Home' Trinidad and Tobago Guardian : May 25th 2014 Contents MAY 25 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
NEWS | SBG5
shareholder s interest, 95 in the strength of
auditing and reporting standards, 125 in
favouritism in decisions of government min-
isters, 111 in public trust of politicians, 116 in
irregular payments of bribes, 116 in the efficacy
of state boards and 89 for the diversion of
The report goes on to say, "this underscores
T&T s need to improve its corporate governance
systems and accounting systems." (Trinidad
Over time, T&T s corporate landscape has
been occasionally punctuated with the failure
and bad behaviour of institutions, headlines
in the press and calls for blood from the public.
Pierce, in fact, lists scandal as one of the hall-
marks of bad corporate governance.
Without naming any local firm, he described
a sequence of events to illustrate what good
corporate governance is and, is not.
"What do the shareholders do? What does
the board do? What do the directors do? What
do the managers do? Who should be respon-
sible when things go wrong?
"In T&T, there are many cases where this
is unclear. Fingers are being pointed at different
people and people are saying, it s not my fault,
it s somebody else s fault. Corporate governance
tries to tackle that by saying, no, it is some-
body s responsibility. There are clear documents
which stipulate who has the power, who has
the responsibility, who has the duty. In T&T,
there are many cases where this is unclear."
Transparency with funds
Pierce said among the cornerstones of good
corporate governance are transparency with
funds, making business easier to conduct,
documented, publicised rules for dealing with
wrongdoing as well as conflicts of interests,
awareness of the country s laws and board
knowledge of all of the above.
He said dealing with other people s money
made it essential that strong governance sys-
tems were in place and that proper accounting
was the board s responsibility.
Having documented policies for handling
related-party transactions and conflicts of
interest is also essential.
Pierce said that well-governed companies
had a "register of interests."
He explains what this is:
"Every director should register the interests
in which he is involved: maybe they are on
other boards; maybe they have shares in other
companies; maybe they are related to other
people, a wife, a husband who also have a
particular interest. These must be registered
with the company."
Conflicts and related-party matters must
be dealt with swiftly, said Pierce. He said the
board must be made aware of them, so that
action can be taken, whether this means bar-
ring the person with the conflict from meetings,
or not allowing them to have a say or a vote
at meetings if they attend.
He also said that an organisation s related
party and conflict of interest policy should be
on its Web site where everyone has access to
it. Pierce recommended that conflict and relat-
ed-party issues should also be brought up in
annual general meetings.
"The company should say that over the past
year, three items of conflict of interest have
taken place. In each and every case, the code
on related-party transactions was followed."
Asked about many specific instances of
apparent conflict of interests in the local busi-
ness sphere, where individuals served on mul-
tiple boards, both in the public and private
sector, Pierce told the Sunday Business
Guardian that he saw nothing wrong with
"In an island of this size, in any major busi-
ness, there are always going to be people that
you know, who are related in any transaction.
It is inevitable they will exist and you have
got to be able to manage it. You have got to
say the organisation did have this transaction,
but I was not involved in it because I left the
meeting. I have not been involved in the imple-
mentation. I have not been benefitting from
When asked about episodes of companies
reporting on self, the likelihood of it being
greeted with suspicion by the Trinbagonian
public and whether he recognised this, Pierce
responded: "Absolutely. Are they telling us
everything? Or are they spinning it in certain
ways? Corporate governance recommends that
you not only tell people the good news, but
also the problems and risks associated with
trading. That shares can go up or down and
that is based on market conditions and so on.
A well-governed company will be a trustworthy
organisation, where you can trust the indi-
viduals to tell the truth and the whole truth."
Self reporting falls under principle 3 (Rein-
force Loyalty and Independence) of the T&T
Corporate Governance Code. It is one of five
principles which include: establishing a frame-
work for effective governance, strengthening
the composition of boards and committees,
fostering accountability and strengthening
relationships with shareholders. Adhering to
this code is voluntary, with directors of com-
panies choosing to sign on.
When asked if Trinbagonian companies
could or should be trusted to self regulate,
Pierce said: "To a certain extent. But every
country requires a good Companies Act and
good legislation. You only move to codes of
corporate governance when you ve got firm
laws in place and it is not good enough to
have good laws. Those laws have got to be
clear and they have to be enforced and when
they are broken, people have to be thrown in
He said what the current code contains
international best practice clauses and the
companies that are not following international
standards either need to comply or explain
why they are not doing so.
According to Pierce, the CCGI is working
on a code for family businesses, which will be
published in 2015. He also said there were dis-
cussions taking place on a code for state-
"It would be nice if it came out before the
next general election. That could then create
some discussion on what the various candidates
think should be done in terms of government
and state-owned enterprises. Because there
may well be significant changes to boards
based on the election results."
Pierce acknowledged that while corporate
governance generally dealt with the larger
companies in the country s economies---and
their relationships with their shareholders---
there were other stakeholders who were affect-
ed by poor governance.
What happens in
Speaking about the consequences of bad
corporate governance to the general public,
the consultant said: "If an organisation is badly
managed it will not be making a lot of profit."
He added that a decline in profits, in turn,
would affect a company s ability to create or
sustain employee. All of these are factors that
affect economic growth.
"The man on the street wants economic
growth, therefore, it is in the interests of the
country as a whole for organisations to be well
run. There will be more growth. There will
be more employment and more and more
money will circulate."
in the future
Pierce told the Sunday Business Guardian
that he is collaborating with the CCGI on
training programmes for executives. Topics at
the just-concluded master course for directors
included: the powers and responsibilities of
boards, choosing a strong chair of a board,
the quality of the information that a board
receives and the reporting of a board s activity.
He admitted that corporate governance was
a cultural issue as much as a financial one.
"You do not expect results within the next
three months or six months. This is a culture
change that the business community is going
through. Some people will find it difficult
because they are enjoying the way things are.
So we are looking at the medium to long term,
maybe the next generation of directors that
is coming through. One of the first things to
do is make the first step. That step is with
the CCGI being launched, a code being devel-
oped, training taking place and it is important
that those first steps are based on strong foun-
dations from which we are able to reach out
and create scalability.
Pierce identified T&T as an important centre,
which is why the good corporate governance
push was started here.
From here, he said, it will move to Jamaica
and the other islands.
The CCGI confirmed that 110 companies
are members of the T&T Corporate Governance
code, while another 14 are in the process of
completing the membership process.
Chairman, Dr Axel Kravatzky told the Sun-
day Business Guardian that so far, Neal and
Massy and First Citizens are the only two that
have included some of the stipulations of the
code in their current annual report.
This included the standards that the com-
panies are working towards and self reporting.
He said given the coincidence of the end of
most firms financial year and the publication
of the report, many of their members opted
to include information recommended by the
report in their next annual report.
A cultural issue
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