commissioner Susan Curtis delivered an open-
ing address on behalf of the British High Com-
missioner Arthur Snell. She stressed the impor-
tance of corporate governance to the economic
growth of individual businesses as well as the
national economy. She also highlighted the
fact that tackling corruption remains at the
"heart of corporate governance." She said cor-
ruption is a crucial factor that hampers progress
on all levels, including GDP growth and attract-
ing foreign investors to T&T.
The Energy Chamber would also like to
thank our sponsors, Savannah Computing and
TOSL Engineering Ltd, for helping us execute
For further information about our upcom-
ing corporate governance workshops, contact
Ariane at: email@example.com
Why should you care?
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