Caribbean Corporate Governance Institute (CCGI) Press Coverage

Integrity in Public Life

Sun, 01 Nov 2020 14:49:54 GMT

Here's an article written by Dr. Jules Ferdinand in the Vincentian Newspaper on one of the topics of our recent online 3 Part Series - Governance Practices in the State sector:

https://thevincentian.com/integrity-in-public-life-p20615-109.htm

Governing SOEs: New governance standards that improve SOE performance

Administrator — Sun, 21 Feb 2016 21:58:11 GMT

Governments are actively working the world over, including in the Caribbean, to improve the governance within the Public Sector. The governance (SOEs) is important because they provide important services within a country and constitute a large and important part of the economy in terms of employment.

As a part of our regional columns on corporate governance, the Caribbean Corporate Governance Institute (CCGI) is launching a series of articles that focuses upon the governance of state owned enterprises (SOEs). In this first article we define what an SOE is and identify some of the international standards and applicable laws and regulations that apply to SOEs in the region.

What is an SOE?

Amongst many policy makers there has been a level of confusion as to which organisations are SOEs. The Organization for Economic Cooperation and Development (OECD) define an SOE as being any kind of enterprise where the state owns shares in it. This simple definition provides a very useful method for identifying in many cases whether an organization is an SOE or not. For example, let us take the much discussed case of CL Financial. The Government of Trinidad & Tobago provided more than TT$20billion to the company but left the ownership of the shares with the original owners. Some people have argued that this lack of direct share ownership means that the company is not an SOE. However, we would argue that the shareholding agreement for the company gave the state the right to appoint a majority of the directors and that this indicates that there was a very significant level of state control. CL Financial should therefore be regarded as an SOE.

International standards for SOEs

The key international governance standard for SOEs is the OECD Guidelines for State Owned Enterprises. These Guidelines were first published in 2005 and have been revised in 2015. They are fully aligned with the more general G20/OECD Principles of Corporate Governance that were also published in 2015. Both the principles and guidelines have benefit from extensive consultations. Many of the CCGI’s partner organizations – in both developed and developing countries have been active participants.

The OECD Guidelines outline the state’s role in an SOE as follows:

“The state exercises the ownership of SOEs in the interest of the general public. … The members of the public whose government exercises the ownership rights are the ultimate owners of SOEs. This implies that those who exercise ownership rights over SOEs owe duties toward the public that are not unlike the fiduciary duties of a board toward the shareholders, and should act as trustees of the public interest. High standards of transparency and accountability are needed to allow the public to assure itself that the state exercises its powers in accordance with the public’s best interest.” (p.32)

The key regulations and laws relating to the governance of SOES

Jamaica

In Jamaica the key references for SOE governance are: the Public Bodies Management and Accountability Act (2001); the Companies Act (2004); the Private Sector Organisation of Jamaica (PSOJ) Code on Corporate Governance (2009); the Accountability Framework for Senior Executive Officers (Permanent Secretaries, CEOs of Executive Agencies and Public Bodies) (2010) and the Corporate Governance Framework for Public Bodies in Jamaica (2012). The Framework (2012) is currently being expanded with a Code of Conduct for Directors, a Competency Profile Instrument for Boards of Public Bodies, and a Performance Evaluation instrument. At present the PSOJ is in the final stages of revising the Code on Corporate Governance, CCGI’s comments are available on our website, and the Ministry of Finance and Planning in Jamaica is actively working on progressing the complementing components of the CGPB even during the course of the current election process under way.

Trinidad and Tobago

In Trinidad & Tobago the key references for SOEs are the Companies Act (1995); Integrity in Public Life Act (2000), the State Enterprises Performance Monitoring Manual (2011) and the Trinidad and Tobago Corporate Governance Code (2013).

SOEs must, of course, comply with their bye-laws, special legislation applying to them, and laws of the country and special directions in cases where they are regulated, for example, in the financial sector. All directors of SOEs should be aware of all legal requirements. At the same time they should be aware that the law is the minimum standard that needs to be complied with - it is not an indication of best practice. Many directors have found the tools developed by the Energy Chamber of Trinidad & Tobago to be very useful. These are freely available on its website (http://corpgovtt.info/). One of the tools includes a customized assessment of the current SOE legislative requirements in T&T and has four levels of maturity progression: Level 1 is the legal baseline. Specific indicators define what each level of progression means and the CCGI recommends that all SOE Boards should consider assessing their organization using this framework and using this as a basis for developing plans for improving their compliance and governance.

Probity, transparency, accountability, and assured sustained performance are four hallmarks of corporate governance for all sectors and type of organization. Many countries have adopted legislation that enables citizens to get access to information on companies that fall under its remit - in the case of Jamaica this is the Access to Information Act (2002) and in Trinidad & Tobago the Freedom of Information Act (1999). These acts should be regarded as a “back-stop” feature of corporate governance because other existing legislation in both countries already mandates disclosure of much of the information covered in these Acts. In addition, international corporate governance standards recommend high levels of disclosure and transparency. The CCGI believes that in many cases the usage of Access to Information and Freedom of Information legislation is as a result of levels of disclosure and transparency of a company being below these international best practice standards. The Freedom of and Access to Information Acts of T&T and Jamaica are, from a corporate governance perspective, only likely to be used if good corporate governance is not taking place.

Disclosure of performance and governance information in the Caribbean is very poor (details are available on the CCGI website) The International Benchmark is that 51 items should be disclosed by public interest entities. In Trinidad & Tobago only 12 items are recommended and there is guidance on an additional 16 items. In the case of Jamaica about 35 items should be disclosed.

Companies that demonstrate sustained commitment to high environmental, social, and governance standards have been shown to be consistently higher financial performers than their less well governed peers. This is the reason why corporate governance standards focus upon disclosure. Disclosure is so important that the OECD Guidelines for State Owned Enterprises (2015) dedicate one of its seven principles to this topic:

Principle VI: Disclosure and Transparency: State-owned enterprises should observe high standards of transparency and be subject to the same high quality accounting, disclosure, compliance and auditing standards as listed companies.

The Institute recognizes that the reform of SOEs is challenging because these organisations are very complex due to the state itself not only having a shareholder and investor role, but also being involved in regulating the very industry in which the SOE is operating. Defining the state’s role and determining effective relationships between the SOE and key stakeholders that normally include the shareholding ministry, portfolio ministry, cabinet, ministry staff, citizens, and regulators is not easy. We recommend that a starting point should be with the shareholding ministry. In all cases a Ministry should be able to demonstrate to the public that it has:

developed requisite policies for the SOEs in its portfolio (including how the ministry avoids potential conflicts and market distortions associated with being policy setter, regulator and market participants),
given clear and informed direction on what results are expected,
reviewed and concurred with the approach the SOE has taken to achieve the results,
monitored the achievement of the results in an assured way,
has complied with all laws, regulations, and applied best practice standards, incl. engaging stakeholders in respect of their material interests in the organizations activities.

The application and execution of these standards would play a significant role in improving transparency, accountability, and performance of public sector organizations in the Caribbean.

The role of the Caribbean Corporate Governance Institute (CCGI) as an independent, professional, non-profit membership organization is to support individual directors, member organisations, and the markets and societies in the Caribbean. To this end our work includes the engagement of all stakeholders in the development of standards for corporate governance that are appropriate for the Caribbean. We also provide quality assured education up to Chartered Director level (we are registered as secondary or tertiary level education institution with the Accreditation Council of T&T). In addition, engaging in the public discourse on corporate governance matters is an important part of our work and to that end we publish in a column on corporate governance regionally in newspapers and online. In 2013 the CCGI, together with the Trinidad & Tobago Chamber of Industry and Commerce (TTCIC) and the Trinidad & Tobago Stock Exchange (TTSE) led a nine month drafting and consultation process resulting in the publication of the Trinidad & Tobago Corporate Governance Code (2013). The Trinidad & Tobago’s former Minister of Finance gave the feature address at the launch and continues to strongly endorse the code. Since then the Institute has been engaging governments in the region in a variety of ways in relation to SOEs. In late 2015 the CCGI decided to build on existing legislation, regulation, standards, and guidance and lead the development of a corporate governance code for SOEs.

