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11/20/2009

New corporate governance council in the making

I have kept this thread alive in redbeanforum since March 2007. I have written to a couple of organisations on the issues of corporate governance and directorship. Few days back, Ho Kwon Ping wrote a long article about what was going on in the Board of companies. Today we are hearing the MAS talking about setting up a body to look into raising the standard of corporate governance. Is this an exercise that is more in form or substance? What had happened in the past few years had seen many investors losing their piles in the stock market with dubious companies and dealings and fraudulent accounting. And where does the fault lie? It is, in a way, something like corporate America. The practice of 'I scratch your back you scratch mine' is only a small fraction of a system going out of control. It all boils down to lack accountability and lack of clout. From the board of directors, top management, auditors, financial analysts and banking advisors, everyone is being paid a fee to monitor and be watchdogs to corporate faults. Some participated in the frauds, some just simply resigned when something smelly popped up. No one is responsible for anything or hardly anyone was taken to task for the failures or frauds. What is needed is not only a revamp of the whole corporate governance formula, but a need to pin responsibilities on the shoulders of those carry it and being paid for it. The SGX has come out with draconian rules and fines for simple and often innocent mistakes made by equally blur investors or careless remisiers. Such an approach should be adopted in corporate governance and corporate frauds when the consequences are much grave. Make everyone who is paid to do a job be accountable. Heavy fines is a way. Resigning and washing their hands cannot be allowed. Accepting the payment must come with accepting the punishment for a job not properly done. Rip Van Winkles cannot go on sleeping and get away with it. People who don't have the time to be execute their management, advisory or watchdog's role should not take on the job. Would something like this happen with the setting up of a new corporate governance council?

5 comments:

Matilah_Singapura said...

People must realise that business -- i.e. capitalism -- is a hard-core game often with hard-core players.

Regulation is always a by-product of the "dangers" in the system -- they evolve "naturally" over time and become part of the accepted practice. It begins with the idea of "caveat emptor" and people choosing voluntarily to choose to trade fairly or try to get "something for nothing". Let us say the vast majority of trades are fair. But "cheating" "stealing" and other ideas of getting "something for nothing" will ALWAYS be present in ANY marketplace -- whether you are trading values for intimacy, friendship or for tangible goods and services.

The trouble with these "councils" is that they often fail to see the entire picture and try to impose regulations and controls -- i'll call it here kiasu kiasi micromanagement -- to a point where players get exasperated and frustrated some of them might even "close shop" and go elsewhere.

Maybe I'm pre-judging this new council. Maybe I am myself kiasu-kiasi and throwing punches at shadows.

OTOH, I could be right :)

Anonymous said...

It is just show business with another name. Regulate this and that, but what about the people overseeing the regulations. Who created the financial mess in the US by turning a blind eye to what their proxies and cronies are doing? Don't be folloed!

You cannot drive straight on a crooked road, can you?

redbean said...

america is the straightest country with all the righteous people in power, in the senate and congress, in all the big banks and financial institutions.

do not doubt that they are all corrupt. they are all honest people, without a doubt.

Matilah_Singapura said...

From 2001 poll data: There are 159 million -- ~76% of the population -- people who identify themselves as "Christian" in the USA.

As long those folks hold the view that as Americans who believe in the zombie geebus -- who promise to "save" them from "sin", then they'll just go right ahead and do whatever the fuck they want including kachau-ing other people and forcing them to live "in righteousness".

The US govt has incredible power and influence, with a fearsome military to smash any resistance. The thing that makes the US govt dangerous is that they are staffed by people who believe in an imaginary "authority" in the for of a jealous, angry old codger who hides in the sky and has voyeuristic tendencies because he'ss constantly spying on people.

Fuck him. All 3 of them :)

Matilah_Singapura said...

Q: "Does religion poison everything?"

I assure you, you'll be laughing or feel intolerably "offended".

Christopher Hitchens and Tony Jones:

http://www.abc.net.au/tv/fora/stories/2009/10/06/2706358.htm