Good governance beneficial

The Enron case is considered to be the most notorious in US history.
Effects of the scandal were felt far and wide. Corporate governance became a global craze.

Critics would ask, “Why now?” Corporate governance proponents, this writer included, found one more case to support arguments for good governance.
During the10 years of my work as a governance consultant, I came across serious skeptics of corporate governance.
Some said that corporate governance was irrelevant, while others wrote it off as another form of colonisation or globalisation gimmick. The behaviour of some transnational corporations did not make it easy to communicate the justice of my cause.

In one of the missions in East Africa, I came across a book by John Perkins, titled “Confessions of An Economic Hit Man”. The book is about clandestine global US government and corporate activities. Perkins was one of the Economic Hit Man (EHM) highly paid professionals. In repentance, he reveals how the US took over the world, including the inside of Enron.
Drawing from the Enron story, this article intends to show that no amount of good governance will save corporations, which are designed to fail.

The inter-connectedness of political, economic and corporate governance is discussed in light of the Arab uprising and the US vision.
Can corporate governance position African countries to “know thyself”, as the Western and Eastern empires bring global economic wars to our motherland?
The following is an excerpt of the Enron case from Confessions of an Economic Hit Man: “MAIN was one example of a company that did not cope well in the changing atmosphere of the energy industry. At the opposite end of the spectrum was a company we insiders found fascinating: Enron.

One of the fastest-growing organisations in the business, it seemed to come out of nowhere and immediately began putting together mammoth deals.
Most business meetings open with a few moments of idle chatter while the participants settle into their seats, pour themselves cups of coffee, and arrange their papers; in those days, the idle chatter often centred on Enron.
No one outside the company could fathom how Enron was able to accomplish such miracles. Those on the inside simply smiled at the rest of us, and kept quiet.

Occasionally, when pressed, they talked about new approaches to management about ‘creative financing’, and about their commitment to hiring executives who knew their way through the corridors of power in capitals across the globe.”
“To me, this all sounded like a new version of old Economic Hit Man (EHM) techniques. The global empire was marching forward at a rapid pace. For those of us interested in oil and the international scene, there was another frequently discussed topic: the vice-president’s son, George W Bush. His first energy company, Arbusto (Spanish for bush,) was a failure that ultimately was rescued through a 1984 merger with Spectrum 7.

“Then Spectrum 7 found itself poised at the brink of bankruptcy, and was purchased, in 1986, by Harken Energy Corporation; G W Bush was retained as a board member and consultant with an annual salary of $120 000.
“We all assumed that having a father who was the US vice president factored into this hiring decision, since the younger Bush’s record of accomplishments as an oil executive certainly did not warrant it.

“It also seemed no coincidence that Harken took this opportunity to branch out into the international field for the first time in its corporate history, and to begin actively searching for oil investments in the Middle East.
“Vanity Fair magazine reported – ‘Once Bush took his seat on the board, wonderful things started to happen to Harken – new investment, unexpected sources of financing serendipitous drilling rights.’ In 1989, Amoco was negotiating with the government of Bahrain for offshore drilling rights. Then Vice President Bush was elected president. Shortly thereafter, Michael Ameen – a State Department consultant assigned to brief the newly confirmed US ambassador to Bahrain. Charles Hostler – arranged for meetings between the Bahrain government and Harken Energy.
“Suddenly, Amoco was replaced by Harken. Within a few weeks, the price of Harken Energy Stock increased by over 20 percent, from $4,50 to $5,50 per share.

“Even seasoned energy people were shocked by what happened in Bahrain. ‘I hope G W isn’t up to something his father will pay for, said a lawyer friend of mine. I was less surprised than my peers, but I suppose I had a unique perspective.
“I had worked for the governments of Kuwait, Saudi Arabia, Egypt and Iran; I was familiar with Middle Eastern politics. And I knew that Bush, just like the Enron executives, was part of the network and my EHM colleagues had created; they were the feudal lords and plantation masters.”