There have been many calls on the CCGI to lead the development of such an SOE code, to conduct training for existing and potential board members of SOE boards, work with Governments and Ministries in the region. Now is an opportune time as there have been important international and regional developments in Corporate Governance that provide a good basis to build the next step on and it is critical to take those steps now.

The CCCGI works toward to the Caribbean being widely recognized and trusted as an attractive, transparent, efficient and ethical place for business. One key element towards that goal is the harmonization of corporate governance standards (for listed companies, closely-held, public bodies and SOEs, all types of Civil Society bodies) within the region, taking account of the socio-economic context in the Caribbean while still being consistent with international consensus standards.

Written on behalf of CCGI by Dr Axel Kravatzky, Chairman of CCGI, and Dr Chris Pierce, Director of Education of CCGI.

The CCGI is a regional, independent, non-profit, professional membership organization registered with the Accreditation Council of T&T. CCGI is the award body that provides the Certificate and Diploma in Corporate Governance and the Chartered Director qualification throughout the Caribbean. The CCGI welcomes membership applications and participation in its courses and events throughout the region. +1 (868) 221-8707 www.caribbeangovernance.org

Integrated Reporting – A New Global Trend

Sat, 20 Feb 2016 16:33:22 GMT

Following the global financial crisis in 2008, there is a growing trend in both the private and public sectors around the world to adopt what has commonly become known as integrated reporting. It is widely anticipated that this novel way of reporting on both financial as well as non-financial information to stakeholders is going to become the new standard of reporting both for companies and their stakeholders in the future. This mode of reporting is also expected to have a material impact on the role of the auditing profession.

While Integrated Reporting has grown exponentially internationally, as of February 2016 there are no known applications in the Caribbean, and it is expected that the first adopters can gain significant advantages. In essence, the objective of integrated reporting is explain to all stakeholders, especially those providing financial capital and others who can materially affect the organization, how the organizations create and sustains value, how the board governs and management’s stewardship of the business. The aim is to engage stakeholders, to enable them to assess more readily important matters that shape its value in the long-term, plans for the medium-term, and patterns and trends in achieving strategic and operational objectives.

In simple layman terms, stakeholders of the business should be able when reviewing an integrated report to determine whether the governing structure of the organisation has reasonably identified social, environmental, economic and financial issues that could affect the future sustainability of the organisation.

Whereas the traditional way of reporting by companies in the past has predominantly focused on historical financial performance and compliance related matters, integrated reporting looks at both historical performance, as well as future performance by assessing a wide range of financial and non-financial factors including risks and opportunities which are likely to impact the business and determine its future sustainability.

The most frequently asked questions by boards of directors of companies when confronted by their stakeholders (or in some jurisdictions the regulators) to produce an integrated report is how does one go about preparing such a report and are there model reports available against which to benchmark an integrated report.

In dealing with the latter first, a distinguishing feature of an integrated report compared to the more familiar annual reports which corporates the world over have become accustomed to and which are more compliance based in nature, there is no one size fits all or model integrated report. Every integrated report must be structured around the unique circumstances of the organisation concerned and requires a completely different mind-set in the preparation thereof compared to the traditional annual report.

Thankfully though, guidance regarding the preparation of an integrated report has been provided by The International Integrated Reporting Council (IIRC) through its publication of The International Framework – Integrated Reporting publication which can be found on the following website http://integratedreporting.org/resource/international-ir-framework/

The Framework produced by the IIRC establishes guiding principles, as well as content elements in terms of what needs to be reported. The guiding principles essentially underpin the preparation of an integrated report and spell out how the information is to be presented whereas the content elements set out what should be contained and addressed in an integrated report.

The guiding principles include:-

strategic focus and future orientation;
connectivity of information;
stakeholder relationships;
materiality and conciseness;
reliability and completeness; and
consistency and comparability.
Content elements require that the following be addressed in the report:-
Organisational overview and external environment;
Governance;
Business model;
Risks and opportunities
Strategy and resource allocation;
Performance;
Outlook; and
Basis of presentation.

Whereas with annual reports, boards can approach the same in a linear fashion by thinking in silos, integrated reporting leading to the production of an integrated report, requires the board to think in an integrated manner by evaluating the six capitals identified by the IIRC namely; financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital and natural capital in relation to the organisation.

As highlighted above, the primary purpose of an integrated report is to explain to all stakeholders including shareholders how an organisation creates value over time by applying the six capitals in the context of its business model and operating environment underpinned by materiality, inclusivity and responsiveness. Materiality requires a robust interrogation of the various risks and opportunities facing the organisation which may or are likely to affect its future sustainability. Inclusivity addresses the extent to which the organisation has engaged with all of its stakeholders in respect of the six capitals, while responsiveness focuses on how the company has dealt with the material risks and opportunities facing the organisation and communicated these to its stakeholders.

Aside from the obvious benefits to stakeholders by gaining a deeper and more holistic appreciation of the organisation from an investment perspective, other advantages to organisations which report in an integrated manner include, among others, the alignment of strategy to risk, the development of a culture of innovation, increased competitiveness in its chosen markets, significant cost savings, heightened transparency and greater stakeholder confidence.

The Caribbean Corporate Governance Institute (CCGI) has taken a leading position in the sphere of integrated reporting within the Caribbean community and will be pleased to assist all boards of organisations within the region which may be interested in pursuing this fast evolving method of reporting.

For further information in this regard please contact Denise Deonarine at

denise.deonarine@caribbeangovernance.org.

Written on behalf of CCGI by Andrew Johnston, member of the Auditing and Accounting

Committee of King III Report, Chairman of the Johannesburg Stock Exchange Corporate Secretary Forum, Member of the ICGN Remuneration Committee, and Corporate Secretary of Altron Group of Companies.

Jamaica Stock Exchange leading the globe and launching Corporate Governance Index

Fri, 19 Feb 2016 17:28:28 GMT

We would like to send our heartiest congratulations to partner and Stakeholder the Jamaica Stock Market (JSE) for earning the rating of number one performing index in 2015 worldwide topping 92 markets tracked by the global financial research company. The Stock Exchange has been a big supporter of the Institute on several initiatives, and we look forward to working with them in the future. Our first initiative for 2016 with the JSE was presenting on the topic of Integrated Reporting at their annual conference entitled “Reaching Beyond Traditional Boundaries - Exploring & Partnering for Growth for All” on January 20th, 2016.

We were able to interview Marlene Street- Forrest the General Manager at the JSE to find out about how the stock exchange views Governance and what she believes is the future for the JSE.

1. How have governance practices been important in your organization's operations?

There are two points of governance for the Jamaica Stock Exchange. (a) The JSE is a regulator of companies listed on the Exchange and member /dealers (brokers). We seek to ensure that these organizations comply where applicable with the regulations contained in the JSE’s rules and the Securities Act. We are regulated by the Financial Services Commission and as a listed Company also by the Rules of our Exchange.

The JSE ensures that we are compliant with our regulators and that as far as possible those we regulate are compliant as the heartbeat of any market is the confidence that the participants have in us.

You may be aware that in order to improve our own governance arrangements, our organization became demutualized in 2008 at which point our regulatory and commercial activities were separated. This ensured that even the perception that the process of regulatory decision was contaminated by self-interest would be minimized or removed completely. Today we can say with confidence that our regulatory process is robust and as was recognized by Bloomberg in their article last year on our achievement on being the World’s Best Performing Stock Exchange in 2015.

2. What would you tell your members about the role of governance in their organizations?

Our members know and appreciate the role of good governance in their organizations. They have experienced the upside of good governance in the improvement in operational efficiencies which have had an impact on these companies’ growth and profitability, public perception and their ability to conduct business globally. Many of our Junior market companies have commented on the fact that initially that all the requirements seem to be somewhat of an arduous task but once started they have reaped significant benefits from doing so. As empirical data has shown that good corporate governance usually improves a company’s share value, companies are encouraged to be particularly diligent in ensuring timely and accurate disclosure of financial reports and material information and that the structure of their boards should be such that allows for equitable treatment of shareholders, transparency and in short good governance.

