In the wake of the Supreme Court judgment on Lanka Marine Services Limited (LMSL) which brought the issue of corporate governance and corruption to the forefront and has left the private sector reeling from the judgment's indictment of wrongdoing on the part of a senior public official and the head of a leading conglomerate, a seminar on integrity and transparency in business brought out several opinions. The seminar was held amidst much controversy from the public as two current directors on the board of John Keells Holdings (JKH) were panelists as well as the company's former finance director.

Moderator and panelist Chandra Jayaratne, former Chairman of the Ceylon Chamber of Commerce, said the speakers for the day were selected based on their knowledge and understanding of international principles, the way in which they have developed best practices in their own entities in addition to being good speakers who would add value to the seminar.

One of the panelists, corporate lawyer Aritha Wickremanayake said collective action is the only path to building and establishing standards of integrity while expecting industries or individuals to self-regulate is nothing but a 'pipe dream.' Compliance with business integrity standards has a cost and the perception is that people cannot find resources in the markets to conform to codes. Companies that seek to engage in self-regulation find that there are burdens, he said. "The reality is that if you want a big contract with the government, you have to pay a facilitation fee." He spoke of instances where top 10 listed companies include information on meetings of audit committees in their annual reports when in fact, there was never an audit committee.

Mr. Wickremanayake said regulatory bodies are ineffective and exploring collective action will put the industry in a better position to demand reforms by building 'integrity pacts.' He said the credibility of the private sector is at an all time low. There is a pressing need for reform and a collective effort to formulate a code.

JKH Director Ronnie Pieris who addressed the seminar on 'Using Business Principles to Build a Corporate Culture of Integrity in Business Management' organised by Transparency International, Sri Lanka said it is a topic very 'near and dear to my heart.' usiness is all about relationships and depends on the virtuous nature of people's characters which include honour, trust, transparency, integrity, professional ethics and ethical behavior. He said morality is declining due to the decline of religion and guidance while the cost of safeguarding assets is increasing.

Mr. Pieris added that employees are facing ethical dilemma's at the work level which make people behave in ways they do not want to. In order to combat this, he said there has to be strong leadership from the top, systems of merits, the availability of good information, communication, a good work atmosphere and integrity inherent in the products and services that are provided. He said he has been fortunate and blessed in his corporate life to have been part of organizations that have embodied and entrenched ethics.

JKH Director Deva Rodrigo said conflicts of interest should be avoided as far as possible. If potential conflicts are going to arise, one should disclose it before it comes. Insider dealings should also be eliminated. Mr. Rodrigo said that many people who allege bribery and corruption do so without any supporting evidence and that multinational corporations have strong in-built procedures against directors and employees. He also said political contributions and charitable donations should not be made to get undue advantage.

Mr. Rodrigo said whistle blowing keeps people and directors in check but needs procedures to be put in place, adding that false allegations should be probed and the offender punished. He also said that the truth and fairness of financial data is directly linked to the responsibility of the auditor and has now become important for the prevention of terrorism and money laundering.

Former Director of JKH Ms. Anusha Coomaraswamy said that in order to be successful, companies cannot be indifferent to the societies they operate in. Corporate Social Responsibility (CSR) should focus on the good of the community, not on public relations. She said corruption is not a one sided transaction. There is an inequitable playing field on the award of large tenders. Ms. Coomaraswamy did caution that over regulation can have negative impacts.

CEO of NDB Eran Wickremaratne said that while systems have to be put in place to keep people honest, the Central Bank (CB) and other government agencies also need to be transparent. He stressed the need for laws and regulations and people of integrity because 'naming and shaming' does not seem to work.
Director of TI Jermyn Brooks said all countries are dealing with the problem of corruption and bribery which impacts the reputation of companies as well as its senior management and employees. After the corporate malfeasance that occurred at Siemens, a global powerhouse in electronics and electrical engineering, Mr. Brooks said the company itself has admitted that college graduates are reluctant to work for the company after its reputation has been heavily damaged. However, the management at Siemens has been open in admitting all the wrongdoing and conceding that policies were in place but that management was not living it.

Mr. Brooks said there are huge issues around the manipulation of financial results, in particular quarterly results and that the pressure on the management is so great, results tend to be 'massaged.' However, senior management still has to be held accountable.

Mr. Brooks said the loss of public trust in businesses is substantial and undermines transition and developing economies alike. He said corporate governance codes and codes of conduct which are voluntary are important because laws alone cannot be enforced perfectly and will not curb corruption. Companies have to see themselves as subjects within society and have to earn the 'license of operate' from that society.

Issues over JKH
A comment from an audience at the seminar brought the JKH into discussion. The audience member said people have been prevented from speaking out due to fear of being ostracized in society.
He also pointed out that during the course of the seminar, the panelists have been speaking on corruption in other countries but have not mentioned Sri Lanka. He added that he has also heard that certain media is also being threatened and receiving hate mail due to its ongoing coverage of the case.

When asked to comment on the judgment by Mr. Brooks, JKH Director Ronnie Pieris said he does not want to say anything about the recent judgment due to contempt of court and stated that he will not talk about it no matter who asks. He did however say that there is a genuine desire to promote integrity and ethics but the model is not perfect.

Corporate lawyer Aritha Wickremanayake said the LMSL judgment does not talk about fraud but about 'unfair benefit.' He speculated that people might be staying silent because the judgment leaves a lot of issues unanswered. He also said that there should be an academic critical analysis on the judgment as it is the only way to develop the law.