It is easy to string through political, economic and corporate governance in this story. This is about empire building. It is an on-going American vision, carried from one generation to the next, beyond political differences.
It gets clearer as we watch current Arab uprising, being graced by visits to Egypt and Tunisia from Congressmen McCain, a Republican, and Kerry, a Democrat, with General Electric CEO Jeff Immelt, along with officials from Boeing, Coca-Cola, Bechtel, ExxonMobil, Marriot and Dow.

Like many, I sometimes get incensed with the above.
However, today my stance is not to judge but to be a student. Foundations and intentions determine the growth and robustness of corporations.
It seems that Enron’s rise and fall was predetermined.
Much like the recent suicidal mission of Europe’s Automated Transfer Vehicle (ATV), Enron had a spectacular rise and fall.

It brought energy to “feudal lords” and in 2001 it came back crushing.
It is reported that ATVs can take to space stations more than seven tonnes of fuel, food, water, air and equipment. On return they are filled with station rubbish.
Almost everything burns up on the fiery descent. Had Enron completed its mission? Was the social cost comparable to station rubbish?

Enron casualties included: 22 000 employees. Even more baffling is that more corporate failures were reported, culminating into global economic crises, in spite of SOX. Was corporate governance being used to cover up dishonesty?
Even SOX, was it necessary? It is this deception which seems to annoy many. This writer participated in governance reviews of several African countries. Discussions with stakeholders are always paved with lots of cynicism.

The equation involving foreign direct investment (FDI) and Doing Business indicators, what Africa could do to attract more FDI, trade, private sector development, economic growth and governance; never seem to result in the poverty reduction?
Poverty reduction or governance, which comes first?

Second lesson is having a common vision that is equally understood at all three spheres of governance; political, economic and corporate. The American vision is clear.
It transcends political divides. It is consistently upheld over generations. Impact of this vision on for example, health delivery services is outside the scope of this article.

The cited book, further, describes this American vision as “one that is as old as the Empire, but has taken on terrifying dimensions during this time of globalisation”.
Regime change, huge debts, extortion, sex and corruption, are some of the examples of tools used by EHM.
Please remember that when next you are tempted to beat each other up during election time, you are just tools in the sight of EHM.

What is our strategy, in the face of on-coming economic wars? I believe there is more that unites us than separates us.
Third lesson is found in Sun Tzu’s saying, “know thy self, know thy enemy. A thousand battles, a thousand victories.”
I understand “knowing thyself” to entail self-governance.

We see this strategy in the rise of Chinese businesses and economy.
The Chinese are confident; they know and believe in themselves.

For a long time, they pretended to be ignorant, only to fall like a thunderbolt.
It caught the world napping. Corporations and institutions mirror who we are as a people. For instance, the queues which we are all accustomed to, send clear messages of inefficiency, as well as lack of dignity and respect for ourselves. It is easy to respect one a people that respects itself.

How can we employ self-governance to know ourselves better?
Fourth lesson: It must not be assumed that any corporation from the West or East and even the BRICS is necessarily run with good governance. However, without our own standard of good governance, we find ourselves adopting standards from King, Commonwealth, SOX, and Singapore etc. The result is confusion, lack of ownership and misplaced anger.

When governance is used as a carrot and stick, conditionality in development assistance, or weapon, then its real benefit is lost. Governance is a way of being. Just as breathing gives life to animals, good governance gives life to institutions.

This terrain called the global village is getting desperate and vicious.
Friends are becoming enemies and enemies are becoming friends. Knowing thyself is best. Without responsible corporate governance our corporations will be swallowed.

On a lighter note, in June, I joined others in celebrating corporate fathers from all parts of Zimbabwe and Africa, who in their own way uphold standards of governance, and nurture businesses, through most trying circumstance.

Readers who know of such corporate fathers and mothers, please send their names to the e-mail address below, not only to celebrate and acknowledge them, but for us to learn from our best.
The writer is a researcher and consultant and can be reached at email; [email protected]