3. For 2016, what are you hoping to see as a key milestone or achievement for the stock exchange?

Given that the JSE recognizes the importance of good corporate governance, it will be launching by the end of the first half of the year, the JSE Corporate Governance Index. The JSE also continues to review its own rules to ensure that new practices and principles which encourage better governance are incorporated into our requirements as we encourage those we regulate to travel with us on this journey. For the Stock Exchange Group itself we are determined also to ensure that our stakeholders, internal and external customers have the best information possible to assist them in bringing about improvements in their organizations.

Let’s Talk Strategy and Risk

Wed, 20 Jan 2016 18:12:29 GMT

Boardrooms throughout the world have by and large become better at risk management as uncertain environments have constantly challenged original thinking. In some jurisdictions corporate governance regimes have put pressure on executives by suggesting best practice and more open reporting beginning with the risk appetite that the Board is willing to undertake. Risk and risk discussions have, over recent years, had more airtime at both board and board committee levels. Increasingly, Audit Committees are called Audit and Risk Committees as that topic demands more attention and practicing experts have been drawn in to populate such committees. Having looked at many risk registers over the years confirms the above, we have noted Boards are getting better and more disciplined. New tools have been developed, example Value at Risk (VAR), heat maps, probability/impact matrices, stress testing, escalation procedures etc. One can almost predict the headings when one goes through these documents as boards constantly fine-tune. Two variables are sometimes missing though. The first is the monetising of risk: what would be the financial impact on profitability, cash flow, balance sheet (statement of financial position) and shareholder value of any of these events occurring? The other sin of omission is what we refer to as Strategic Risk. This is often overlooked as the risk conversation concentrates on the usual legal, cyber, environmental, political type of risks (all very valid!) Boards very rarely conduct a strategic health check when things are going well. Strategic reviews tend to be orchestrated and engage executives deeply only when performance begins to waiver or when a new Chief Executive Officer is appointed.

Here are a few thoughts for executives:

Is your business model still relevant? Far too often discussions on strategy assume that the current model is still appropriate and all conversations therefore take place within that assumption.
Those who choose to live by the sword get shot by those who don’t! Remember that famous scene from the first Indiana Jones movie? The point here is that new competitors pay no respect to legacy and history. They just don’t care. Far too often the “stay as we are” option is the comfortable one until disrupted by new and different competitors. This choice of option must always be critiqued more fervently.
What is the craziest thing that our competitor(s) could do? We recommend you should consider that in our workshops. The findings may surprise you. When platforms attack!

To reinforce the point above, digital platforms are no longer content to be just that. They understand their capabilities and lever them accordingly. Credit Card companies and retail banks have been under attack from the likes of ApplePay, Paypal and so forth for some time now.

Nothing is for ever. Ask Nokia, Eastman Kodak and many others. Corporate longevity is no longer assured and recent studies point to the fact that businesses in most western economies are disappearing faster. No one has ‘a right’ to be in business. No business has a divine right to hold on to loyal customers. Customers have choice (and a lot of it) and loyalty is easily tested. Consumers have access to information like never before. Switching costs have come down or are inexistent. Furthermore consumers now have voice. Word of mouse has replaced word of mouth. The court of public opinion carries considerably more weight than before.

“In our industry!” is phrase you would probably want to avoid in strategic review sessions. Such an approach is too narrow and limits the scope of thought and conversation. New competitors often come from outside the industry. Sony must be livid at Apple “entering” the music industry.

Be wary of benchmarking. The ultimate benefit of benchmarking is perfect imitation. You and your competitors become the same, look the same and sound the same. This is one of the most difficult strategic positions to find yourself in. Strategy should not be like following a fashion trend… Instead, be different, or better, or cheaper!

Cost cutting is not a strategy! You are just fixing a problem. Strategy has to be generating more enduring advantages.

The role of Marketing has changed. Advertising has become surveillance and forecasting; influencing consumer behaviour has assumed considerably more importance. The boundaries between ecommerce and advertising have become blurred. Is your marketing function up to it? Who makes up that division? Experience is great as long as the future resembles the past. Do you have the right level of marketing experience? Remember: twenty years’ experience may well be one year’s experience repeated twenty times.

Be wary of management consultants and other strategic soothsayers. Advisers cannot do your strategy for you. They can assist in the process to ensure that the right debates take place, they will query, validate, act as agent provocateur if needed, but the end call rests with the Board. Responsibility cannot be abdicated.

What about the process? How does strategy happen here? Who is involved? Is the process inclusive and democratic or is it the preserve of a few. Would the process stand up to scrutiny? When was it last reviewed. Are you happy about the quality of the information that the Board receives?

Can you answer the following questions easily:

We know how we compete.
We know where we compete.
(And by implication we know where we do not compete and how we do not compete)
We fully understand our source of competitive advantage.
We fully understand the link between our strategy and shareholder value creation.
We always have a good Plan B. (Did David have one when facing Goliath?)

And above all your strategy should be simple to articulate. Remember the movie “Pretty Woman?” The financier played by Richard Gere struggles to respond to the call girl played by Julia Roberts when she asks him” What do you do?” He breaks into corporate finance mumbo jumbo that nobody understands. Much later in the movie, having thought it through, he revisits his answer with more clarity.

Contributor: Mr. Jean Pousson (United Kingdom) Faculty Member of the Caribbean Corporate Governance Institute

Stakeholders combine to form code of good governance

Administrator — Tue, 10 Nov 2015 09:00:00 GMT

By Brian Lewis in Trinidad & Tobago Guardian

A new beginning. A brighter future. As T&T celebrates Divali— the festival of lights with the Hindu community—it seems as if it’s a clear sign not mere coincidence that the topic of today’s column offers a ray of hope and light. As sport both locally and internationally continues to face a relentless barrage of sordid headlines—all symptomatic of poor governance.

It’s timely that the focus today is good governance. Why? There is good news. The battle to improve good governance in T&T received a powerful boost last week. Good Sport governance is top of mind internationally, regionally and locally. The T&T Olympic Committee (TTOC) hosted last week its first ever “Good Sport Governance” week.

A series of meetings were held with national sport organisations and sport stakeholders. Professor Leigh Robinson, head of sport studies at the University of Stirling provided expertise in sport governance. Supporting, the TTOC in its ongoing efforts to build leadership and governance capacity, knowledge and skill set is Olympic Solidarity.

A key aspect of the last week’s good sport governance week was the consultation aimed at including sport stakeholders views in the proposed good governance code for sport in T&T initiative that the TTOC is championing.

One of the breakthrough benefits was a heart-to-heart meeting involving the Ministry of Sport and Youth Affairs, Sport Company of T&T and the Olympic committee. It was the first time such a collective gathering was held and all those present including Professor Robinson expressed profound appreciation for the opportunity to share ideas, concerns and views on governance.

Minister of Sport Darryl Smith must be commended for his enthusiastic support and endorsement. Minister Smith also seized the moment and allowed Professor Robinson to share her candid thoughts while at the same time making it crystal clear that improving governance is one of his priorities. The Ministry of Sport and Sport Company and the TTOC must work together and share resources.

The TTOC hosted a good governance workshop at Olympic House where Minister Smith addressed participants and sat in on the workshop for as long as his busy schedule allowed.

Also meeting with Professor Robinson were members of the TTOC Governance Commission. Members of the commission include Rikhi Rampersad, Brian Frontin, Axel Kravatzky, Jason Juillen and Brigadier General Anthony Phillip Spencer and Jeanne Borneo. read the full story here

Finance lessons for executives

Administrator — Mon, 26 Oct 2015 09:00:00 GMT

Barbados Nation - Business Authority

Caribbean corporate executives are being urged to update their knowledge of financial risks, solvency, bankruptcy laws and regulations. This advice is coming from the Caribbean Corporate Governance Institute (CCGI). Read the full story here.

What every company director should know about bankruptcy, insolvency

Administrator — Mon, 26 Oct 2015 09:00:00 GMT

Barbados Advocate - Business Monday

Read the full story here.

