UAE | General
Interview: Middle East 'must take corporate governance very seriously'
- By Manoj Nair, Staff Reporter
- Published: 00:00 October 10, 2003
'Corporate governance' has been a much bandied about term over the last few years. In the light of the corporate scandals that rocked the US last year, it is also one term that has seemed a little frayed around the edges.
Will a new culture of corporate responsibility emerge from the ashes strewn around in the wake of Enron and others of its ilk?
In an exclusive interview with Gulf News, Stephen Richard Letza, a specialist in corporate governance and performance measurement, gives his assessment of the situation and what could be in store.
Gulf News: How would you assess the general levels of corporategovernance in key markets the wake of recent scandals?
Stephen Richard Letza: Public and investor confidence has been running at dangerously low levels over the past couple of years, in part due to scandals such as Enron and Worldcom. This has manifested itself in substantially lower stock market prices - from a peak in 2000, major markets have fallen by approximately 50 per cent.
At the heart of these scandals lies many questions about the way in which large corporate bodies, both private and public, are governed.
There has been some development of corporate governance over recent years – however, there is still much to do.
Is corporate governance, as we know it, dead?
Not at all! I believe we are just at the starting block. There is so much that needs to be done at many levels.
At the national level, there is the issue of the use of law. Should the law be used? If so, what type of law? For example, corporate or criminal law?
At the professional level, there is the issue of the use of codes of conduct. For example, should stock exchanges issue their own code of conduct? Should professional bodies, such as accountancy, issue their own code of conduct, etc?
At the company level, many questions have to be asked about values, policies, systems and culture related to governance.
Arewe going to see new standards coming through in companies? Do companies take the initiative ordo you feel that a government directive may be required to spur companies to implement corporate governance?
A mixture of approaches. Governments are worried and are introducing new legislation and approaches. In the US, the Sarbanes-Oxley Act has been introduced.
However, companies themselves are taking initiatives to put their house in order. Underpinning the in-company developments is a better understanding of risk, specifically the risks which organisations face.
Corporate Governance in the Middle East - your comments?
Wherever corporate entities exist, there is a need to assess corporate governance.
The Middle East, or for that matter anywhere in the world, is not exempt from this assessment process.
Improved governance leads to improved performance. Organisations such as the World Bank, the OECD, and credit rating agencies recently introduced corporate governance as a major aspect of their assessment process.
Put quite simply, if the Middle East is to remain competitive in terms of raising finance internationally and enter international markets, I believe it must take the question of corporate governance very seriously.
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