Financial Times - Voluntary self-declarations the way forward

The society in general, with shareholders, lenders, creditors and the state in specific, have good governance expectations from directors, senior managers and administrators entrusted with the management of assets, property and business ventures on behalf of stakeholders.

These expectations can be at a level of duty of care, professional commitments or even as trustees. The laws and regulations impose rules and responsibilities and expect them to be discharged by this group. Independent reviews, audits, professional, analysis, media critique and sometimes even poison pen anonymous letters, blow the whistle on failure of the duty of care, negligence, wilful acts or even outright fraud perpetrated by this group.

The recent high profile case studies on governance failures in the developed world as well as well known lacuna in governance framework in Sri Lanka in the public, private and civil society sectors clearly establishes that the external policing is ineffective or can easily be circumvented. In the modern day efficient and effective governance frameworks, however appear to rely more on processes that supplement external reviews, legal and regulatory oversight as apart of the normal procedures itself.

Sri Lanka is accredited with low levels of recognition in ratings on good governance. Global competitiveness surveys, as well as global/regional opacity indices, point to a need to address the impacting issues with commitment and on a timely basis. In fact Sri Lanka needs to attempt to advance in areas that bring in bonus points in these same areas of assessment.

Can we expect the leaders of government, the chambers, the professional bodies and regulatory oversight bodies to adopt that, voluntary self declarations will henceforth be the way forward? Will they actively canvass and implement such processes and assure requisite governance frameworks are in place?

Such declarations within a good governance framework must impose expectations on directors, senior managers and administrators entrusted with the management of assets, property and business ventures on behalf of stakeholders to annually publicly swear an affidavit of compliance that covers the following areas;

*Legal obligations at company and individual observance levels having been duly complied in respect of all such obligations

*Due compliance with integrity and good business practice observance within a framework of expected ethical standards

*The absence of any conflicts or potential conflicts of interests at personal, family or organizational (when serving on external organizations) levels

*Practices and procedures are in place that ensure significant business transactions are with known customers only

*Practice and procedures are in place that ensure all business, external environmental, market and operational risks are actively managed and mitigated

*Effective practices and procedures are in place for employees encountering or becoming aware of any potential compliance failures (whether relating to obligations of law or to internal compliance expectations) to report same without fear of reprisal

*Personal investments and actions uphold the expectations under insider dealings rules

*Responsible investments are made within set limits only for the purposes of the entity and assuring that expectations of risks and rewards match company policy and scope of operations.

*All public information issued are complete, transparent and accurately represent the true and fair representation of the state of affairs

*All information of a confidential and personal nature are respected and preserved in that state for the benefit of all stakeholders and maintains the trust placed on the company and its officials by the stakeholders

*Due standard of care, professional judgement and effective management action are evidenced and practiced in every transaction and action of management

*Ensure an accurate and responsible flow of information to recipients of information

*Not to engage in or make financial or other contributions of an improper involvement relationship of any nature with in any political or corrupt organization or in any corrupt activity, including all acts of deception and bribery

*Not to engage in any act, transaction or make financial or other contributions with an improper involvement relationship of any nature that damage the interests of the nation, the environment and the civil society

*All management actions are consistent with the guiding principles of Independence, Integrity and Objectivity

The media, the regulatory oversight bodies, and chambers must be also be willing to support and raise the premium value of the due compliant entities and individual directors and managers and also highlight those from whom such self declarations were expected but have failed to make such declarations publicly. Good governance will strive and Sri Lanka will erase some of the negatives associated with the governance failures of the past, if the making of voluntary declarations becomes the norm in Sri Lanka. Is it too much to expect from our leaders?