Solvency in the Caribbean

Administrator — Wed, 14 Oct 2015 09:00:00 GMT

Jamaica Observer - Business

CARIBBEAN CORPORATE GOVERNANCE INSTITUTE

The preceding article stated that the board of directors must examine the level of solvency within the company. If a company is insolvent it means that an organisation is either unable to pay its debts, or its liabilities and debts listed in the balance sheet exceed its assets. If the debts don't get paid, then the insolvency will lead either to bankruptcy for individuals and sole traders, or the company will be wound up or liquidated. In addition, the directors' control over the company will cease and the company will cease to trade, its assets will be sold and the proceeds will be distributed among its creditors.

The article concluded by noting that some business commentators regard solvency versus profitability as a false dilemma. They argue that both are important and that companies need to monitor both closely. On the other hand, other experts argue that a company cannot realise its potential profit if it can't remain solvent along the way. They argue that the relative importance of solvency versus profitability depends on the time horizon that is being used. If you are focusing upon a short-term time horizon, then solvency is more important than profitability. However, if you are focusing upon a medium- and longer-term time horizon, then profitability will become relatively more important. read full story

Making government more accountable

Administrator — Sun, 11 Oct 2015 10:00:00 GMT


Click here to download	Finance Minister, Colm Imbert

By Natalie Briggs, T&T Business Guardian

“At one point in 2015, just after the Election, with no new contractual obligations on the part of the incoming government or new items of expenditure, the overdraft at the Central Bank reached 98.0 per cent of the legal limit, with barely enough funds to service the country for a few days.”.. read the full story here

What is more important -- solvency or profitability?

Administrator — Wed, 07 Oct 2015 09:00:00 GMT

By CCGI in Jamaica Observer - Business

It is obvious to business people that companies should make a profit in the long run as otherwise they will go out of business. However, it is much less well known that most organisations fail because they have not been managing their cash flow and have become insolvent.

In the short run, survival of the company depends mainly on ensuring that bills from creditors can be paid; it is not about making insufficient profit. This article explains what every director needs to understand about their company making a profit and being able to meet its financial obligations.

Profitability

You can easily determine if your company is profitable by analysing ... read the full story here

Make corporate governance paramount

Administrator — Mon, 05 Oct 2015 10:45:28 GMT

THE Caribbean Corporate Governance Institute (CCGI) is calling on Finance Minister Colm Imbert to make it mandatory for all State-Owned Enterprises (SOEs) to apply the principles of the Trinidad and Tobago Corporate Governance Code (TTCGC) and to report to the public how they have done this.

In a statement on Friday, the CCGI recalled that in November 2013, together with the TT Chamber of Industry and Commerce and the TT Stock Exchange, it published the Trinidad and Tobago Corporate Governance Code (TTCGC).

The TTCGC applies to all corporate bodies with public accountability.

Adopting the code as the reference standard for corporate governance would be consistent with the recommendation by the Organisation for Economic Cooperation and Development (OECD) in its 2015 Edition of the OECD Guidelines on Corporate Governance of State- Owned Enterprises.

The CCGI said it is urging Imbert in his capacity as Corporate Sole, to add one line to the 2016 Budget and mandate that all State-Owned Enterprises to adopt the TTCGC as its reference standard. read full story here

What is an independent director on a state board?

Administrator — Thu, 01 Oct 2015 12:00:00 GMT

By CCGI in T&T Business Guardian

Over the next few weeks, a sizeable number of appointments to State Boards will have continue to be made by the new administration. More than 1,000 positions are needed to be filled. These appointments to State Boards require persons with the right credentials and there is a very small pool of qualified candidates.

One of the questions that has arisen during the appointment process has been the issue associated with independence. This has been caused principally by the appointment of a former independent senator as Chairman of the boards to oversee the operations of the Caribbean New Media Group (CNMG) and the Government Information Services Ltd (GISL). Many commentators, political analysts, politicians, and citizens have weighed in on the appropriateness of appointing sitting or former Independent Senators to these state organizations.

The differences of opinion may be explained by partisanship and personal persuasions of each of the speakers, but the comments expose different levels of understanding regarding the role of independence on the board. For example, Mrs. Kamla Persad Bissessar, Leader of the Opposition, in her appointment speech on September 21 said that “Public displays of apparent independence should not be used as a mask for political activism”, Dr. Winford James, political analyst, commenting to the media on September 22 stated that “Drayton now appears to be politically tainted and her past contributions as an independent senator would now be scrutinized” and Mr. Vasant Bharath, Opposition Senator on September 20 stated that Mrs Dayton was an “excellent choice. Helen Drayton is a woman of great integrity and she has a significant amount of competence and she comes from a background where she understands communications and she understands people”. This article discusses the nature of independence on the board and addresses many of the issues currently being raised and addresses many of the issues raised.

What is independence ?

read the full story here

1000 Directors in 100 Days How does a Government choose?

Administrator — Thu, 24 Sep 2015 09:00:00 GMT

By CCGI in Trinidad & Tobago Business Guardian

Over the last fortnight, a lot of opinions regarding the decision making process for choosing the numerous appointees to State Boards have been aired from the nation’s public, business community and varied political interest groups. As you read these words, it is week 3 of the new Government’s tenure and in the first 10 days, there have been 15 Board appointments to 4 major State companies – a Board of 4 at the combined Caribbean News Media Group (CNMG) and Government Information Services Limited (GISL), a Board of 5 at the National Gas Company (NGC) and a Board of 6 at Petrotrin... read the full published story here

Nine must-answer questions for state board appointments

Administrator — Thu, 17 Sep 2015 09:00:00 GMT

By CCGI, Trinidad & Tobago Business Guardian

Within the next two months, over 1,000 individuals will be appointed to the governing boards of more than 200 public bodies in T&T following the election and change in government last week. ... read the full story here

Lessons from TCL - Highlighting the importance of solvency, profitability

Administrator — Thu, 10 Sep 2015 09:00:00 GMT

By CCGI, in Trinidad & Tobago Business Guardian

The Caribbean Corporate Governance Institute (CCGI) will be addressing topics that are important for directors and senior managers in local businesses in the coming weeks and months. In this article, we discuss the relative importance of solvency and profitability. ..read full story here

Caribbean Corporate Governance Insititute to host two-day workshop in Barbados

Thu, 09 Jul 2015 12:51:55 GMT

Media Release

FOR IMMEDIATE RELEASE

July 9, 2015

Caribbean Corporate Governance Insititute to host two-day workshop in Barbados

The Caribbean Corporate Governance Institute (CCGI) will host workshops for senior managers and directors at the Hilton Barbados Hotel, July 14 &15. The workshops are designed to help executives navigate the corporate governance landscape to effectively guide their organisations for the benefit of shareholders, the business and society. Persons attending will begin the process toward attaining the Chartered Director Designation.

Until a year ago directors in the Caribbean had to travel to the UK, South Africa, or Canada to attain this designation. In July 2014, CCGI started the first regional cohort in its classic three-step programme that leads to this prestigious qualification.

CCGI is the regional independent non-profit membership organization for all professionals and stakeholders involved in Corporate Governance. CCGI was registered in 2012 in Trinidad & Tobago, and at presents its directors are resident in Barbados, BVI, Jamaica, St Lucia, and Trinidad & Tobago. CCGI currently has over 160 members and is the awarding body that is the custodian of Chartered Director qualification in the Caribbean.

Chairman of the CCGI Axel Kravatzky, said that there are a number of issues facing Caribbean businesses that make it incumbent on companies to have directors that are not only competent in business but are also cognizant of the legal and discretionary activities that companies should engage in to be good corporate citizens. “CCGI is not a watchdog organization but what we do is to help advance the debate on sustainable business practices,” Kravatzky said.

According to Kravatzky, being a chartered director enhances the career prospects of executive, non-executive directors, corporate secretaries as well as other senior officers of companies. “Chartered directors have a dramatic and positive effect on the success of the organization and we are excited at the prospect of transforming the Caribbean business landscape with the help of our distinguished faculty, “said Kravatzky.

Alison Kibirige is the lead faculty of the Barbados workshop. Kibirige was the Secretary to the main Boards of Unilever and Barclays in London. She is a Fellow of ICSA, and was awarded the 2013 ICSA President’s Medal for Meritorious Service as well as the inaugural ICSA Company Secretary of the Year award in 2005. Kibirige will ensure that local participants are well on their way to gaining the requisite knowledge (Step1, the Certificate in Corporate Governance), the requisite skills (the Diploma in Corporate Governance) and the requisite practical leadership experience in the Corporate Governance field (Step 3 the assessment of a portfolio of work).

