...Global perspectives on governance: lessons from east and west While the core principles of governance are the same throughout the world, the Asian model places particular emphasis on trust and relationships. This paper discusses the key differences between the western and Asian approaches to help business leaders explore the best aspects of both. Conclusions 1. The corporate governance model that’s familiar in Asia, Africa and most developing nations places strong emphasis on trust and relationships. This can be beneficial for stakeholders: the typical pattern of ownership in businesses means that there can be a longer-term view of an organisation’s success compared with that in a western company. But the system is potentially vulnerable to corruption and cronyism. It can also be difficult to implement basic control procedures. 2. The prestige of what can be broadly termed the western governance model has diminished in the aftermath of the financial crisis. This model has driven globalisation and has emphasised a combination of legislation and standards as well as transparency, with a focus on developing appropriate structures, processes and frameworks. This is widely understood and helps to create a level playing field. But major financial failures over the past two years, such as that of Lehman Brothers, have shown that there are limits to what can be done to tighten checks and balances. A new emphasis on the behavioural aspects of governance is overdue. 3. ...
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...2 4. Enron and WorldCom executives prosecution ........................................................................... 5 5. Effects of the scandal, legislative perspective ............................................................................ 5 6. Comment and lesson to Rwandan business sector ...................................................................... 7 6.1. Corporate governance .......................................................................................................... 7 6.2. Committed crimes during the scandals .............................................................................. 10 6.2.1. Insider trading .............................................................................................................. 10 6.2.2. Wire fraud .................................................................................................................... 11 7. Conclusion ................................................................................................................................ 12 8. Authorities................................................................................................................................. 13 1 Lessons from Enron and WorldCom cases 1. Introduction The economies of the nations are built many economic activities, businesses being cornerstone. For them to run smoothly, the States must avoid a strict interference of how business must be conducted. Or, if they...
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...CORPORATE GOVERNANCE LESSONS FROM ENRON SCANDAL The Enron scandal is the most significant corporate collapse in the United States since the failure of many savings and loan banks during the 1980s. This scandal demonstrates the need for significant reforms in accounting and corporate governance in the United States, as well as for a close look at the ethical quality of the culture of business generally and of business corporations . PROBLEMS : Paying directors with stock may have aligned their interests with shareholders', but it's just as likely to have created a motive for not asking the tough questions. Disclosure rules may have alerted investors to the fact that one audit committee member had a potential conflict of interest, but not that two others did as well. The Enron audit committee may have been exactly what the stock exchanges had in mind in December, 1999, when they required that members demonstrate financial know-how--but the expertise may have been out of date following the changes Enron went through in the 1990s. In any case, it didn't help the committee make sense of Enron's tangled finances. The board of directors was not attentive to the nature of the off-books entities created by Enron, nor to their own obligations to monitor those entities once they were approved. The board did not pay attention to the employees because most directors in the United States do not consider this their responsibility. They consider themselves representatives of the...
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...500 magazine and arguably the most innovative company in the United States. Hanson (2002), as quoted by Nakayama (2002) argues that the Enron scandal is the most significant corporate collapse and it demonstrated the need for significant reforms in accounting and corporate governance, as well as a close look at the ethical quality of the culture of business generally. There are many causes of the Enron collapse. Among them are the conflict of interest between the two roles played by Arthur Andersen, as auditor but also as consultant to Enron; the lack of attention shown by members of the Enron board of directors to the off-books financial entities with which Enron did business; and the lack of truthfulness by management about the health of the company and its business operations. In some ways, the culture of Enron was the primary cause of its failure. Zimbabwean companies can draw a number of lessons from the Enron scandal. The lessons learnt from the Enron scandal have been one of the bases for the development of more robust corporate governance recommendations and legislation in some countries, for example the Sabanese-Oxley Act in the United States. According to Nowroozi (2002), the failures and lessons associated therewith can be classified as follows: Fudiciary failure Enron’s board clearly failed in its fudiciary duties to safeguard the shareholders’ interest in the following ways: * It allowed Enron to engage in high risk accounting * It allowed transactions carrying...
