Home' Trinidad and Tobago Guardian : June 1st 2014 Contents JUNE 1 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
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"Globally, the best practice is that,
because every company is unique, they
should do an analysis of the unique needs
of the organisation and then match that
need with the skills and qualifications
of directors, hence you need to develop
a competence profile."
To demonstrate other practical
approaches on how a code could be
implemented, Kerr again made reference
to his own country.
Kerr said, the Jamaican Stock Exchange
went beyond just stipulating that com-
panies abide by the code, and found
practical ways to increase buy in. One
of these was hosting an annual com-
petition, where firms could cop prizes
like "best prepared annual report" and
"best corporate disclosure"
. He said the
awards were now in its 11th year, and
firms were fierce competitors for the
Beyond the lack of the practical, Kerr
also took issue with the number of com-
panies listed as having been signed onto
In last week s article, 110 companies
were said to have signed on to the adopt
principals of the code, with another 14
in train to do so. According to the CCGI
chairman, Dr Axel Kravatzky, while some
of the firms were able to implement
some measures, most had not largely
because of the timing of the release of
the code. These had promised to imple-
ment by the end of coming financial
Kerr said: "Nothing can be adopted
unless it is being implemented in the
company. That begs for questioning and
clarification... Adoption cannot be by
word of mouth. That is where wrong
impressions can be conveyed to John
Public when you create what is supposed
to be a beneficial instrument like this.
"Instead of a survey being done, with
follow up questions being asked like:
Have you adopted the code? What
aspect of the code have you adopted?
What is the process of adoption?
"You cannot have people indicating
that we are going to adopt. It does not
The UWI lecturer said that the code
did not stipulate how the CCGI planned
to measure the compliance of its mem-
bership over a period of time.
"What cannot be measured, cannot
be implemented," he concluded.
A 'National' code
for private interests
Dr Kerr also questioned the motives
of those who initiated the code. Accord-
ing to him, the code s origins can be
traced to "a few groups, private groups,
peculiar groups." The CCGI Web site
lists the T&T Stock Exchange, as well
as the Chamber of Commerce as its
"You notice that the government has
not put its stamp of approval upon this
anywhere, yet interestingly, it is a T&T
code," said Kerr.
The UWI lecturer also noted the
involvement of the Minister of Finance,
Larry Howai, and his attempts to get
the code adopted by the public sector.
However, Dr Kerr said because of the
initial flaw of not involving stakeholders
from the highest level of the public sec-
tor in the formation of the code, there
would be difficulty in getting buy-in
from government ministries.
He said that most codes around the
world had a public sector and a private
sector element in countries such as the
UK, Canada, Singapore, Malaysia and
"There is no national code that has
been developed by any small group of
individuals and has been translated to
a national code."
This is one of the key mistakes of the
T&T code, he said, especially given
what Dr Kerr saw as a current crisis in
public sector governance.
"As it is now, no matter how many
of these (codes) you write, you cannot
achieve excellence in corporate gover-
nance before, without someone in gov-
ernment at high level recognising that
there are systemic weaknesses and deal-
ing with them."
Through his company, GovStrat Ltd,
Dr Kerr said he had lectured to more
than 1,900 directors, including those in
the public sector over the past eight
years, and he believed he was qualified
through things he had "gleaned" in those
sessions to make this pronouncement.
One of the weaknesses he saw and
believed was a major contributor to cor-
ruption in this country was too much
director involvement in the procurement
process in local state enterprises.
Dr Kerr said more meaningful collab-
oration between the public and the pri-
vate sectors on the code could eliminate
Another weakness was that the selec-
tion of state boards could not be covered
by the current code. Looking at Principle
2 of the document, which treats with
the strengthening the composition of
boards, Dr Kerr said there was no proper
definition of the term "independence"
He wondered how the code planned
to treat with the reality that private sec-
tor boards made selections based on
"who they knew"
, while state boards
were made with "political connections"
He said an improvement to the code,
would be to insist that a new unit be
developed within the Ministry of
Finance to treat solely with the iden-
tification and selection of candidates
for state boards.