CCGI programmes combine deep local knowledge with global benchmark standards. The Accreditation Council of Trinidad & Tobago has inspected the programme and an announcement regarding registration is expected shortly. The Institute of Chartered Secretaries (ICSA), and Institute of Chartered Auditors of Barbados (ICAB) have reviewed the programme and are awarding 6CPD credits per day for its members.

Further information, membership and event registration and payments can be done online at www.caribbeangovernance.org.

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Caption:

Chartered Director Programme courses are highly inter-active

Dr Terrence Farrell, former Deputy Governor of the Central Bank of T&T and Director of Republic Bank, Paula Rajkumarsingh, CFO Massy Holding, and Anand Pascal (President, Guardian Life of the Caribbean)

Moving forward T&T’s disclosure standards still low - TRINIDAD GUARDIAN

Thu, 21 May 2015 14:43:44 GMT

by Raphael John-Lall

Dr Axel Kravatzky, Chairman of the Caribbean Corporate Governance Institute Photo: Andre Alexander

T&T is still trailing other countries in the region in corporate governance practices, says Dr Axel Kravatzky, chairman of the Caribbean Corporate Governance Institute (CCGI).

“In terms of disclosure requirements, T&T before the Corporate Governance Code was established, was the country with the lowest disclosure requirement in the world. The international benchmark is 51 items, and T&T had five items. So now with the code and all voluntary aspects, with recommendations and guidance it comes to 30. If you compare that with Jamaica, it is 31 in law. In Barbados, it is over 40. T&T is moving forward but the disclosure standards are still on the lower side,” he told the Business Guardian last Friday.

He said strong corporate governance practices are important for an economy as investors look at how companies are run.

“They are looking to see if you have standards in place as opposed to anything goes. Only the United States has legalised such a code. In other countries, they either comply or there are applied codes which make it mandatory to disclose but it does not tell you that you must do things a certain way.”

He said the Minister of Finance has called on all state enterprises to adopt the Corporate Governance Code.

“We are monitoring which enterprises adopt it. What we are finding is that a lot of organisations are using the code as reference and a lot of them are preparing to bring themselves up to speed.”

Although he does not have statistics as yet on how many companies are using the corporate governance code, he said there are encouraging signs that more and more companies are using it.

“We have a working group that is examining this. The tell-tale signs are: what does your annual report say; does it make a reference to what standard you are using?” he asked.

He said developing accountability in T&T’s corporate sector and steering clear from acts of corruption will not be a “quick fix” and it will take time.

“This is a sustained effort. Our institute is committed to working in the long run. Organisations that are well directed and in which there are clear aims will perform higher than those that do not.”

Kravatzky spoke to the Business Guardian last Friday at the Guardian’s Office, St Vincent Street, Port-of-Spain.

The CCGI was registered in 2012 in T&T and became operational in 2013 and has 153 members from Caribbean countries.

Chartered Director Programme

He also said the CCGI Chartered Director Programme provides directors and board members with the professional training to help their companies and businesses run efficiently.

This programme allows board directors to acquire professional training for boards and become members of a professional society similar to how chartered accountants and other professionals do it in their fields.

“The big item in 2013 for the CCGI was the development of the T&T Corporate Governance Code together with the T&T Chamber of Industry and the T&T Stock Exchange. Then in 2014 was the development of the Professional Development Programme. Last year, we launched it with a Certificate in Corporate Governance and the certificate is the first in a three-step process to qualification as a chartered director. Now we are launching the second cohort in May,” he said.

He said in April the institute had the inspection visit of the Accreditation Council of T&T.

“We are seeking registration as a first step and then accreditation of the course. It is a two-step process there and we are now awaiting the decision of the council. They want to know if we have an educational system in place that has quality management standards in place. Is the exam process in such a way that the person who is examining is not the same person who is teaching it? We believe we have met all the criteria,” he said.

The director of education at the institute is Dr Chris Pierce, who was previously the director of professional development and standards at the Institute of Directors in London.

“It is not the same programme as the Chartered Director Programme in the UK but it has the same structure and we are utilising similar qualification criteria. But the content is at a global level where there are specific legal and best practice guidelines for the Caribbean. When you do this you know what the standards are in T&T and how it compares internationally.”

He compared the course to similar programmes in the UK and Canada.

The UK programme offers 13 days of training, while Canada’s programme offers 12 days compared to the CCGI’s nine days.

“Ours is nine days face-to-face not including interviews and portfolios. The cost to do it with the CCGI is US$7,000 compared to US$21,916 with the UK and$17,177 with the Canadian course. The $7,000 covers step 1 and step 2 of the certificate and diploma programmes. We think that this is very high quality and it is built for the long run.”

He said the aim is that people who qualify as chartered directors will demonstrate that they have the knowledge, the skills and the experience.

“As a director of a company who engages in this programme you are demonstrating to your stakeholders that you are a professional and successful because you have professionals directing it. In the same way there are chartered accountants, why not have professional qualifications for directors as well. Frequently when you look at boards some people wonder what qualifies that person to take on the responsibility. Now you can have the answer. The person may not be a subject matter expert but if you are a non-executive director you know how to direct and control the organisation. Before you would have to go to the UK, Canada or South Africa and now you can do it in the Caribbean.”

He said a graduate of this course can be trusted to be on a board.

“The person will act with independent judgment, the person will compare options before he or she makes decisions and take decisions in ethical and transparent ways. They also have the full knowledge of how organisations work.”

On May 26, another set of professionals for the chartered director programme will be launched.

“Also, on May 27, we have a corporate governance master class specifically on the topic on ethics and corporate responsibility. This is not part of the chartered programme, this is more in depth,” he said.

Organisational risk

Kravatzky said the graduates of this programme are qualified to deal with the risks in their organisations.

“A risk is any event that will prevent you from achieving your objective. In order to know what to look for, you need to know how your organisation works, what is its business model and its value chain. Where do you create value and everywhere you create value you must make sure that nothing interferes with it. If you cannot create a business model for your organisation, then you are not in a position to manage risk,” he said.

As a qualified director, he said the candidate will know how to draw up a business model and analyse a value chain.

T&T, like many other countries, has directors who lack the skills necessary to make a proper contribution on boards.

“T&T—as all the other countries in the region—have important business to conduct in public and private.

However, the business schools do not give these qualifications. You go to the universities and other areas and they do not give you that. They give you other valuable things. The skills and knowledge to operate as a board director is the entire body of knowledge you need and, as in other professions, this is the place where there is a professional code of conduct. It is the same way there are schools for chartered accountants.”

Given the nature of T&T’s economy as a small developing country, he said professional training for board members are now even more important.

“It is important for small island economies where you have a one degree of separation, that you have professional standards that you can refer to. A lot of board members are under tremendous pressure in public and private institutions. If you are not sure of what you are doing or you do not have a professional background, then it means you are taking all the pressure.”

Published: Thursday, May 21, 2015 -

http://www.guardian.co.tt/business-guardian/2015-05-21/moving-forward-tt%E2%80%99s-disclosure-standards-still-low

Chartered Director Program making steady strides across Caribbean

Mon, 27 Apr 2015 21:44:28 GMT

Port Of Spain, April 17, 2015| Chartered Director Program making steady strides across Caribbean

Pictured Above the CCGI Board and CEO (L-R): Ronnie Bissessar, Desiree Gobin-Seecharan (CEO), Vincent Hippolyte,
Dr Axel Kravatzky, Marlon Yarde, Leslie Clarke, Fé Lopez-Collymore. Missing from picture are Dennis Brown, Clarence Faulkner, Arnold Niranjan, and Jacqueline Quamina

At the 2nd Annual General Meeting held on April 17, 2015 at the Courtyard by Marriott, CEO Desiree Gobin-Seecharan of the Caribbean Corporate Governance Institute (CCGI) boasted an upward trend in membership and the Institute’s Chartered Director Program - the first of such kind in the Caribbean, and the fourth in the world. “We are excited about our membership growth, we experienced a 66% increase in individual membership and growth of over 30% in organizational membership to achieve 134 members, as we move into our third year of operations” said CEO Desiree Gobin Seecharan.

