14 - 20 September 2000

Commonwealth Corporate Governance Conference

Proper governance crucial to world economy

An international conference on Corporate Governance is being held on 18 and 19 September at the Hilton Malta.

Organised by the IOD Malta Branch, the two-day conference will focus on corporate governance in the banking, commercial and industrial sectors.

The first day is dedicated to the banking sector and speakers include the Commonwealth deputy secretary general for Development Cooperation, the Chairman of the Commonwealth Task Force on Corporate Governance in Banking, the executive director of the Commonwealth Association for Corporate Governance and a number of other foreign speakers from International Central Banks and Reserve

Banks. The session will also include a presentation of the report of the Commonwealth Task Force. Corporate Governance in the Commercial and Industrial sectors will be discussed on the second day with presentations by the Chairman of IOD Malta, the executive director Commonwealth Association for Corporate Governance, OECD speakers Jonathan Charkham and Michael Gillibrand, and other high-level foreign and local speakers.

The Commonwealth Programme on Corporate Governance has now extended to over 20 countries in Africa, the Caribbean and the Pacific, and in all these countries the issue of corporate governance for State enterprises has been a high priority, in many cases even higher than for publicly listed companies.

Local banking, legal and accountancy professionals are encouraged to attend the conference.

Banking is recognised as a critical sector for development in general, and the recent Asian financial crisis was attributed in large part to failures in corporate governance among banks.

There is a growing interest locally in strengthening corporate governance. Company directors, executive managers, investors, entrepreneurs together with legal and accounting professionals are invited for the second day of the conference.

The Commonwealth has a mandate from the Commonwealth Business Forum, endorsed by heads of government in the Edinburgh Economic Declaration, that "capacity should be established in all Commonwealth countries to create or reinforce institutions to promote good corporate governance; in particular, codes of good practice establishing standards of behaviour in the public and private sector should be agreed to secure greater transparency and to reduce corruption".

It may be noted that the Commonwealth approach to corporate governance emphasises not only the conformance of boards of directors to standards of transparency, accountability and social responsibility, but also their performance in leading their companies to compete in the global economy.

"The proper governance of companies will become as crucial to the world economy as the proper governance of countries," IOD Malta Chairman James Satariano said.

In many Commonwealth countries, the stream of interest in corporate governance converged with increasing interest in associated issues of competitiveness, corporate citizenship, and social and environmental responsibility. Corporate governance was also linked to broader issues of national governance and action against corruption, with governments recognising that reform in the public sector would only be truly effective when accompanied by parallel reforms in the private sector.

As the process of privatisation accelerates, the concern for corporate governance grows as it becomes increasingly apparent that in many countries State enterprises are being privatised into what has been described as a "post-privatisation policy vacuum" - a policy and institutional environment which often lacks not only any formal regulator, competition policy, environmental protection or fair trade legislation, but also has outdated company law, insufficient technical product standards, weak professional institutions and consumer associations, congested court systems, and a restricted local press, in economic sectors with market failures and limited competition.

These issues of the lack of the essential institutional fabric to sustain fair competition and appropriate regulation are identified as being a heavily debated part of the programme in Malta.

The widespread practice of good corporate governance can help to achieve multiple objectives in an emerging market. For example, corporate governance is seen as a policy instrument which contributes to: