Governments issue corporate governance guidelines, academics write books about it, institutions hold conferences on it, organisations add extra pages to their annual reports claiming to be compliant with the guidelines and individuals, including me, take it upon themselves to train on the subject, hoping to implement such guidelines within their own organisations.

All to no avail, I am afraid.  It has been largely an exercise in futility and lip service to the outside world.  Of course, there are honourable exceptions of organisations who do take these matters seriously and genuinely implement them.  However, these are exceptions and not the rule.  The general rule is that with dubious efforts, companies can still carry on running their business in such circumstances as:

  • Continuing to trade when they are insolvent
  • Boards of directors’ rubberstamp powerful executives’ decisions or wishes of influential shareholders.Directors don’t even know what their duties are
  • Business strategies which are supposed to focus on innovation and expansion of the business are substituted by cost-saving measures which eventually suffocate the core business
  • Conflict of interest of key people in the organisation
  • Long-term viability and success of the organisation is sacrificed for the short-term gain of the few
  • Annual reports paint a rosy picture of the business and mask the true status of the organisation
  • Companies and external auditors are in cahoots to secure sign-off of annual accounts

The true prevailing attitude is that corporate governance is seen as a hindrance and an obstacle to be avoided at all costs.  However, no company would dare admit this simple reality.  Instead, they talk about it a lot, hoping the loud chatter will distract from the lack of action.  So, corporate governance is mentioned in annual reports, marketing material, presentations to stakeholders, and speeches by company presidents, CEOs, and chairmen, believing this would suffice to avoid the hard work and discipline of actually applying corporate governance which demands time, effort and money.  Hence giving a new meaning to the expression ‘if you cannot fight, wear a big hat’ whereby, you create a distraction about your failings by actually claiming they are, in fact, your successes!

And don’t think for a second that this state of affairs is exclusive to businesses operating in 2nd or 3rd World countries; far from it.  If that were the case, we wouldn’t have the mess created by so many well-known companies from insolvent banks and insurance companies, insider trading corporates, major retailers falsifying company accounts, to vehicle manufacturers submitting fake gas emission data of their products to .  All manage to somehow survive because they are too big or too valuable to their respective home-countries to be allowed to fail.  Sadly, it is individuals like you and me who have to foot the bill and suffer the consequences of these corporate crimes.

So, will the post COVID-19 ‘new world order’ predicted by experts change companies’ or governments’ attitude towards corporate governance?  Who knows?  Ignoring the various shades in between, we have a binary chance of giving the right answer of ‘Yes’ or ‘No’.

My personal view is that my money is on the ‘No’ answer.  After all, with few exceptions (food retail, on-line shopping, hi-tech etc.), all other business sectors have suffered dramatically over the last 9 months or so and in order to survive, companies will be looking for quick recovery, slimmed down workforce, by getting rid of those who are involved in non-core activities to demonstrate cutting costs seen as waste of valuable liquidity.

It would be a wise, albeit suicidal director or senior executive, who would suggest spending time, effort and resources implementing corporate governance.  It would appear to others as though everyone is busy working on a plan to put out a raging fire and one of them suggests playing background music to enhance the ambience of the situation.

Having said that, I hope that in time, after the world economy begins to recover and companies regain their confidence, a new generation of executives and board members will have the foresight and wisdom to introduce effective and relevant corporate governance that will help organisations adopt disciplined and accountable methods that truly seek to protect the long-term interest and success of the business.  Further, boards of directors are reformatted to include diverse individuals who understand what their responsibilities are and dare to set out business strategies and challenge potential violation of corporate governance.

As to when this new utopia of world economy recovery will take place, the answer is not a binary one this time and I am not prepared to put a single dollar betting on an answer.

My hope is that the time between now and then is utilised to rid companies of unscrupulous operators, incompetent executives and directors, and self-seeking individuals who see their involvement with organisations as opportunities to protect their jobs or enrich themselves.