Rapheal John-Lall

T&T's cor­po­rate gov­er­nance dis­clo­sure prac­tices are be­low the av­er­age of emerg­ing mar­ket economies, said Dr Ax­el Kra­vatsky, chair­man, the Caribbean Cor­po­rate Gov­er­nance In­sti­tute (CC­GI).

"In terms of cor­po­rate gov­er­nance dis­clo­sure prac­tices, the glob­al stan­dards have 61, Ja­maica has 35 dis­clo­sure re­quire­ments in law, while in T&T, there are five dis­clo­sure re­quire­ments that are manda­to­ry. Some com­pa­nies al­ready dis­close high­er than oth­ers, par­tic­u­lar­ly those that are list­ed on stock ex­change," he said at a me­dia brief­ing on Mon­day at the T&T Cham­ber of In­dus­try and Com­merce, West­moor­ings.

Ac­cord­ing to a CC­GI state­ment, a 2011 re­port by Syn­te­gra Change Ar­chi­tects Ltd found the av­er­age en­ter­prise in T&T dis­clos­es less than half of the items sug­gest­ed by the In­ter­na­tion­al Stan­dards of Ac­count­ing and Re­port­ing, which is less than half for oth­er emerg­ing and fron­tier mar­kets.

In the cor­po­rate gov­er­nance "eco-sys­tem", there are three main part­ners, he said.

"On one hand, you have the own­ers who, by law, must ap­point di­rec­tors and di­rec­tors ap­point man­agers, and this is the re­la­tion­ship among all part­ners. There are cru­cial weak­ness­es and room for im­prove­ment in the re­la­tion­ship. The cur­rent laws do not re­quire com­pa­nies to dis­close very much to the own­ers," he said.

Cor­po­rate gov­er­nance code

The CC­GI is now work­ing with dif­fer­ent stake­hold­ers on de­vel­op­ing a cor­po­rate gov­er­nance code. The group is to lead a full con­sul­ta­tion process be­tween May and Au­gust.

The CC­GI said there is no na­tion­al stan­dard in T&T for good cor­po­rate gov­er­nance and ex­ist­ing laws are "dis­joint­ed and not com­pre­hen­sive."

The code, when ful­ly es­tab­lished, is in­tend­ed to be used as a guide, pri­mar­i­ly by list­ed com­pa­nies.

Kra­vatsky said the prob­lem of cor­po­rate gov­er­nance is not a short-term fix, but a long-term ef­fort and the CC­GI is play­ing its role in this.

"Cur­rent projects in­clude the T&T cor­po­rate gov­er­nance code, to­geth­er with the T&T Stock Ex­change and T&T Cham­ber of Com­merce. In June there is a cor­po­rate gov­er­nance event with ex­pe­ri­ence speak­ers from Latin Amer­i­ca, and in Sep­tem­ber, a cer­tifi­cate in cor­po­rate di­rec­tor­ship," he said.

He said one chal­lenge is defin­ing the scope as to how it re­lates to ex­ist­ing Cen­tral Bank laws and reg­u­la­tions.

"T&T is not a leader in the en­vi­ron­ment and there are many oth­er coun­tries that have es­tab­lished codes. Codes are de­vel­oped on the ba­sis of oth­er codes, com­pa­ny prac­tices and laws and reg­u­la­tions," he said.

He said there are many ben­e­fits for com­pa­nies of hav­ing a cor­po­rate gov­er­nance code and "mon­ey flows with best prac­tices."

"Com­pa­nies that per­form bet­ter be­cause of this code have low­er cost of cap­i­tal, low­er risks of fail­ure and scan­dal and stronger lead­er­ship and op­er­a­tions."

Good cor­po­rate gov­er­nance al­so has ben­e­fits for the coun­try.

"There are stronger pri­vate busi­ness­es as well as state-owned en­ter­pris­es, there is greater ben­e­fits from the man­age­ment of na­tion­al wealth and there is al­so greater in­vestor con­fi­dence," he said.

In­for­ma­tion pro­vid­ed by the CC­GI, showed that a 2002 sur­vey by McK­in­sey and Com­pa­ny de­ter­mined that glob­al in­sti­tu­tion­al in­vestors are pre­pared to pay a pre­mi­um of up to 40 per cent for com­pa­nies with su­pe­ri­or cor­po­rate gov­er­nance prac­tices.

In­vestor con­fi­dence

Roger Hamel-Smith, chair­man of the CC­GI work­ing group and for­mer Jus­tice of Ap­peal, in a CC­GI state­ment said: "Re­cent events in the T&T econ­o­my have high­light­ed the need for com­pa­nies to recog­nise the im­por­tance of qual­i­ty over­sight with a high de­gree of ac­count­abil­i­ty. There is no sub­sti­tute for good judge­ment. How­ev­er, in­sti­tu­tion­al­is­ing a set of best prac­tices to which lead­ers can strive to­wards and mea­sure against is a crit­i­cal and mean­ing­ful pur­suit."

Wain­wright Iton, chief ex­ec­u­tive of­fi­cer, T&T Stock Ex­change (TTSE), who al­so spoke at the press con­fer­ence, said the TTSE has heav­i­ly in­vest­ed in good gov­er­nance as it re­sults in in­creased prof­its, in­creased trans­paren­cy and greater op­por­tu­ni­ties for in­vestors.

The TTSE has 32 list­ed mem­bers and is a project part­ner with the CC­GI in de­vel­op­ing a cor­po­rate gov­er­nance code.

"Share­hold­ers, man­ag­er, mem­bers of the board all ben­e­fits from this; al­so the pop­u­la­tion at large. Any­thing we can do to build trust and con­fi­dence in the econ­o­my, we will," Iton said.

Iton com­pared the cor­po­rate gov­er­nance code to a "man­u­al" that com­pa­nies can use as a guide.

"If you buy a spe­cif­ic ma­chin­ery or gad­get and you want to know how it per­forms, you need a man­u­al. If we look at the code in that sense, it will guide list­ed com­pa­nies and un­list­ed com­pa­nies as to how to con­duct busi­ness in terms of good gov­er­nance," he said.

Cather­ine Ku­mar, chief ex­ec­u­tive of­fi­cer, T&T Cham­ber of In­dus­try and Com­merce, said the code will not be manda­to­ry, but is op­ti­mistic T&T com­pa­nies are "ma­ture" enough to fol­low the code once de­vel­oped.

"When you look at com­pa­nies fol­low­ing ISO 9000, a lot of these things are vol­un­tary as far as com­pli­ance, so we ex­pect com­pa­nies that want to get on the stock ex­change and through the cham­ber's mem­bers, there will be a cer­tain de­gree of com­pli­ance," she said.

Ku­mar said the code will de­vel­op a new cul­ture in busi­ness prac­tices.

"As a de­vel­op­ing na­tion, if we had to put every­thing in­to law, it would not be prac­ti­cal. At the mo­ment, we have chal­lenges en­forc­ing the laws that al­ready ex­ist. So this is about en­cour­ag­ing a cul­ture of what is best," she said.

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