PERILS OF CORPORATE GOVERNANCE GONE AWRY

WHAT IS CORPORATE GOVERNANCE?

It is a system of rules, practices and processes by which an entity is directed and controlled. It is the art of balancing the many diverse interests of the entity’s stakeholders.

Of import, governance in itself specifically refers to rules, policies and processes that dictate corporate behavior. Corporate behavior speak to reliability, integrity and credibility of the entity and as such it is the specific behavior attributable to high level manpower- (read Board of Directors and Management) who are the face and brand of the entity.

WHAT WENT WRONG IN UCHUMI, CMC, IMPERIAL BANK AND CHASE BANK?

PEOPLE

People who had been entrusted with positions of fiduciary responsibility exploited their positions of power and abused the realm and ethos of office. In the four entities, breach was committed by members of Board of Directors or Management or a collusion of both!

It is obvious that the malaise of poor governance and corruption is not confined to public sector but is also in private sector.

The rules and processes to guide corporate behavior are common sense and not academic . It is an expectation that it would be relatively easy to follow the rules but no! Lack of sensibility has continued to inform theft and squander of public funds and in such proportions and unimaginative styles of stealing that would defy commonsense. Money renders greed. Power fuels greed and the vicious cycle is infinitum.

ETHICS/PROFESSIONALISM/MORALITY/INTEGRITY

The practices that help a society to define or to distinguish between what is right and wrong and what constitute good and bad behavior is steeped in our sense as human beings. That essence breeds in us the values pertinent to our environment (which has many influences) but there are definitely broad sets of behavior which are common to all humanity and which establish a value set.

Values of ethics, integrity are not relative in nature. They are absolute in their exertions of what constitutes right and wrong.

In this regard, we find that the people in positions of responsibility within the four entities deliberately compromised their morality and engaged themselves in practices that were unethical, lacked integrity and professionalism. Their actions were shameless, un-conscientious and driven by impunity.

The resultant effects of such actions are visible today and their impact on other stakeholders is also very succinctly adverse.

CULTURE

Culture is a cliché word but we shall use it to clearly show that as a people we are aligned in our psyche in all the wrong ways and which influenced the happenings in the four entities.

As a general public, Kenyans have a unique collective way of being. One such way is being fickle- We forget easily and a morbid fascination with riches and of people who strike it rich. This drives an insatiable desire to get rich quick and so any opportunity that arises, is justified and glorified as a means to an end. It has become an entitlement to be rich!

The placebo affinity with other peoples’ “dreams are valid” and combined with the high levels of selfishness and individualism within our evolved culture and environments has lead to a compromised enforcement culture.

In the four entities, the facts on record show that more often than not the enforcers looked the other way or had their price to drop enforcement of rules etc. through sabotaging structures of enforcement, neutralizing checks and balances, creating or promoting ineffective accountability measures and unmitigated risk management.

The “what can I do” syndrome, lack of patriotism, loyalty and limited access to information and knowledge of facts on matters they should rightly be fully informed about did not help either. Generally issues are diagnosed for the elite in the society and a clear divide is made of disparity in capacity to conceptualize both intellectual and socio-economic issues even in regard to this matter.(Wanjiku factor).

POLITICS

This is a waterloo for all issues ailing our populace and has permeated to our working places. It is a culture issue that mutates to implode in all spheres of our lives.

Tribalism, nepotism, tenderprenuership within government and or an entity with clear conflict of interest, the powerful versus the voiceless, etc. were a common recipe in the management and operations of the four entities and which contributed to the massive losses evidenced.

CONCLUSION

The fruit does not fall far from the tree. The fruit of the actions of the Board of Directors and Management of afflicted entities showcase a catastrophic collective failure of people and systems and is the bane of poor indoctrination to ethical behavior.