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...MEN & MORALS - Don’t turn Gurgaon into a Faridabad GURCHARAN DAS – TOI, 12th August, 2012 It was the same question on everyone’s lips. Aggrieved Suparna Prasad Dev asked, “If 50 policemen were at the scene, why didn’t they act when a hundred Maruti workers brutally attacked managers and killed my husband?” When the police did finally act, it was too late. The factory was in flames, almost a hundred managers were bleeding, many injured seriously. Awanish Kumar Dev, head of human relations, was dead. There are many lessons in the recent tragedy at the Maruti-Suzuki factory at Manesar in Gurgaon district. One of them is that labour trouble is not only a management’s or a union’s problem but a vital concern of the state. Haryana has not learned this lesson. It destroyed the vibrant industrial town of Faridabad more than a generation ago due to poor industrial relations. It is now bent on scaring industry away from Gurgaon as well. Last year’s unrest at Maruti resulted in Rs 2,500 crore loss. This is a shockingly high figure—half a billion dollars—for any company to lose anywhere in the world from industrial trouble. For Suzuki, whose Indian operation brings in half its global profit, it is appalling. For a Japanese company to be continuously in the news for labour unrest is extraordinary when Japan has taught teamwork and industrial harmony to the world. Suzuki should ask itself if it has the right persons in charge. The role of the state is less obvious. In the 1970s...
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...colour in the template. These should be deleted prior to the document being distributed for review and approval. Update text within square brackets which is placeholder text with relevant text. E.g. [yyyymmdd] should be changed to latest date 20130305 Use this basic structure and type sizing for all your covers. Do not manipulate or rescale any of the graphic components. Use initial caps in your headings with capital letters for proper nouns only. Document Control Document location Location | | Author Position | Name | Contact no | | | | Stakeholders and other contributors Consider key stakeholders who might have input in the decision to approve or reject the Business Case. Typically, distribution to the relevant governance forum members’ is required for a one-on-one walkthrough prior to presenting. The costs section of the document may need to be removed from widely distributed versions. Position | Name | | | | | Revision history Version | Issue date | Author/editor | Description/Summary of changes | | | | | | | | | Reviewed by Version | Issue date | Name | Position | Review date | | | | | | | | | | | | | | | | Approvals Approval refers to the approver’s acceptance of the content and overall intention of this document, including acceptance of any commitments described in order to successfully deliver the initiative. The approver, where relevant, also confirms that this document complies with relevant strategies...
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...National Kidney Foundation (NKF) of Singapore INTRODUCTION “Power tends to corrupt and absolute power corrupts absolutely.” Lord Acton National Kidney Foundation (NKF) was established way back 1969 as part of the cell under the Singapore General Hospital due to the arising numbers of kidney related disease victims in Singapore. That cell not only responsible for treating the kidney patients but also taking up the challenges on research as well as educating the community on kidney disease. NKF has officially opened their first dialysis centre at the Kwong Wai Shiu Hospital in 1982 and throughout they have gone ups and down before emerge as a premier charity organisation in Singapore. By July 2005, Singaporean were shocked when the news of NKF scandal broke following the collapse of defamation trial. It is unexpected due to the fact the NKF has already recognise as a lead charity organisation with the revenue of $116 million. Lots of allegation were slandering around and the spot light goes to the then NKF CEO, Mr Thambirajah Tharmudurai or better known as T.T. Durai. The news not only rock the nation but also has attracting interest of global parties. The scandal has cause the CEO and his board of Directors to resign. Therefore, this case study is significant for the group to analyse the organizational leadership issues and challenges. AIM The aim of this study is to analyse the case of National Kidney Foundation scandal in the context...
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...Lessons from the Enron Scandal On March 5, 2002, Kirk Hanson, executive director of the Markkula Center for Applied Ethics, was interviewed about Enron by Atsushi Nakayama, a reporter for the Japanese newspaper Nikkei. Their Q & A appears below: Nakayama: What do you think are the most important lessons to be learned from the Enron scandal? Hanson: The Enron scandal is the most significant corporate collapse in the United States since the failure of many savings and loan banks during the 1980s. This scandal demonstrates the need for significant reforms in accounting and corporate governance in the United States, as well as for a close look at the ethical quality of the culture of business generally and of business corporations in the United States. N: Why did this happen? H: There are many causes of the Enron collapse. Among them are the conflict of interest between the two roles played by Arthur Andersen, as auditor but also as consultant to Enron; the lack of attention shown by members of the Enron board of directors to the off-books financial entities with which Enron did business; and the lack of truthfulness by management about the health of the company and its business operations. In some ways, the culture of Enron was the primary cause of the collapse. The senior executives believed Enron had to be the best at everything it did and that they had to protect their reputations and their compensation as the most successful executives in the U.S. When some of their...
