Financial Times

Focus on governance challenges at CIMA Summit 2009

Globally money laundering amounts to more than US $ 2 trillion to US $ 2.5 trillion annually (which is 5-6% of world gross domestic product in 2006), finance experts said quoting some estimates. Prof. J.D.Agarwal Professor of Finance and Founder Chairman, Indian Institute of Finance, Delhi, India told a high profile gathering at the launch of the Chartered Institute of Management Accountants (CIMA) 2009 Business Leaders’ Summit on Monday that real estate has been one of the most common and the simplest means to launder money.

Speaking on the responsibility of the directors, he said business leaders need to understand that prosperity of organizations depend upon prosperity of people and other sectors of the economy. He said that business leaders need singular visions and missions to give stakeholders what they need. “Most business leaders ignore social engineering and concentrate on productivity, profitability and growth, expansions, maximising firms’ market share, maximising wealth and their bonuses and remuneration,” he noted. He said that business leaders often ignore innovations, macro and global economic environments, business ethics, socially desired corporate governance and inclusive and dynamic growth.

He also noted that most stakeholders need pride, hope, wealth and power, dignity and respect together with a satisfying return on their investment and efforts. He added that the policymakers need to monitor developments in financial markets closely and be ready to take hard steps in-time. Speaking on the challenges before Sri Lanka, Prof. Agarwal said that they range from rebuilding public sector industry, rehabilitation of victims of natural disasters, escalation of food prices and oil shock strengthening infrastructure.

Charles Tilley, CEO CIMA addressing the gathering at the technical sessions on the challenges for governance and sustainability, said that governance failures have three recurrent themes- namely effectiveness of director boards, adequacy of risk managemet and remuneration. “The principles versus sanctions of the boards and the processes for effective oversight and challenge (is a question with regard to the effectiveness of the boards),” he said. He said that risk appetite can vary across the business and it is a pertinent issue whether director boards really focus on their risk appetite and whether they make it actually clear throughout their businesses if they recognize such appetites. He noted that risk is a process not a number/value and that the companies need to recognize this. “Many companies oscillate between over-scrutiny and excessive cost cutting, too much risk aversion and also under-scrutiny, aggressive expansion and empire building,” he said.

Speaking about governance, Mr. Tilley said that the main principles in corporate governance are long term sustainability and leading from the front. “The main issues relating to governance are integrity and ethics, effective board structures (such as the role of non-executive directors and relationships with owners), effective connectivity between board and management and the transparency and effectiveness of reporting,” he said. Speaking on the challenge of public sector and private sector link to economic growth, Lalith de Mel, Chairman Hemas Holdings PLC said that asthe private sector tends to look at the government as its executive arm, the public sector has a large role to play in creating confidence about the future.

“The government has many levers to manipulate and buttons to press to manage the economy. What they do is very visible to the public. If they appear to be hitting the right buttons it can create confidence. If they are not it will create diffidence and also uncertainty about the future,” he said, adding that the authorities need to take a calculated gamble to reduce the complexity of the rules. On the sidelines of the seminar Mr. De Mel told the Sunday Times FT on the same issue of stringent regulation, that rules on firms listing on the Colombo Stock Exchange and insider dealing are very stringent and that they ‘frighten the daylight out of firms who want to list’. “They may not be relevant to the current market conditions. We have a highly over-regulated system which impedes on the dynamism, growth and investment in the market,” he said.

Dr Dieter Kotte, CEO and Partner Casual Impact which is into statistics and management consulting, making a presentation on ‘new challenges/ new strategies’ said that the public sector in Sri Lanka need to streamline administrative services (Good Governance) and improve the formal education sector. “Sri Lanka can professionalize technical-vocational education & training (jointly with the private sector; Public-Private Partnership) and improve international perception.” He also said the private sector should stop worshipping individual Key Performance Indicators and take a more comprehensive, strategic look at performance. “Firms should look for partnerships and strategic alliances globally and also market yourself more professionally while comparing yourself to others and learn from them (benchmarking),” he said.

 
Top to the page  |  E-mail  |  views[1]
 
Other Financial Times Articles
> Colombo stock market trading soars
> Garment sector picking up
> Supreme Court considers F&G restructuring plan, special Trust
> Foreign fund gets 10% in Ceylinco Insurance
> CB withdraws 20% bonus interest on RFC/NRFC accounts
> HNB brokers name change
> COMMENT - Emerging out of poverty
>
An objective analysis of tea imports for re-export
> Expatriate workers rights in the US
> Asia Cap group goes to the North
> Visit of high-powered US biz delegation to Sri Lanka
> IFC-supported Business Cells to help small enterprises grow in Sri Lanka
> Focus on governance challenges at CIMA Summit 2009
> ACHIEVERS award for Mayfair Lanka (Pvt) Ltd
> UN-HABITAT Business Award for Dr Darin Gunesekera
> Sri Lankans down 1 million litres of
> Deutsche launches mobile authorisation in Sri Lanka
> EWIS frontier systematic e-waste management in Sri Lanka
> Emirates Airport Services moves to new office at BIA
> Oil exploration in the Mannar Basin
> Lanka's FDI must double - CB Governor
> Plenty Foods to train IDPs in corn growing
> Trade delegation from Mahratta, India visits FCCISL
> Rural Sri Lanka drives FMCG growth - Nielsen data shows
> Emirates’ Wolgan Valley Resort & Spa opens in Australia
> Plantation companies say management fees brought down
> Sri Lanka poised for BPO growth - Aegis, India
> BOI meets Vietnam delegation
> Troubled Okanda Finance seeks liquidation
> Ceylinco Life helps two schools in Trincomalee
> Asia Miles named “Best Frequent Flyer Programme”
> Asset quality of finance companies deteriorating - RAM Ratings
> Ambitious target of 2.5 mln tourists in 2016 achievable- industry official
> Local NGO prepares new measurement for housing
> Deepal on ‘new ideas’ at TMC Kalutara
> ComBank presents computers to Vocational Training Centre in Tellipallai
> Tourism employees stage protest
> AMCHAM AGM
> No alcohol on New Year’s Eve
> FR case against SLT dismissed
> Unlawful privatisations in Lanka – Role of the Auditors
> Wonder drugs cost less and saves lives- DPJ Chairman
> Fitch says fiscal targets are ambitious
> Hedging case resumes in Supreme Court
> Ceylinco Insurance - Maldives announces 70 % interim dividend

 

 
Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 2009 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved.| Site best viewed in IE ver 6.0 @ 1024 x 768 resolution