adminamong people that company directors and executives are self-interested actors who use their positions to pursue their own ends rather than focusing on pursuing what is best for the company and its stakeholders.
Locally, the unearthing of unethical conduct by people in senior management positions at financial institutions such as Interfin Banking Corporation, Renaissance and Royal Bank has further fuelled the perception.
Internationally, there have been reports on the record 25-year jail sentence that was handed down to former WorldCom CEO Bernard Ebbers for his part in the fraud that caused the US$11 billion collapse of that company.
There is also the issue of the opulent lifestyle of Lord Conrad Black that was being bankrolled by his company Hollinger International and Kenneth Lay’s role in the widely reported corporate abuses, accounting and corruption scandals that led to the downfall of Enron Corporation.
The question that I always find interesting is the one on why some company executives continue to be paid huge salaries and perks when their companies are failing or their own performance is no longer up to standard.
This scenario is not alien to our own backyard where some parastatal bosses are reported to be earning as much as US$20 000 a month yet their organisations are teetering on the brink of collapse.
According to Serat (2011), having good corporate governance systems and procedures in place helps organisations achieve their agreed targets and objectives. Poor corporate governance can speed up the decline or demise of an organisation as was witnessed in the demise of WorldCom, Enron, Poly Peck International.
It is therefore worth noting that never before has the spotlight focused so much on boards of directors and executive management performance including the contribution that the individual board member is offering to the governance of an entity.
Corporate governance is neither a fairy tale nor a myth.It is real and continues to be a growing mainstream topic locally and globally.
Ever since I moved back into Harare I am very much encouraged by the fact that corporate governance is very much on the minds of legislators, regulators, professionals and corporate executive in various sectors of the economy.
The evidence is there for all to see because soon Zimbabwe will have its own corporate governance code. It is envisaged that the code will hopefully offer guidance on best practices that companies can adopt or embed in both theory and practice.
The initiative to have our own code is an encouraging step for Zimbabwe as this will be a homegrown code built on the needs, demands of the local economy and also covering some of the gaps that King III and other national codes may have.
By having our own code Zimbabwe will have taken a huge leap forward to safeguarding the interests of the stakeholders and potential investors thus ensuring that there is real accountability and transparency on the part of the directors running an entity.
What is even more encouraging is the fact that regulators are increasingly seeing corporate governance as a key protector of financial stability and of value to our battered, but emerging economy, going forward.
Recently at the just ended Corporate Governance Summit held in Victoria Falls, Minister of State Enterprises and Parastatals Gorden Moyo spoke about the need to improve the governance of State enterprises and parastatals.
He emphasised the need for SEPs to start embedding the Corporate Governance Framework for State Enterprises and Parastatals that was approved in November 2010 as good governance is real and alive.
This therefore highlights that corporate governance is not just for the listed companies but is applicable to all sectors of business including State-owned enterprises and Government departments.
Just taking a look at the recently published financial statements of some listed and non-listed entities one can easily notice that the corporate governance fever is slowly gripping the boardrooms as the quality of reporting has improved from the yesteryear.
The Securities Exchange Commission of Zimbabwe has been proactive in this regard as they recently instituted investigation in to financial statement published by Cafca after noticing that it was lacking some critical issues such as an auditor’s report.
On a positive note several financial services providers went the extra mile by publishing information such as the number of meetings that a board member attended, etc.
It thus made it clear for all to see which board member contributed value for money and those who has just been there only in name but getting the fees.
Terrence N. Chimanya, MSc, LLB (Hons), ACIS, MCMI is a corporate governance practitioner and Senior Manager Risk Advisory Services (PwC).
Online Reporter