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...Home » Issues » Money & Politics E-Mail Page Printer Safe ITALY: Corporate Governance Lessons from Europe's Enron by By Michael Gray, Compensation Analyst; Carlotta Amaduzzi, Global Analyst; and Stephen Deane, Publications Director, Institutional Shareholder Services Europeans are labeling it their Enron. The U.S. Securities and Exchange Commission is calling it "one of the largest and most brazen corporate financial frauds in history." And one investigator gushes, "The whole is truly beyond all limits....In every company we have found forgeries and falsifications of all sorts. But in this case we are really beyond the limits of the imagination." Parmalat Finanziara, the Italian dairy and food giant, is fast joining Enron and WorldCom as a household name for corporate scandal. The alleged financial fraud at Parmalat spans more than a decade and involves sums whose estimates have ballooned from EUR 4 billion to more than EUR 8 billion. Founder, chairman, and chief executive Calisto Tanzi has been ousted from the company and board and is under arrest. Enrico Bondi, who replaced Tanzi in December, has been given new authority to act as sole administrator of Parmalat. He has 180 days to save what he can of the company. While Bondi races against time to unearth the sources of the scandal, some corporate governance experts are already drawing lessons. The Corporate Governance Significance "Clearly what has happened in Parmalat, and Ahold a few months ago,...
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...Sullivan was arrested on charges of frauds and misrepresentation of the accounts. The Arthur main accused of fraud was washing their hand by fired the fact of fraud. He was creating the facts, which shows that he was not aware about the accounting discrepancies (The WorldCom Accounting Scandal, 2002). The auditor made the hole of $4 billion in balance sheet of the company, which created the financial crisis for WorldCom. For overcoming from the financial crunch company lay off 17000 workers, which was the 20% workforce of company. When the conduct fell through, WorldCom charged for bankruptcy on July 2002 under chapter 13 of the bankruptcy code. In 2002 the WorldCom's balance sheet represented the $9 million hole (WorldCom scandal: Lessons for corporate America). Significance of Organizational Behavior Theories...
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...Corporate Governance Case Study: British Petroleum Submitted by: Vanés Cassells Introduction In the words of Ramo (2009, p.8), “We are now at the start of what may become the most dramatic change in global order in several centuries... What we are facing isn’t one single shift... as much as an avalanche of ceaseless change... creating unprecedented disruption and dislocation.” Given that a crisis normally occurs without prior warning, it is therefore imperative that certain measures and procedures are put in place that can expedite a cure and thereby reduce the impact so that normality can be restored. For there to be effective crisis management, a robust risk management structure must be instituted within the organisation and must form an integral part of the ongoing corporate governance monitoring framework. A company should learn from previous incidents and incorporate preventative as well as curative measures into any risk assessment. The risk oversight function of the board has gained immense importance in the last few years, mainly due to the collapse of the financial sector in 2008. Today, risk management has become even more critical and challenging. Companies are now confronted with risks that are more complex, interconnected and potentially devastating than ever before. BP’s ostensible lack of consideration for the risks involved in exploration drilling contributed to large-scale disasters which, in turn, highlighted a catalogue of corporate governance failures...
