The general internal feelings around March of this year was that the person appointed to the post of Deputy Chief Executive was not of sufficient experience to be elevated to the position. Rumours were abound that there was a mini uprising (all very peaceful) and that there were some that were unwilling to serve under the new DCE, hence the sudden creation of positions like Project Advisor etc. It would seem that this uprising did not go away and under the clouds of Bresih5 a coup of sorts has taken place.
In almost all organisations you have a chairman, a board of directors, comprising executive and non executive directors and then you have a person appointed as the chief executive or managing director. In this organisation the chief walla is the Executive Chairman. The next person of responsibility and accountability under the Act is the DCE.
However a few years ago, so the story goes, that the then EC realising the powers of the DCE decided to do away with the DCE and had two MDs. The current EC, in fairness to him, decided to revert back to tradition and have a DCE. All things in Camelot was fine until the last DCE's contract was not renewed and the new appointee was announced, causing the mini uprising as there were those in senior management that felt that they had more right to the position due to their experience, long tenure etc. To placate the situation, 6 months later, the EC came up with this new structure, creating within the organisation, managing directors, executive directors, and directors, and in all this there is still the position and the person in the post of DCE.
To avoid bias, I called friends ask what their understanding was of a managing director and a deputy chief executive, and the majority was of the opinion that the MD was in a position of higher authority than the DCE........hmmmm. Before the man goes off on a tizzy and says that this is all malicious and is the view of people don't understand, please note that 90% is perception and 10% is reality.
To add substance to this I am also told that all the highways (read as bold lines) are to the EC and that trunk roads (read as dotted lines) are to the DCE, says a lot.
I am additionally confused by this role of Chief Regulatory Officer, General Counsel etc. If the EC actually understood the origins of the position of General Counsel he would realise its a non operational position, an that it is meant to be independent function.
Confusion, confusion, confusion, this is what happens when attempts are made to pander to egos, confusion and dysfunction sets in..........best of luck to the organisation.
Saturday, 19 November 2016
Wednesday, 19 October 2016
Speaking with Fork Tongues!
Being an overcast and dull day I thought I will troll the SCM's website and see whats interesting!
1. I looked at their leadership team and noted that there is no one that is responsible for regulatory compliance and enforcement. I suppose the SCM is in a very privilege position as they don't need one, as a friend said, "when they say do, everyone dutifully does!". But then again there are so many enforcement actions, I can only conclude that there is a ghost department somewhere that is doing all the work.
2. Did anyone notice that in the CLSA/ACG report Malaysia's ranking fell to number 6 and everyone is blaming it on public governance, i.e. 1MDB, is it all to do with 1MDB or is there a trend?
In 2012 we were no 4, in 2016 the report said we made great strides/improvement, so logic dictates that we would move to 3, or 2 or 1, but no we were still no 4! and now we are 6. Is it all 1MDB, i think not, maybe Tan Sri Dato Sri Singh needs a deep look at the true state of corporate governance and not hide in the shadows.
3. Is the SCM seriously seriously concerned about Corporate Governance, if they are how come there are prospectus with unbalanced boards, seven (7) board members, three (3) are independent non executive, balance executive directors.
BNM is going towards a majority of independent non executive directors and SCM approves these. So Board minutes will read that the majority of the board approved the matters laid before the board, but hold on now, are these matters not put forward by the executive and they approve it.
Also don't forget under Bursa rules the AC is made up of non executive, majority independent, and every year the AC has to be evaluated by Nom Committee. Nom Committee's membership is..........non executive, majority independent. Alamak, how to do one ah!
SCM semua boleh!, maybe time for TSDS and his machans, and similarly CRO(BM) and her maciks to go, nine (9) year rule, in senior management!........cannot be doc heal thyself!
1. I looked at their leadership team and noted that there is no one that is responsible for regulatory compliance and enforcement. I suppose the SCM is in a very privilege position as they don't need one, as a friend said, "when they say do, everyone dutifully does!". But then again there are so many enforcement actions, I can only conclude that there is a ghost department somewhere that is doing all the work.
2. Did anyone notice that in the CLSA/ACG report Malaysia's ranking fell to number 6 and everyone is blaming it on public governance, i.e. 1MDB, is it all to do with 1MDB or is there a trend?
In 2012 we were no 4, in 2016 the report said we made great strides/improvement, so logic dictates that we would move to 3, or 2 or 1, but no we were still no 4! and now we are 6. Is it all 1MDB, i think not, maybe Tan Sri Dato Sri Singh needs a deep look at the true state of corporate governance and not hide in the shadows.
