Values in corporate Sri Lanka
View(s):Ethics, governance and transparency are much touted words in the corporate lexicon in Sri Lanka.
Many companies have special chapters to deal with these issues, list their codes of conduct and governance process and profess to do good for society and the marketplace. Annual reports proclaim how these fundamentals are followed to the letter.
But as the Business Times has repeatedly pointed out, over and over again … ad nauseum, how much of these so-called ‘do-gooders’ practise what they preach?
Many violate their own principles of values and ethics, rather blatantly and in a “I-care-a-damn’ fashion, which is the culture that pervades the new corporate spirit of doing good. It’s kind of a Dr. Jekyll & Mr. Hyde policy … just like the Government behaves sometimes (or often?).
Some developments this week captured this editorial writer’s interest; one serious, another praiseworthy and two others rather amusing and hilarious.
The organizers of the popular Colombo Fashion Week (CFW) came out with their guns blazing, accusing well-known fashion retailers of copying designs from the event and producing them under the store brand name even before the designers could put their own production on the shelf!
Show organiser Ajai Vir Singh, in an interview with this Business Times, said this is ‘highly unethical’. Singh refers to several stores but those in this industry know the culprit – one particular high-class outfit which Hameedia has also been critical of for a long time for selling fake labels. Why do reputed companies resort to cheating? Is the marketplace so competitive that cheating is the only way forward?The good news this week came from IIFL, a securities firm, which sacked one of its dealers for involvement in unethical practices.
One commentator on a website which reported this development said, “Thank you IIFL for (the) quick action taken. It seems that the Code of Conduct (launched by Sri Lankan brokers) is being implemented. I hope other brokers would not employ the sacked guy.”
The code was announced by the Colombo Stock Brokers Association (CSBA) earlier this week and deserves praise, applause and kudos. Or, are those blessings too early in the day?
Some brokers and their clients were part of the cartel or so-called mafia that manipulated the stock market for several months in 2011-2012. Such was their power that chairpersons of the Securities & Exchange Commission (SEC) either quit in disgust or were eased out when they began to crack down on alleged stock manipulation and other misdemeanors. A few officials at the SEC also quit or were eased out through pressure tactics. The Colombo Stock Exchange must share the blame for not taking action against errant traders.
The SEC has settled down now but for the wrong reasons. Share prices are unattractive (however there is some foreign demand for different reasons) and need to fall further for a full recovery to take place; interest income brings greater returns than stocks and the SEC hierarchy sees ‘eye-to-eye’ with the powerful trading lobby.
The broking profession may stand on its head and deny this but the fact remains that a section of the brokers are part of the “I-scratch-your-back-you-scratch mine” and boldly and arrogantly break the rules. The IIFL case of a rogue broker is just the tip of the iceberg.
In this context one wonders whether the CSBA will be courageous enough to crack the whip and strictly enforce the code, particularly when some of the big boys themselves have skeletons in their cupboards.
Nevertheless codes by professional bodies in Sri Lanka are often broken blatantly and little action taken against the offenders. Happenings amongst the accounting profession and the Institute of Chartered Accountants (now CA Sri Lanka) some years ago are a good example of the reluctance to act against errant members. In one unethical case, a ‘highly respected accountant’ sat on a committee that was re-examining the membership to a chamber of a company that had been slammed by the judiciary. The accountant and one of the directors on this company served on the same board in another firm! Conflicts of interest were conveniently forgotten. Members of the committee, some highly respected, chose to ignore this fundamental requirement and allow a sham process.
Codes are voluntary and they, more often than not, stay that way. Grand promises to be firm and take a principled stand are all poppycock in today’s corporate world where chummy relationships and buddy-buddy deals rise above ethics and honesty, and good business practices. CSR is faithfully articulated in pages of ‘doing good’ but deals by these very people are filled with influential power-play and money changing hands.
Another interesting event was a seminar on Company Law obligations of directors.
Many readers brought this to our notice pointing out to some of the speakers with flawed pasts themselves or the companies they represent. “How can they talk about good governance and responsibility of directors,” said one irate reader by telephone.The speakers included SEC Chairman Nalaka Godahewa, Neomal Goonewardene of Nithya Partners, Rajendra Theagarajah, retiring Managing Director of HNB and Ronnie Peiris, Director of John Keells Holdings.
Given the blatant violation of corporate governance fundamentals by both companies and individuals and our constant egging of regulators and authorities to take action which falls on deaf ears, we leave readers with this thought: “Enjoy this commentary. After all, if nothing changes, at least it is a good Sunday read.”!
Follow @timesonlinelk
comments powered by Disqus