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...under its domain. The responsibilities of the PMO can range from providing project management support functions to being responsible for the direct management of a projecti PMO Services:ii . Basic support services Administrative support for project managers Collating and reporting project status to senior management Providing standards, methodologies and a set of PM tools Managing project documentation (including risk registers, schedules, incident logs etc) Promoting project management within the organisation 2. Advanced specialist Services Consultancy and advisory services Strategic and governance services Developing competencies of personnel, including training and mentoring for project managers Advising project and programme managers Evaluating project managers’ performance Recruiting, selecting and/or allocating project managers Recording, analysing and disseminating lessons learned Identifying, selecting and prioritising new projects, including involvement in benefits management and business cases, contingencies etc Allocating resources between projects and programmes Providing advice and recommendations to senior management Conducting project health checks and post-project reviews Monitoring and reviewing PMO performance and its effect on project delivery SServuces Services Services Providing estimating, scheduling and risk management expertise to PMs Coordinating plans between projects and monitoring resource use Monitoring and reviewing project performance...
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...tiPS: Despite some new additions to the Paper P1 Study Guide in June 2011, a substantial part of the Paper P1 syllabus continues to concern matters of corporate governance. Section A6 of the Paper P1 Study Guide requires to have knowledge of the different approaches to corporate governance, inter alia, the development of corporate governance codes in principles-based jurisdictions (A6(d)), the Sarbanes-Oxley Act (2002) as an example of a rules-based approach (A6(e)) and the objectives, content and limitations of corporate governance codes intended to apply to multiple national jurisdictions, namely the OECD principles of corporate governance (A6(f)). specification in something such as a code of best practice ... One thing is clear, though. Whatever the model, the public must know about it and about how it is operating in practice. Disclosure should be a central feature of any corporate governance regime. Shareholders, potential shareholders and the wider public are entitled to real, meaningful detail about the way the directors say they are carrying out their stewardship role. The annual report and, in these times, the company’s website are important forums for disclosure. Directors who take the fundamental notions of openness, integrity and accountability seriously …… will be well on the way to good corporate governance.” to US and non-US companies with a US listing. Some of the provisions of SOX are in direct conflict with provisions in the law or practices of other countries...
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...GOVERN IT Topic and Motivation: Smart IT governance helps enterprises deal with complexity.IT governance is ‘the assignment of decision rights and the accountability framework to encourage desirable behavior in the use of IT’ (Weill, 2001; Broadbent & Weill, 1998) Defining desirable behaviors takes time, effort, focus, cost savings, innovation, growth, reuse, sharing. IT business value directly results from effective IT governance. Firms with superior IT governance have at least 20% higher profits (ROA) than firms with poor governance given the same strategic objectives. • Characteristics of High IT Governance Performers - More focused strategies • Greater differentiation between customer intimacy, product innovation, or operational excellence - Clearer business objectives for IT investment • Greater differentiation between supporting new ways of doing business, improving flexibility, or facilitating customer communication - High level executive participation in IT governance • Greater involvement, impact of CEO, COO, Business Heads, Business Unit CIOs and CFO • Who could accurately describe IT governance arrangements - Well functioning formal exception processes - Formal communication methods Research Questions: Who has decision rights and inputs? How can IT governance arrangements can be represented? Approach: • Plan it, work it! - Game plan, self-assessment, project plan • Establish IT Governance Principles based on overall IT strategy • Evaluate...
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...Oversights 9 Increase in the Number of Bankruptcies 11 Global Financial Crisis and Its Positive Effects 12 Designing Regulations to Monitor the Financial Sector 12 Global Governance as a Side Effect of the Global Financial Crisis 13 Lessons Learned 16 Domestic Lessons Learned 16 Global Lessons Learned 17 Lessons from Romania. 18 The Role of Financial Executives in GFC 19 Conclusions 21 References 24 Abstract The first financial crisis of the twenty-first century has not yet ended, according to Gorton and Metrick (2012), the wave of research on the crisis has already exceeded any single reader’s capacity, with the pace of new work only making this task harder. The Global Financial Crisis is considered by many economists to be the worst financial crisis since the Great Depression. Global Financial Crisis resulted in the threat of the total collapse of large financial institutions, the bailout of banks by national governments, and market downturns around the world. In the aftermath of this crisis, the housing market declined significantly and has not recovered. This essay begins by providing an overview of the Global Financial Crisis. Both the positive and negative effects of Global Financial Crisis will be examined from both a domestic and international perspectives. The lessons learned from GFC also will be summarized. Positive and Negative Effects of the Global Financial Crisis The Global Financial Crisis (GFC) is considered by...
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