No corporate governance in Sri Lanka
Most people advocate that corporate governance laws need to move beyond laws, to principles. Day dreaming? In Sri Lanka, even the rules are flouted sometimes even by the regulator like the Central Bank or other authorities.
For example in Sri Lanka, Central Bank deputy governors are appointed to private banks, a day after their retirement and made deputy chairman and Chairman; directors who have run financial institutions to the ground are appointed to development banks; businessman who are living off banks are appointed to banks. Convicts sit on Boards. Pyramid specialists run the shows. Related party transactions are not disclosed. Executive Directors join other banks without a mandatory cut off period taking insider information to other rival institution, when even low level sales representatives are barred from joining other rival companies. There is little or no hope for principles in Sri Lanka other than with laws.
The very people who create them flout the rules in Sri Lanka. We have seen rules being enacted by regulators to get rid of people who criticize them for mismanagement. The regulator does nothing when financial institutions are in a trouble (CIFL). In Sri Lanka, corporate governance is one of those items most-public companies and banks pay insufficient attention to, hence at least the investors in those companies should force directors to focus on key governance considerations and governance structures, and even help those involved to understand the challenges of the governance landscape to protect their investments. In the future, ongoing regulatory and investor scrutiny of corporate governance structures and approaches in the world will impact companies of all shapes and sizes. Given the many rules and requirements facing boards, along with increasing shareholder demands, Addressing governance issues early and thoughtfully will make Lankan companies look more attractive, to potential investors and to subsequent investors. But with the current set of regulators and shareholders there is not much we can expect. They are all taking inspiration from the political landscape.
R. Fernando
Colombo 5