3. Is the SCM seriously seriously concerned about Corporate Governance, if they are how come there are prospectus with unbalanced boards, seven (7) board members, three (3) are independent non executive, balance executive directors.
BNM is going towards a majority of independent non executive directors and SCM approves these. So Board minutes will read that the majority of the board approved the matters laid before the board, but hold on now, are these matters not put forward by the executive and they approve it.
Also don't forget under Bursa rules the AC is made up of non executive, majority independent, and every year the AC has to be evaluated by Nom Committee. Nom Committee's membership is..........non executive, majority independent. Alamak, how to do one ah!
SCM semua boleh!, maybe time for TSDS and his machans, and similarly CRO(BM) and her maciks to go, nine (9) year rule, in senior management!........cannot be doc heal thyself!
Sunday, 7 August 2016
Of Board Balance and the need for majority independent directors(in FIs)
In the issue of the 8th August Edge Magazine, there is an article "tightened governance standards see banks dipping into a shrinking talent pool". The article draws reference to the future requirements that going forward there is a requirement that FIs must have boards, the majority of which are made up of independent directors.
One should ask,
a. What is the objective of this new requirement?
If the objective is to bring about greater diligence, then is there really a need for more independent directors, would the board being made up of a majority of non executive directors not be sufficient.
b. Will the new proposal achieve the desired results?
If the reason is that the current non executive are unwilling to raise the necessary question in undertaking their oversight role, surely the answer cannot be adding more independence but removing non performing directors. Letting them continue can only be equated with rewarding failure!
Part of the current issue with board performance is that most non executive board members keep silent, guarding their financial and non financial packages. This in my opinion is because non executives don't fear the repercussions of non performance. In cases of action it is the executives that face the brunt of the regulators. Maybe in future when something goes wrong what the regulators must do is to charge the whole board, this will more likely to increase the board effectiveness and performance more then having a majority of independent directors. If a person has lock jaw, he has lock jaw, having more independent directors won't loosen those jaws, it will only add to more lock jaws, the newly appointed directors after sometime will adopt the herd mentality.
c. Is there really a shrinking pool of persons available?
No there really is no shortage. The truth is that even with the regulators the persons appointed must be "acceptable and part of the establishment". Those that are willing to play that role are never invited, as they are not seen as being part of "us". How can the regulator complain when they are not willing to be transparent and accept this group, if they want independent minded persons may come with some dsyfunction, but this is the trade off!. Additionally the regulators must be transparent and clear throughout the industry, they cannot keep silent and turn a blind eye to persons that are sitting on non performing companies and yet are considered acceptable to sit on FIs or even be future CEOs. Adjustments are required at both ends of the scale if they are serious and want to attract those that can play this role!
Governance after all is about doing the right thing, maybe what is needed on the part of the regulators is to go seek out those that are willing to "be the pleasant irritant on the board" afford him the necessary protection and make sure that he is appointed. Trying to train persons under various programmes only addresses the technical challenges, it becomes a compliance issue and never ever addresses the cultural issue that is the objective.
The intention is good, but the approach flawed and result in all probability not achievable!
Tuesday, 31 May 2016
The Consultation Paper on the Malaysian Code of Corporate Governance 2016
As much as one criticises, one must also praise where praise is due.
After days and weeks, i finally got around to read the consultation paper on the MCCG 2016. What a wonderful document it is, congratulations Securities Commissions Malaysia!
Here are my comments:
1. The person that wrote this paper obviously understood the intention of the authors of the original MCCG 2000 as in many aspects it goes back to the original code and removes any doubt at to what it was intended to achieve.
2. It leaves no doubt that the mechanistic approach that listed entities adopted is no longer acceptable. No more CG Statements for the sake of compliance, it is now has to be factual and be practiced.
3. It reiterates the leadership role of the board and that boards are not subservient to management or dominant shareholders. I wonder if this is laying the foundation for action not just against the Executive Directors and Audit Committee Members but all directors!
4. It has Core practices that is the minimum and CORE+, that are exemplary practices that companies are encouraged to follow. Since the Core+ are nothing so difficult one can only ask "how can companies not embrace them?"
Unfortunately for companies, it boards and their dominant shareholders it is not going to be an easy ride any longer, time to deliver for what you are paid.
My reminder to the SC is that I hope the Issues/Corporate Finance head at the SC will understand this. I still cannot understand how he approved the number of listing where there was an obvious imbalance in the Board.
Once again sybas Securities Commission, now lets get it implemented and ensure its compliance!
After days and weeks, i finally got around to read the consultation paper on the MCCG 2016. What a wonderful document it is, congratulations Securities Commissions Malaysia!
Here are my comments:
1. The person that wrote this paper obviously understood the intention of the authors of the original MCCG 2000 as in many aspects it goes back to the original code and removes any doubt at to what it was intended to achieve.
2. It leaves no doubt that the mechanistic approach that listed entities adopted is no longer acceptable. No more CG Statements for the sake of compliance, it is now has to be factual and be practiced.
3. It reiterates the leadership role of the board and that boards are not subservient to management or dominant shareholders. I wonder if this is laying the foundation for action not just against the Executive Directors and Audit Committee Members but all directors!
4. It has Core practices that is the minimum and CORE+, that are exemplary practices that companies are encouraged to follow. Since the Core+ are nothing so difficult one can only ask "how can companies not embrace them?"
Unfortunately for companies, it boards and their dominant shareholders it is not going to be an easy ride any longer, time to deliver for what you are paid.
My reminder to the SC is that I hope the Issues/Corporate Finance head at the SC will understand this. I still cannot understand how he approved the number of listing where there was an obvious imbalance in the Board.
Once again sybas Securities Commission, now lets get it implemented and ensure its compliance!
Monday, 30 May 2016
"What Business Leaders Fail to Understand about Trust"
People do not get caught because they are stupid, they get caught because they are damn arrogant, they think that they occupy a position of power and that their audience are less informed than they are! How sad and silly, has no one realised that we live in an infocomm world where knowledge and information are so readily available. There is no more hiding, everything we do is in the public domain, don't believe me..... as you drive around the city, look up and see the number of cameras that are on the poles, even at the same spot!
In today's Starbiz there is an article with the above title, purportedly written by the managing partner of a big 4 professional services firm! Being written by the managing partner of a Big 4 professional services firm it goes without saying that the highest standards of professionalism, probity and trust is expected of the writer and his organisation by the ordinary people, which I think is not an unfair expectation.
In the article it is stated that people are looking for the following, if a company is to be considered trustworthy;
In today's Starbiz there is an article with the above title, purportedly written by the managing partner of a big 4 professional services firm! Being written by the managing partner of a Big 4 professional services firm it goes without saying that the highest standards of professionalism, probity and trust is expected of the writer and his organisation by the ordinary people, which I think is not an unfair expectation.
In the article it is stated that people are looking for the following, if a company is to be considered trustworthy;
- Competence
- Experience
- Value
Now all three of these elements by coincidence are linked to the people dimension and hence culture, so I think its only fair that the some questions are asked of the writer/commentator himself;
- By publishing this article are you suggesting that many clients of the firm need a serious dose of trust or is this a subtle message to your banking client? Now irrespective of whichever it maybe, why not come out and say, trust your integrity and professionalism, surely you must believe that the stakeholders of these companies that have a trust deficiency have a right to know!
- Demanding such elements from companies I can only gather that in the organisation that you manage these elements are at the core and practiced without exception!
- In your second last para you say, "so why can't businesses be that something", I presume that it does not include your firm and the other firms that belong too in your profession.
- Finally your last para calls out to corporate leaders. Why only corporate leaders not everyone? Surely trust is for everyone, not just corporate leaders!
What is that saying, put the brain into gear first, maybe all these articles etc(pseudo marketing and arrogance I call it), should take a back seat, improve that standards on auditing first, make sure that when people see you and your firm there is a resounding chorus of "trustworthy organisation and people, total reliance on what they say!"
Always remember less is more!
Friday, 20 May 2016
Thinking Aloud - Do journalist have hidden agendas
Of course we all know that they don't, or do they?. Be friendly enough, know the bosses, entertain them and abracadabra!
Last Saturday I was reading an article in the business section of a daily, where the writer brought up the issue of the vacant position of Chairpersons in Public Listed Companies. In that article the writer was highlighting the pivotal role a Chairperson plays etc and that as part of good governance even that the Malaysian Code of Corporate Governance had highlighted this most important of roles and made recommendations there too.
Now what I found "funny, that the writer only highlighted/named two companies in his article and I began asking myself why he would do that as he could have brought into play the many other practices that corporations had been practicing, for example,
Before I get ahead of myself, I know, all of you are saying must read the position description and see what their roles and responsibilities are! True, however there is also what is disclosed and what the ordinary man on the street will conclude from reading these positions. Can you imagine the responses from Company Secretaries, if a shareholder writes and ask for the position descriptions for these positions!
Thinking out aloud, can there not be a case for not having Chairman of the Company, but instead Chairman of the Meeting by rotation, it could actually foster better governance as everyone knows that they will be under the spotlight! Oh, as for Chairman's statement in the Annual Statement it can be Statement of the Board of Directors, even better for responsibility and accountability, it will get those that tend to good off to stay awake!
Coming back to the original question, I wonder if there was an agenda with regards to last weeks article?, I suppose the days for balanced and unbiased writing is some distant dream.
Last Saturday I was reading an article in the business section of a daily, where the writer brought up the issue of the vacant position of Chairpersons in Public Listed Companies. In that article the writer was highlighting the pivotal role a Chairperson plays etc and that as part of good governance even that the Malaysian Code of Corporate Governance had highlighted this most important of roles and made recommendations there too.
Now what I found "funny, that the writer only highlighted/named two companies in his article and I began asking myself why he would do that as he could have brought into play the many other practices that corporations had been practicing, for example,
- Daddy founder, now retires son takes over, daddy assumes role of Executive Chairman and son CEO/MD, or
- Former CEO retires, appointed deputy executive chairman, new person is MD and yes there is still a Chairman.
Before I get ahead of myself, I know, all of you are saying must read the position description and see what their roles and responsibilities are! True, however there is also what is disclosed and what the ordinary man on the street will conclude from reading these positions. Can you imagine the responses from Company Secretaries, if a shareholder writes and ask for the position descriptions for these positions!
Thinking out aloud, can there not be a case for not having Chairman of the Company, but instead Chairman of the Meeting by rotation, it could actually foster better governance as everyone knows that they will be under the spotlight! Oh, as for Chairman's statement in the Annual Statement it can be Statement of the Board of Directors, even better for responsibility and accountability, it will get those that tend to good off to stay awake!
Coming back to the original question, I wonder if there was an agenda with regards to last weeks article?, I suppose the days for balanced and unbiased writing is some distant dream.
OH NAZIR, OH NAZIR
In yesterday's Starbiz, the headlines on the frontage was that YBHg would be resuming his role as Group Headhanco as the independent review found he did nothing wrong! There were some shortcomings in the processes, so it said.
Putting aside the rights and wrong of YBhg, I just want to know if the EY report now says that passing money through one's account is legal, and cannot be tantamount to infringing the AMLA Act? Funny that the only body that actually has a right to comment, BNM, remains silent! I suppose the best way to communicate what some thoughts are on the subject is to reproduce my text with a banker:
Me: Money passing thru accounts now OK?, BNM not saying anything.
Banker:This is classic hoodwink. If public including the bloody journalist understand the scope of work, they won't writing such headlines.
Looks like BNM will only react if their position threatened.
Me:Well is their position not!Is it not suggesting money laundering to be ok. BNM has to make a statement.
Banker: They should, technically.
Thinking out aloud I wonder who had done the greater wrong:
a) The CEO of an islamic institution for his Facebook posting, and who was summarily dismissed,
or
b) A person that pretended to be virtuous until the foreign press draws attention to "an error in judgement" for himself, but for anyone else a grave crime I suppose.
To those chappies on the Audit Committee, I suppose the systems of control are sound, to the external auditors, I suppose tyour private report on the statement of risk management and internal controls still stands, and to EY, hi guess what with these type of engagements you guys can change the name to AA, ala Enron II, akan datang.
Putting aside the rights and wrong of YBhg, I just want to know if the EY report now says that passing money through one's account is legal, and cannot be tantamount to infringing the AMLA Act? Funny that the only body that actually has a right to comment, BNM, remains silent! I suppose the best way to communicate what some thoughts are on the subject is to reproduce my text with a banker:
Me: Money passing thru accounts now OK?, BNM not saying anything.
Banker:This is classic hoodwink. If public including the bloody journalist understand the scope of work, they won't writing such headlines.
Looks like BNM will only react if their position threatened.
Me:Well is their position not!Is it not suggesting money laundering to be ok. BNM has to make a statement.
Banker: They should, technically.
Thinking out aloud I wonder who had done the greater wrong:
a) The CEO of an islamic institution for his Facebook posting, and who was summarily dismissed,
or
b) A person that pretended to be virtuous until the foreign press draws attention to "an error in judgement" for himself, but for anyone else a grave crime I suppose.
To those chappies on the Audit Committee, I suppose the systems of control are sound, to the external auditors, I suppose tyour private report on the statement of risk management and internal controls still stands, and to EY, hi guess what with these type of engagements you guys can change the name to AA, ala Enron II, akan datang.
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