The first cohort in CCGI’s Certificate in Corporate Governance, the first of three steps in its Chartered Director Program, will complete the programme in June 2015 by demonstrating requisite knowledge, through an examination. The organization has also made significant strides in its accreditation process. “The Institute has successfully completed all steps towards being registered with the Accreditation Council of T&T (ACTT). The Institute thereby does not only comply with laws and regulations, but also demonstrates best practice through quality assurance and proper governance of the regions gold standard in Corporate Governance education” said Chairman Dr Kravatzky.

The AGM also saw the appointment of new board members. The newly appointed and returning directors to the Board are as follows:

Newly Elected

Ronnie Bissessar

Attorney-At-Law

Trinidad & Tobago

Vincent Hippolyte

Managing Director

Water & Sewerage Company Inc. (WASCO)

St . Lucia

Jacqueline Quamina

General Counsel/Corporate Secretary

Republic Bank Trinidad and Tobago

Trinidad & Tobago

Returning Board Members

Dennis Brown	Accountant / Financial Consultant	Jamaica
Leslie Clarke	Managing Director of Murphy Clarke Financial Limited	Trinidad & Tobago
Clarence Faulkner	Managing Partner, Pension Management Interactive Inc.	British Virgin Islands
Fe Lopez-Collymore	Corporate Secretary, Guardian Holdings Limited	Trinidad & Tobago
Axel Kravatzky (Chairman)	Principal Consultant and Director of Syntegra Change Architects Limited	Trinidad & Tobago
Arnold Niranjan	Partner, Advisory Services, Ernst and Young	Trinidad & Tobago
Marlon Yarde	CEO and General Manager, Barbados Stock Exchange Inc & Barbados Central Securities Depository Inc.	Barbados

The Caribbean Corporate Governance Institute (CCGI) is the first and only non-profit membership organization dedicated to advancing corporate governance across the Caribbean. CCGI provides world-class training, professional development, regional corporate governance standard development and networking for Directors, Senior Executives, Investors, and Regulators.

For further information contact:

Tamaisha Eytle| Caribbean Corporate Governance Institute

14 Alcazar Street

Port of Spain, Trinidad & Tobago

T: +1.868.221.8707 (TTO)

M: +1.246.283.4314 (BAR)

M: +1.868.774.3306 (TTO)

M: +1 (876) 818-3789 (JAM)

tamaisha.eytle@caribbeangovernance.org

www.caribbeangovernance.org

Caribbean Experts to address Corporate Governance Workshop in Jamaica

Fri, 20 Mar 2015 17:16:35 GMT

Are Jamaican corporate boards living up to their responsibility of being accountable to stakeholders and shareholders? How do Jamaican laws compare to others in the Caribbean and to international best practices?

These and other burning issues will be explored during the 2015 groundbreaking workshop to be hosted in Jamaica by the Caribbean Corporate Governance Institute (CCGI). Entitled ‘Corporate Governance… Board Accountability, Disclosures, Audits and Evaluations’, the workshop is scheduled to take place on Thursday, February 12, at the Jamaica Pegasus Hotel in Kingston between 8:30 a.m. and 4:30 p.m.

The workshop which will be addressed by experts in the field of corporate governance will share primary research findings and provide examples and guidance for effective accountability. Some other topics which will be covered include: Guidance on how boards can demonstrate accountability and what shareholders need to look for; as well as guidance on how and what to disclose about an organisation’s corporate governance practices.

Lead facilitator at the workshop will be Dr. Axel Kravatzky, Chairman, CCGI , and founding Chair of the first and only non-profit membership organization dedicated to best practice Corporate Governance in the Caribbean.

Among the other distinguished speakers and panelists are: Mr. Dennis Brown, CCGI, Director and Council Member of the Institute of Chartered Accountants of Jamaica (ICAJ); Mr. David Hall, President, Institute of Internal Auditors;

Ms. Suzanne Ffolkes-Goldson, Attorney-at-Law and Lecturer in Law, UWI Mona Campus; and Ms. Carolyn DaCosta, Group Compliance Manager and Company Secretary, Jamaica Money Market Brokers Group (JMMB).
The one-day Corporate Governance Workshop will be targeting Corporate Secretaries, Directors, Internal and External Auditors, Senior Managers, Chairpersons, as well as Corporate Governance Committee Members.

Cost for the workshop is US$100.00 (Members) and US$120.00 (Non-Members) and includes Lunch and Coffee Breaks. Persons wishing to participate may register on line at events@caribbeangovernance.org For further information contact: Desiree Gobin-Seecharan +1 (868) 221-8707 (CCGI); Maxine Brown (876)978-6709 and Janet Morrison, (876)330-0332

Governing with a potential competitor on board

Administrator — Sun, 23 Nov 2014 14:41:11 GMT

Published in Sunday Business Guardian

The recent announcement of the possible purchase by Cable & Wireless Communications Ltd of Columbus International Inc and the appointment of a new board of directors at Trinidad Cement Ltd (TCL) have each created challenges for the boards of Telecommunications Services of T&T (TSTT) and TCL; the principal challenge of the boards is to assure the respective shareholders, employees and other stakeholders that the directors, consistent with their fiduciary duties pursuant to section 99 (1) and (2) of the Companies Act Chapter 81:01 are looking after the best interest of the companies.

This statement by the Caribbean Corporate Governance Institute (the Institute) addresses the corporate governance issues in a general and not in any company specific manner consistent with the enabling legislation and international best practice.

It is now almost one year that the T&T Corporate Governance Code 2013 (“the code”) was launched by the Institute and its Partners, the T&T Chamber of Industry & Commerce and the T&T Stock Exchange. It is submitted that the code underscores and provides guidance in respect of the corporate governance issues, in particular, as in the present cases where a board of directors has, or might be facing the potential of having, directors nominated by competitors on their board.

There are three specific corporate governance issues namely:
(i) ensuring that the all directors individually and collectively satisfy their fiduciary duties to the company of which they are directors,
(ii) ensuring that all potential conflicts of interest are disclosed by directors and
(iii) ensuring that confidential and strategic information in relation to the companies remain confidential.

The code identifies five principles and contain 24 recommendations (download for free at CCGI: www.caribbeangovernance.org); this statement focuses on the practical implementation of the recommendations.
This is in the context that the code is designed to be a report on the application of the principles and recommendations. Or, to put it another way, it explains why and what you have done otherwise.

Principle 1 is concerned with the establishment of a framework for effective governance and states:
• Every company should be headed by an effective board, which is collectively responsible for the long-term success of the company.
• In general, no director should have any doubt about the fact that the law and best practice requires that every director is a fiduciary only to the company on whose board he serves irrespective of who nominated him and how he was voted onto the board.

Recommendation 1.1 states that the board should establish and make publicly available a clear outline of its roles and responsibilities, including any formal delegation to management. The guidance on this recommendation states that every board should have a formal charter. The board should fulfill certain functions, including: (i) monitoring and managing potential conflicts of interest of management and board members.

Therefore, the first thing that the board should establish is a charter; the charter should include (but not be limited to) how related party transactions are handled, the process of disclosure and communications with shareholders and stakeholders and a risk management framework; the charter should also address the process of review and approval of corporate strategy. These are all important considerations for the cases referred to above.

Recommendation 1.3 states that the board should demonstrate ethical leadership, which includes commitment to high ethical standards and responsible decision-making. In the guidance for this recommendation it then states that every company should adopt a written code of conduct that clarifies the standards of ethical behavior required of the board, management and employees.

Recommendation 1.5 states that the board should take into account the legitimate interests and expectations of all stakeholders. The guidance is that the board should formalise its strategies for achieving transparency, balance and equity in stakeholder engagement.

The general thrust, therefore, of the best practice recommendations in the code is for the board to be clear on its purpose and where its loyalty lies and then to design, formalise and publish its approach to governance consistent with this purpose.

Such an approach creates clarity and transparency and avoids potential conflicts of interests and builds confidence amongst all stakeholders; moreover companies which adopt these progressive governance and disclosure policies are more attractive to investors and are likely to attract a premium on their share value.

