It's an irony of the sport that goalkeepers are better remembered for the ones they let through. Brilliant saves are lauded but briefly, while the let-offs seemingly live on in the collective conscience.
Which is why an analogy of sorts can be drawn to the region's on-off and now on-again relationship with the touchy issue of corporate governance. When the economy is in fine fettle, little or nothing is heard about the need for businesses to live up to the precepts of good corporate governance.
It is instantly assumed that businesses are doing all they should to be the fine citizens of the corporate world. No searching questions are asked on how they operate, and the bottomline trumps all other considerations.
But when the bottom caves in and irregularities come to light as never before, the same businesses are lambasted for not having a corporate governance programme that actually works. But now may be the time for all stakeholders to come up with a corporate governance framework that endures during the good times and bad.
Some of the initial spadework has already been done, most notably in the form of Ministerial Resolution No. 518 of 2009 on ‘Corporate Governance Rules and Corporate Discipline Standards'. What it does is define a framework for such a regime and prescribes the manner in which listed companies are expected to adopt an effective corporate governance regime.
"There has been such ignorance as to what constitutes corporate governance in the past, and I know of cases where it has been mistaken for corporate social responsibility," said a consultant who worked with some of the leading business houses before the downturn. "Some of them even felt engaging in charitable activities was part of corporate governance, and I'm not joking."
Accountability is key
It should be duly noted that the 2009 ministerial resolution applies only for ‘listed' companies. Also, instances of lax corporate governance that were exposed locally took place at leading non-listed companies.
But as a start, Resolution No. 518 was indeed a need of the times. "Compliance with corporate governance standards in the past was voluntary, the UAE has now sought to adopt a model which requires companies to become more actively involved," said Sanam Singh, associate at law firm Taylor Wessing (Middle East).
"Accountability is key and to that end an annual report [is] to be filed with the Emirates Securities and Commodities Authority [SCA] in a prescribed format. What the UAE has adopted is a more hands-on proactive approach, one that requires senior management, directors, and employees to see that accountability reigns supreme, and that they do not have a free rein when the interest of stakeholders is at stake.
"Moreover, corporate governance reduces the risks of mismanagement as effective and timely checks are put in place to protect the interests of the company and its stakeholders."
But given the enormity of what is at stake, no one thinks that all has been achieved. Regulatory enhancements need to be fleshed out, and not in reaction to what happens in the marketplace. If the authorities get that right, the sense of having to play catch-up on corporate governance practices will subside.
That will also be the time to finetune practices that are in sync with differing contexts. "It is a matter of time before there are attempts to create exceptions to the rules per se, but a common starting point is the fundamental basis for accountability, order, stability, and security, safeguarding shareholders' interests and the economy as a whole," said Sanam. "As was seen post-Enron, and currently due to the worldwide recession and certain banks' involvement in the cause, corporate governance rules are ever evolving. From chaos comes order, and the beginning of order is to have a ‘one size fits all' set of rules.
But companies, listed or otherwise, could still do their own thing in an evolving landscape for good governance. "Governance is the new buzzword for ‘good housekeeping' and ‘ethical conduct'," said Jesdev Saggar of Deloitte Corporate Finance.
"Every business should make this part of their operating framework and it is never too late to implement."
