Corporate governance, code of ethics essential for CEOs
In this write-up by Ravindran Raman Kutty – an avid writer, community worker, award-winning communications practitioner and social activist with a profound love for the environment – he shares his views on how GLCs can combat corruption. KUALA LUMPUR: The recent spate of resignations of several chief executive officers of government-linked companies (GLCs) makes me wonder if there is any code of conduct or ethics for chief executives to check graft at the high levels.
Most of the CEOs who resigned or were forced into retirement were in some way or other associated with or seen to be supporting certain political parties.
Malaysia as a relatively young country is trying hard to become a developed nation. We have moved the bar from 2020 to 2025. It is pointless to move the goalposts if our actions still relate to the dark ages. If it is 2025, we have another seven years to get there. But are we ready?
There are so many issues with regard to the management of our public-listed companies, sports organisations, educational institutions and GLCs.
According to Malaysian AntiCorruption Commission (MACC) data, in the five years since 2010, we had more than 60 cases of corruption or graft involving CEOs, secretaries-general of ministries, vice-chancellors of universities and senior officials of several companies. Sixty may seem a small number but the impact of the graft on the stock market, as well as the reputation and integrity of the company, ministry, university or sports body concerned, can be damaging and devastating.
We cannot change CEOs whenever the government changes. There must be a stringent process in the appointment of the CEO. He or she cannot be a political appointee. They must be professionals with the required qualities and qualifications in managing a GLC.
We have had enough cases of malpractice and abuse of power. Most of the CEOs can be seen at press conferences showing off their achievements and claiming that they have brought in millions or billions of ringgit into our country. I wonder who audits their performances.
The GLCs must be audited without fail. The CEO’s salary must be fixed at moderate levels and not at the whims and fancies of the chief executive himself or the board which always shares a hunky-dory relationship with the CEO.
Just pay a visit to the office of some of the GLC CEOs. They are usually humongous in size and sometimes take up almost one floor. This is a waste of funds and is outrageous. Many are even decorated with state titles and datukships. Almost all of CEOs have a 5-series BMW or Mercedes Benz top range car and are given perks, secretaries and firstclass travel packages. I am not complaining but this practice (of giving them attractive perks) has led to some CEOs thinking that they are incredible.
It will be good if there is a mandatory code of ethics and conduct to govern the CEOs and ensure that they refrain from malpractices or abusing their power. Although most of the GLCs have, on paper, their own internal audit committees and a good internal governance mechanism, I wonder if these are adhered to closely.
They should act with honesty and integrity, avoiding actual or apparent conflicts of interest in personal and professional relationship and disclosing any such conflicts of interest. They should provide information that is accurate, complete, objective, relevant, timely and understandable to ensure full, fair, accurate, timely and understandable disclosure in reports and documents filed to the Securities Commission or Bursa Malaysia.
GLCs should:
Comply with all applicable laws, rules, regulations of federal, state and local governments.
Act in good faith, responsibly with due care, competence and diligence without misrepresenting facts or allowing one’s independent judgment.
Respect the confidentiality of information.
Share knowledge and maintain skills important and relevant to stakeholders.
Proactively promote and be an example of ethical behaviour as a responsible partner among peers, at work and the community.
Achieve responsible use of control over all assets and resources employed or entrusted.
Promptly report to the relevant parties on any violation of law or business ethics or any provision of this code.
Not impose or promote any religious ideologies or any racial undercurrents in promoting company values or in recruitment.
Ensure donations to any political parties are made in accordance with the laws stipulated.
Public perception towards corruption in Malaysia has remained unchanged since 2005 and a recent Merdeka Center survey showed that at least 77 per cent of Malaysian voters this year agreed that corruption in the country was serious.
The same survey also saw a majority, or 56 per cent, of the respondents perceiving the government’s fight against corruption as something that left much to be desired despite recent successes by MACC. These views were more apparent among younger voters and those with Internet access.
According to the survey, 51 per cent of the respondents felt that the Auditor-General’s report was not taken seriously while 39 per cent felt otherwise.
However, the survey found that 67 per cent of the respondents felt that it was possible for ordinary citizens to make a difference in combating corruption. This sentiment was particularly strong among the rural and low-income households. The survey also found that 41 per cent of the respondents felt that giving bribes was aimed at speeding things up, while another 28 per cent felt it was the only way to obtain services.
Malaysia scored 47 points out of 100 on the 2017 Corruption Perceptions Index (CPI) reported by Transparency International. The CPI is based on various indexes, and in Malaysia’s case it involved 13 various studies or different data sources. If we want to improve the score, it is time for us to look into the requirements of all 13 studies, which include good governance, code of ethics, integrity and anti-corruption measurements.
The CEOs and the senior officials are critical stakeholders in the war against graft, so let’s not ignore them.
Besides the Corporate Integrity Pledge programme which is being promoted among all the corporate bodies in the country, the MACC must also institute more stringent measures and mechanisms, right from corporate governance to code of ethics.
Like the phrase, ‘A fish rots from the head down’, it is imperative that the senior officials and CEO of every organisation be trained and mentored to become “anti-graft” officers, besides being leaders producing successful organisations and companies.
It is my sincere hope that the newly formed centre – National Centre for Governance, Integrity and Anti-Corruption – will consider these issues in a comprehensive and holistic manner.
The new government is Malaysia’s new hope. We hope we can nip the leadership issues of all organisations in every sector of this nation in the bud by making sure they practise full accountability, total responsibility and sustainability, which will set us on the path of becoming a new nation of the world.