THE CARIBBEAN CORPORATE GOVERNANCE INSTITUTE (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 Trinidad & Tobago 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 corporate governance standards focus upon disclosure. Disclosure is so important that the Organisation for Economic Cooperation and Development Guidelines for State Owned Enterprises (2015) dedicates 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 recognises that the reform of state-owned enterprises 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 state-owned enterprise is operating.
Defining the state’s role and determining effective relationships between the state-owned enterprise 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 state-owned enterprises 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 state-owned enterprise has taken to achieve the results;
• monitored the achievement of the results in an assured way, and
• complied with all laws, regulations, and applied best practice standards, including engaging stakeholders in respect of their material interests in the organisations activities.
The application and execution of these standards would play a significant role in improving transparency, accountability, and performance of public sector organisations in the Caribbean.
The role of the CCGI as an independent, professional, non-profit membership organisation 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 Trinidad & Tobago). 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 and the Trinidad & Tobago Stock Exchange 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 state-owned enterprises. 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 state-owned enterprise code, to conduct training for existing and potential board members of state-owned enterprise 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 CCGI works toward to the Caribbean being widely recognised and trusted as an attractive, transparent, efficient and ethical place for business. One key element towards that goal is the harmonisation of corporate governance standards (for listed companies, closely-held, public bodies and state-owned enterprises, 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.
This concludes an analysis written on behalf of the Caribbean Corporate Governance Institute (CCGI) by chairman Dr Axel Kravatzky, and director of education Dr Chris Pierce. CCGI is a regional, independent, nonprofit, professional membership organisation based in Trinidad. It is the award body that provides the certificate and diploma in corporate governance and the chartered director qualification throughout the Caribbean.
