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4/29/2008

Corporate Governance raising its ugly head again

Lee Suet Fern resigned as independent director of CAO. She was unhappy about how decisions were made. It was more like a fait accompli according to a report in Today. And the Chairman doubles up as the CEO and paid an undisclosed sum. And 'the firm is said to be in contravention of the Corporate Governance Code, which requires that at least one third of the board of the directors are independent.' How could a public company be in violation of the Corporate Governance Code when there are so many eminent and highly honourable people in the board? Don't these people know that their actions are illegal? They are the cream of our society, the role models, the people that the public look up to. So what is at fault, the system or the people? A primary school kid will give you the answer immediately. And if Lee Suet Fern would not have resigned, the issue would not have come out in the open and everyone will be so happy continuing what they were doing without any sense of wrongdoing. Another point which I think is very wrong in our culture is that independent directors are there to make sure things are done right and legally. They are not supposed to run away when they see that things are going wrong or when things got foul with the law. Why would our world class infrastructure and system of transparency and accountability allow such things to get by without putting a stop to it? Are independent directors appointed only to collect money when things are ok and quickly runaway when things are going wrong, and thus absolve their responsibility? When will there be a major revamp of the independent directors system to make sure that everyone in the board of directors are held accountable for wrong doings? A parallel report by Esther Fung said SIAS 'did not determine any obvious flaws in CAO governance standards following concerns raised by Mrs Lee Suet Fern in her resignation letter last week.' The report also said CAO board 'comprised 4 reps from CAO's parent company, two reps from oil giant BP and 3 independent directors.' And that this is unprecedented. Now who is right?

1 comment:

Anonymous said...

What do we expect? Even Government bodies like EDB came out with less than proper accounting standards. Does it make sense to you why they refused to let people dig into GIC and Temasek?