Other principles identified in the code have implications with respect to the issues that are being discussed and on the basis that the code is a holistic document It is noteworthy that there are interrelationships between the respective principles. We will now briefly refer to these principles.

Principle 2: there should be a balance of independence and diversity of skills, knowledge, experience, perspectives and gender among directors so that the board works effectively. The main thrust here is that when composing the board, the principal consideration should be the skills, perspectives, independence and knowledge that adds value to the board’s deliberations.

The board’s work is complemented by its various committees including the audit committee and the nominations committee; in respect of the latter, the majority of its members should be independent as defined in the code. There must also be a rigorous, transparent, and formal annual evaluation of (the boards) own performance and that of its committees and the individual directors.

Principle 3: All directors should act honestly and in good faith in the best interest of the company, ahead of any other interests. The code offers a definition of independence in the guidance to recommendation 3.1. Moreover the board should undertake an assessment of its independence on an annual basis and disclose in the annual report each non-executive director it considers to be independent.

The guidance is that a director is not independent if he represents a significant shareholder, to be considered as a person who either alone or with one or more affiliates or connected parties is entitled to exercise 20 per cent (or such other percentage as may be determined relevant on a case by case basis) or more of the voting power at any general meeting of the company.

Recommendation 3.3 states that members of the board and senior management should disclose to the board whether they, directly or indirectly or on behalf of third parties, have a material interest in any transaction or matter directly affecting the company.

Principle 4: the board should present an accurate, timely, balanced and understandable assessment of the company’s performance, position and prospects. The key here is disclosure, audit, the approach taken to manage all the risks of the organisation and reporting on the application of the code, its principles and recommendations.

Principle 5: the board should promote constructive relationships with all shareholders that facilitate the exercise of their ownership rights and encourage their engagement with the company. The key here is that all shareholder rights, including minority shareholders rights, are respected.

This statement represents the views of the Institute and not necessarily those of its individual members or partners and it is being issued consistent with the Institutes’ mandate to comment on corporate governance issues in the Caribbean.

The Caribbean Corporate Governance Institute (CCGI) is a non-profit, professional membership-based organisation serving directors, investors and other corporate governance stakeholders throughout the Caribbean.

Jamaican corporate governance expert slams T&T code - CCGI responds

Administrator — Mon, 02 Jun 2014 02:28:09 GMT

View the critique and response

Consultant Chris Pierce: Corporate Governance affects us all

Administrator — Mon, 26 May 2014 02:23:41 GMT

Published by Trinidad & Tobago Business Guardian

Natalie Briggs

Published:

Sunday, May 25, 2014

Chris Pierce

Fish and corporations have little in common ordinarily. One corporate governance expert, though, has seen parallels. “There is an old Chinese saying that fish rots from the head. If you have a rotten fish, it starts at the head. If you have a bad board, everything else will be rotten,” Chris Pierce, a global consultant who has responsibility for education and training at the Caribbean Corporate Governance Institute said.

Pierceundefinedthe CEO of Global Governance Servicesundefinedwas in T&T last week to conduct the first master class for company directors at the Caribbean Corporate Governance Institute (CCGI). The institute was launched last year October and published the first T&T Corporate Governance Code in November. According to Pierce, these are just first steps in what should be a consistent, a “long-term” effort to improve the performance of boards and, by extension, benefit the society as a whole.

How far the rot goes
Successive governments have attempted to position this country as a regional financial leader. However, the Global Competitive Index Report of 2013-2014 published late last year, shows T&T lagging behind in a number of areas that are critical in engendering the faith of foreign investors.

Out of 148 countries, the report shows T&T ranking 118 in the ethical behaviour of firms, 111 in the protection of minority shareholder’s interest, 95 in the strength of auditing and reporting standards, 125 in favouritism in decisions of government ministers, 111 in public trust of politicians, 116 in irregular payments of bribes, 116 in the efficacy of state boards and 89 for the diversion of public funds.

The report goes on to say, “this underscores T&T’s need to improve its corporate governance systems and accounting systems.” (Trinidad Guardian) Over time, T&T’s corporate landscape has been occasionally punctuated with the failure and bad behaviour of institutions, headlines in the press and calls for blood from the public. Pierce, in fact, lists scandal as one of the hallmarks of bad corporate governance.

Without naming any local firm, he described a sequence of events to illustrate what good corporate governance is and, is not. “What do the shareholders do? What does the board do? What do the directors do? What do the managers do? Who should be responsible when things go wrong?

“In T&T, there are many cases where this is unclear. Fingers are being pointed at different people and people are saying, ‘it’s not my fault, it’s somebody else’s fault.’ Corporate governance tries to tackle that by saying, ‘no, it is somebody’s responsibility. There are clear documents which stipulate who has the power, who has the responsibility, who has the duty. In T&T, there are many cases where this is unclear.”

Transparency with funds
Pierce said among the cornerstones of good corporate governance are transparency with funds, making business easier to conduct, documented, publicised rules for dealing with wrongdoing as well as conflicts of interests, awareness of the country’s laws and board knowledge of all of the above. He said dealing with other people’s money made it essential that strong governance systems were in place and that proper accounting was the board’s responsibility.

Having documented policies for handling related-party transactions and conflicts of interest is also essential. Pierce said that well-governed companies had a “register of interests.” He explains what this is:
“Every director should register the interests in which he is involved: maybe they are on other boards; maybe they have shares in other companies; maybe they are related to other people, a wife, a husband who also have a particular interest. These must be registered with the company.”

Conflicts and related-party matters must be dealt with swiftly, said Pierce. He said the board must be made aware of them, so that action can be taken, whether this means barring the person with the conflict from meetings, or not allowing them to have a say or a vote at meetings if they attend.

He also said that an organisation’s related party and conflict of interest policy should be on its Web site where everyone has access to it. Pierce recommended that conflict and related-party issues should also be brought up in annual general meetings. “The company should say that over the past year, three items of conflict of interest have taken place. In each and every case, the code on related-party transactions was followed.”

Asked about many specific instances of apparent conflict of interests in the local business sphere, where individuals served on multiple boards, both in the public and private sector, Pierce told the Sunday Business Guardian that he saw nothing wrong with related-party transactions.

“In an island of this size, in any major business, there are always going to be people that you know, who are related in any transaction. It is inevitable they will exist and you have got to be able to manage it. You have got to say the organisation did have this transaction, but I was not involved in it because I left the meeting. I have not been involved in the implementation. I have not been benefitting from that transaction.”

When asked about episodes of companies reporting on self, the likelihood of it being greeted with suspicion by the Trinbagonian public and whether he recognised this, Pierce responded: “Absolutely. Are they telling us everything? Or are they spinning it in certain ways? Corporate governance recommends that you not only tell people the good news, but also the problems and risks associated with trading. That shares can go up or down and that is based on market conditions and so on. A well-governed company will be a trustworthy organisation, where you can trust the individuals to tell the truth and the whole truth.”

Self reporting falls under principle 3 (Reinforce Loyalty and Independence) of the T&T Corporate Governance Code. It is one of five principles which include: establishing a framework for effective governance, strengthening the composition of boards and committees, fostering accountability and strengthening relationships with shareholders. Adhering to this code is voluntary, with directors of companies choosing to sign on.

When asked if Trinbagonian companies could or should be trusted to self regulate, Pierce said: “To a certain extent. But every country requires a good Companies Act and good legislation. You only move to codes of corporate governance when you’ve got firm laws in place and it is not good enough to have good laws. Those laws have got to be clear and they have to be enforced and when they are broken, people have to be thrown in jail.”

He said what the current code contains international best practice clauses and the companies that are not following international standards either need to comply or explain why they are not doing so. According to Pierce, the CCGI is working on a code for family businesses, which will be published in 2015. He also said there were discussions taking place on a code for state-owned enterprises.

“It would be nice if it came out before the next general election. That could then create some discussion on what the various candidates think should be done in terms of government and state-owned enterprises. Because there may well be significant changes to boards based on the election results.”

Pierce acknowledged that while corporate governance generally dealt with the larger companies in the country’s economiesundefinedand their relationships with their shareholdersundefinedthere were other stakeholders who were affected by poor governance.

