how to improve corporate governance? back to basics

the nkf fiasco has been an enlightening lesson to everyone. all the myths were destroyed in one stroke. all the big names, rich, professional, highly paid...people are just people. we need a few good men. and good men are not measured by all these. corporate governance must be revisited from the basics. we not only need independent directors who are really independent. we need people who step forward to serve to really serve and have the time to serve. we need responsibility and accountability. people who accept the appointments better have the time to do a good job and not be on holiday all the time. and telling people that they are volunteers is not an acceptable excuse. if they are not prepared to commit the time and dedication, they must not accept the job. it is highly irresponsible to do so. the job comes with a lot of prestige for the ego, some even pay big directorship fees, honour, and recognition. it also comes with a heavy responsibility. and everyone must be held accountable for negligence, mismanagement or fraud under their watch. there is no excuse and no escape from taking the rap. and the authorities must get this message through. no tea party in public service or as directors of commercial organisations. the rest of good corporate governance like regulations and procedures, training, corporate authorisation, checks and balances, legislation, duties of watchdogs etc will only be useful if there is a heavy hand on accountability. otherwise, for some cheap thrill of recognition and fame, and worst still, for director fees, people will just grab as many directorships as possible with no concern of whether they can contribute or have the time to contribute to the good governance of the organisation. lets hope that the party is over and people get down to serious business.

nkf annual income $108.7 million

the straits times published that nkf had an income of $108.7 million last year. and yesterday it was reported that it raised $75 mil in 2004. there is thus an additional income of $33.7 mil. earlier in several discussions in the media it was reported that nkf's annual expenses was $19.6 mil and was receiving a pledged donation of $20.4 mil. and it was asking the govt for a grant of $4 mil. all these prompted a public to write in the straits times forum that there is an additional income of $7.8 mil from interest not taken into account. and nkf has announced that it is going on a fund raising campaign again. and it gave the same reasons that it needs to build more reserves. all the figures published gave a very distorted picture of the financial health of nkf. how much does it cost to run nkf, how much is its income and reserves? is it running on a surplus or a deficit? any journalist think it is his or her duty to do a proper investigation and report to the public on the true picture? the public needs to be well informed before they start pouring money into nkf again, new or old. it will be preferable for the new nkf to lay bare its financial status and start from a clean slate of transparency. all the figures are creating more doubts and it is no good to the new nkf.

chicken...egg...chicken

can the management of a company shortlist and select their own board of directors. then the directors approved everything that the management wants. pay the ceo and whoever anyhow, pay employees 3 or 4 increments in a year, suka suka pay bonuses, any amount to anyone, approved management expenses, even all charges to corporate credit cards to a tune more than their monthly pays? and ceo said everything is approved by board of directors. and no one is at fault and nothing can be recovered? ceo is free, board of directors just walked away. nothing can be done. no crimes, no intent to deceive or cheat. just bad management decision by very able professionals?

corporate governance: a christmas wish

companies appointed people to their board of directors for various reasons. public listed companies have to as provided by the companies act. given a choice, companies would want to appoint all their fathers, mothers, grandpas and grandmas and uncles and aunties as directors. better to pay themselves than outsiders. some people were invited to join the board as a reward, some for the connections they can bring along, some to lend credibility and prestige, some to curry favours, and some to share expertise. no one is invited as a watchdog. no watchdog is welcome in the board of directors. whoever try to be a smart alec and want to be a watchdog will soon be shown the door. how then can the system caters for this important function when it is a non starter in the first place? my christmas wish is for the mas to make it compulsory for public listed companies to appoint 2 to 3 directors from an independent approved institution. preferably this institution be the sias which represented several hundred thousand investors. they have a genuine and vested interest to want to make sure that public listed companies are managed in a way that do not compromise the interests of public shareholders. sias can then work out their own procedures to provide a list of qualified directors for public listed companies. and one of the main role of these directors, in fact the most important role, is to be watchdog. of course the companies will not be too happy with this. but if corporate governance is to work, this is it. the companies can still appoint all the other directors they want. but the independent directors must sit in the audit and remuneration committees to keep an eye on things. their tenure of directorship will be decided by the independent institution ie sias. not the management. as for private companies or vwos, they can also tap their directors from this same institution or from another govt appointed institution. perhaps ncss could be tasked to perform the same function as sias. then we will have a really independent watchdog body of independent directors to ensure things are done in a more transparent way. not that this is the cure all formula. but it will help in many ways. the current procedure is flawed as independent directors are not independent.

i had a wonderful dream

i dreamt that i was the head of a big charity organisation. and me and my senior executives were flown to a little island retreat to scheme our plans for the future of the organisation. we were all told to make ambitious plans. the bigger the better. and we decided to build 5 big hospitals, bigger than the govt hospitals, located north, south, east, west and centre. and the objective is to help people with all kinds of major illnesses. no need to worry about money. there are plenty of opms. other people's money. and with such a big mission, we will have the support from everyone. helping people in trouble will always be supported by the people and even the authorities. we worked out that we will need $2.5 billion. estimate $500 mil for each hospital. operating cost can come later. now we know how much to raise for the next 15 years, projected to build one hospital every 3 years. wow, we will be kept busy for the next 15 years and more as we will need to raise more money for the operating cost. when we retire we will all leave a legacy behind us. 5 big hospitals. our names will be carved in gold, or on gold plated boards hanging everywhere. they might even name the hospitals after the top executives. and we earn all these, good names, and a handsome income, all from public money. create jobs and recognition for ourselves. and that is only the small part of the goodies. imagine how many people will be grateful to us? the patients and their families and the public. and those whom we pay them very well with public money to make them beholden to us for life. and of course they better know how to take care of us with the money we throw at them. at the end to the day i woke up in cold sweat.