Going again to Jamaica, Dr Kerr said
selections to state enterprises had largely
moved beyond partisan politics, prefer-
ring to select persons who could serve
over those aligned to parties in the
Dr Kerr also strongly disagreed with
the idea presented by Mr. Pierce last
week that the country was too small to
find directors who were not connected
in some fashion.
"I reject it. It is a common argument,
but there are smaller economies that
T&T that get their affairs in a more
orderly and tidy manner and they are
Commonwealth countries. So I don t
know why, if they can do it, Trinidad
and Tobago can t." Barbados was his
He also said not enough was being
done to draw talent from the young, pro-
From Page 4
Implementation needs measurement
Dr Kravatzky responds
I thank you for the opportunity to pro-
vide some data and to highlight that the
T&T Corporate Governance Code
(TTCGC) partner organizations (CCGI,
TTCIC, and TTSE), together with the
Code Working Group, welcome all com-
ments and engagement on the topic of
corporate governance, including the topic
of the TTCGC 2013.
The process of designing the code took
more than seven months and it benefited
from many reviews by local, regional
and global corporate governance profes-
sionals, including those of institutions
such as the Global Corporate Governance
Forum (GCGF), which is part of the
World Bank, and consultants who had
led the drafting of many national cor-
porate governance codes.
he whole process was very closely
aligned to that recommended by the
GCGF in their toolkit entitled "Devel-
oping Corporate Governance Codes of
The actual process of developing the
code itself took 11 months - from January
to November 2013. During this period
the working group comprised 15 members
under the chairmanship of Justice Roger
Hamel-Smith. The working group that
drafted the code was purposely diverse
and this ensured that the beneficiaries
of the code, namely companies with
public accountability, were adequately
We believe that the wide participation
in the drafting, focus groups and public
fora as well as written submissions
received was the result of an open, trans-
parent, rigorous and credible process.
In total, 33 per cent of the listed com-
panies participated in person at a con-
sultation event. Many others participated,
including the Minister of Finance, the
Permanent Secretary and the Deputy PS
in Ministry of Finance, eight professional
service providers, six professional organ-
izations, five regulatory bodies, five inter-
national experts selected by the GCGF,
three state-owned Enterprises, two media
houses and many others (not counting
the participants at the launch). Many
more companies with public account-
ability received personal correspondence.
In our experience there are several
stages in the process of applying the
principles of a code: first there needs
to be awareness, then there comes a
decision to act, then the development
of knowledge to implement the recom-
mendations, then the development of
the capacity to act practically on that
knowledge and finding ways of improv-
ing that over time.
We are currently expecting that com-
panies will take a board decision to adopt
the code as the standard for their cor-
porate governance practices and then,
during the course of the year, undertake
the relevant measures to implement it.
Next year we should see an increased
number of companies reporting how
they applied the principles and, as well,
explaining why they may have chosen
to apply some practices that are different
from the recommendations of the code.
We expect this process to take years,
but early signs are encouraging.
At the beginning of April, the TTCGC
Partners launched the second phase of
the project and are currently in the
process of constituting a renewed Code
Working Group. There will be continued
public sector and company- specific
engagements over the coming years.
Companies are asking questions about
how to apply the recommendations and
are making suggestions for possible
improvements. All comments will be
collected, implementation levels mon-
itored, guidance notes will be issued and
best practices publicly shared.
It is quite possible that towards the
end of 2015 a revised code will be issued
- the TTCGC partners will be guided
by the efforts of the working group in
this regard. The aim is continue to
engage stakeholders so as to have a code
that is always current, relevant and
enabling. The CCGI has been selected
to be the secretariat for this process.
It is through the discussion and then
decisions in the board rooms, the
engagement with shareholders and
investors, the media, academia, and other
stakeholders that the momentum for
good corporate governance is increased
and the benefits that it holds realized.
Axel Kravatzky, PhD
TTCGC Project Partner
Dr Axel Kravatzky
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