What happens in boardrooms
Speaking about the consequences of bad corporate governance to the general public, the consultant said: “If an organisation is badly managed it will not be making a lot of profit.” He added that a decline in profits, in turn, would affect a company’s ability to create or sustain employee. All of these are factors that affect economic growth.

“The man on the street wants economic growth, therefore, it is in the interests of the country as a whole for organisations to be well run. There will be more growth. There will be more employment and more and more money will circulate.”

Corporate governance in the future
Pierce told the Sunday Business Guardian that he is collaborating with the CCGI on training programmes for executives. Topics at the just-concluded master course for directors included: the powers and responsibilities of boards, choosing a strong chair of a board, the quality of the information that a board receives and the reporting of a board’s activity. He admitted that corporate governance was a cultural issue as much as a financial one.

“You do not expect results within the next three months or six months. This is a culture change that the business community is going through. Some people will find it difficult because they are enjoying the way things are. So we are looking at the medium to long term, maybe the next generation of directors that is coming through. One of the first things to do is make the first step. That step is with the CCGI being launched, a code being developed, training taking place and it is important that those first steps are based on strong foundations from which we are able to reach out and create scalability.

Pierce identified T&T as an important centre, which is why the good corporate governance push was started here. From here, he said, it will move to Jamaica and the other islands. The CCGI confirmed that 110 companies are members of the T&T Corporate Governance code, while another 14 are in the process of completing the membership process.

Chairman, Dr Axel Kravatzky told the Sunday Business Guardian that so far, Neal and Massy and First Citizens are the only two that have included some of the stipulations of the code in their current annual report. This included the standards that the companies are working towards and self reporting. He said given the coincidence of the end of most firms’ financial year and the publication of the report, many of their members opted to include information recommended by the report in their next annual report.

A National Standard for Corporate Governance

Administrator — Wed, 24 Jul 2013 17:49:00 GMT

Published by Trinidad & Tobago Express Newspaper

Story Created: Jul 23, 2013 at 11:11 PM ECT

Story Updated: Jul 23, 2013 at 11:11 PM ECT

In November 2012, the Trinidad and Tobago Chamber of Industry and Commerce, together with the Trinidad and Tobago Stock Exchange, partnered with the newly formed Caribbean Corporate Governance Institute to lead the development of a national Corporate Governance Code. In January 2013, a dedicated team of individuals from 15 organizations were assembled to develop a document that will not only be a customised set of best practices for T&T companies, but also irrevocably increase the standard of corporate governance, and thereby business performance in our nation.
Fast-forward six months to June 2013 at the second annual Corporate Governance event series hosted by the International Finance Corporation (IFC) at the Hyatt Regency in Port of Spain. At this occasion, Ms Alex Kjorven, chief executive officer of the Caribbean Corporate Governance Institute, on behalf of all partners on the Code project, including the Chamber, offered audience members a glimpse inside the current draft of this much anticipated Code.

Why a Code?
The idea of introducing new codes or standards are often met with either skepticism from those who feel Codes are not enough, or objection from those who feel there are already too many rules.
In order to gain clarity over those opposing new standards, we must look within our existing rules and frameworks. Although there exists reporting requirements to regulatory bodies, the requirements for reporting information to owners and investors are undeniably low. Existing laws in Trinidad and Tobago (T&T) around disclosure are currently less than half of what other emerging economies require of their companies (2011 Syntegra Change Architects -Corporate Governance Disclosure Practices in Trinidad & Tobago). Therefore, there is considerable room for improvement with regards to transparency and providing investors the tools they need to demand greater accountability.
As for the skeptics, who favour more heavy-handed approaches towards protecting public interest, we must look beyond our borders. There are currently over 90 countries around the world that have developed codes or guidelines on corporate governance. With the exception of only a few, these codes were implemented for adoption on a voluntary basis with higher rates of reported benefit than those implemented as law. Most common is the ‘comply or explain’ method where companies disclose that they are in compliance with the provision of a code or explain the reasoning behind any deviations they chose to make for their particular circumstance.
Although it may be widely accepted that establishment of national codes is in line with global practices, many underestimate the potency of creating what is, at the end of the day, a highly customisable resource for companies who understand the rewards of good governance, and who seek to achieve greater competitiveness in an increasingly demanding marketplace.

How Will Companies Benefit?
According to the 2012 World Economic Forum’s Global Competitiveness Index, T&T ranked 114 out of 144 on the efficacy of corporate boards, just one disappointing ranking amongst several in the category of institutional performance.
Now that corporate governance has been established as a key investment criterion to the point where investors may claim avoidance of not only companies with poor governance but also countries (McKinsey Global Investor Opinion Survey on Corporate Governance, 2002. Thirty-one per cent of investors survey claims avoidance of certain countries when making investment decisions.) that do not institute strong governance, then it must be recognised that the sustainability of our companies and our overall global competitiveness rests on the efforts we take to align ourselves with recognised best practices.
This Code builds consensus on what these best practices should be in the local context and the return on investment for companies who adopt it include lower costs of capitals due to increased investor confidence, lower risk of internal control failure that lead to fraud or scandal and stronger leadership and relationships between the board, management and investors. The benefits for the company quickly precipitate through to civil society, which will be strengthened by improved management of national wealth and improved market efficiency.

What Does the Code Look Like?
A readily available draft of the proposed Code is currently being circulated amongst the business community for feedback and consultation. It is free for public download on the website of the Caribbean Corporate Governance Institute, which was selected by all partners to act as Secretariat and long-term, independent lead for the Code.
The Code has been modelled after globally agreed upon best practices with specific consideration and much customisation for the local economy and dynamics of the T&T business society. It was developed with sensitivity towards the costs and benefits of implementation, ease of use and clarity to companies on the benefits for their organisation.
The Code consists of five Principles that represent the highest and most fundamental elements of good corporate governance. Companies should always maintain consistency with the spirit of each Principle when implementing governance initiatives. Within each Principle, there are several Recommendations that speak to specific practices that companies should adopt. Companies are asked to disclose in their annual reports whether they have applied the recommendations set out in the Code, or explain the reasons for not doing so. Finally, each Recommendation is supplemented with Guidance for practical application that may further strengthen the company’s understanding.
This Code is targeted towards companies with a public accountability for adoption on an “apply or explain” basis. This includes publically listed companies, or those who report to a securities commission or other regulatory organisation. It also includes companies who hold assets in a fiduciary capacity for a broad group of outsiders, such as financial institutions.
Going forward, it is the intention of the Institute and its collaborators to create future guidelines or publications that will address the more unique governance challenges faced by other types of organisations, such as state-enterprises or family-owned businesses. In the meantime, although the recommendations and guidance provided in the current draft of the Code have been crafted with a certain user group in mind, the overall Principles of the Code are universal, and should be seen as standards of best practice for all types of organisations.

How to get Involved
You are invited to join in this initiative by downloading the current draft, sharing your views and participating in a consultation session. Further information on this project as well as the current draft of the Code is available on the CCGI website (www.caribbeangovernance.org/codes-guides/ttcgc/feedback).

The anticipated publication date for the Code is November 2013. Additionally, individuals, investors, regulators and board directors are encouraged to become members of the Caribbean Corporate Governance Institute to contribute and stay abreast of developments related to the Code and other regional initiatives.

For information on the Code or on becoming a member, please contact:
TTCGC Secretariat
Caribbean Corporate Governance Institute
14 Alcazar Street, Port of Spain
Trinidad
Email: info@caribbeangovernance.org
Phone: +1 868 221 8707
Fax: +1 868 221 5306

Management expert: Low scores for corporate T&T in governance disclosures

Administrator — Thu, 11 Apr 2013 17:54:19 GMT

Published by Trinidad & Tobago Business Guardian

Rapheal John-Lall

Published:

Thursday, April 11, 2013

Dr Axel Kravatsky, chairman of the Caribbean Corporate Governance Institute (CCGI), centre, has the attention of Wainwright Iton, chief executive officer of the T&T Stock Exchange, and Catherine Kumar, chief executive officer of the T&T Chamber of Industry and Commerce. PHOTO: SHIRLEY BAHADUR

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 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.