Failure of Companies Blamed on Weak Corporate Governance

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By Emmanuel Otaru

The Executive Vice Chairman/CEO Nigerian Communications Commission (NCC), Prof. Umar Garba Danbata, has blamed the failure of some companies on weak or complete absence of corporate governance structures, as seen in major companies around the world such as Enron, Worldcom, Arthur Anderson, Leeman Brothers and in Cadbury Nig. Ltd; among others.

Danbatta, who was represented by Mr. Felix Adeoye, made this remark at the Executive Breakfast Meeting organised by  Society for Corporate Governance Nigeria (SCGN), with theme: “Corporate Governance, Regulatory Compliance and Competitiveness in the Telecommunications Industry” held in Lagos recently.

According to Danbatta, “a strong corporate governance culture in an organisation encourages success and business sustainability. In an emerging economy such as ours, corporate governance is predicated on the need to entrench a control system, which increases shareholder value, as well as exceeding the expectations of other stakeholders”.

He said the liberalisation of the Nigerian telecoms industry opened investment opportunities for both local and foreign companies, contributing significantly to the country’s Gross Domestic Product (GDP).

He said that in recognition of the need to sustain the success recorded in the industry and replicate the lessons learnt in other sectors that had gone through the boom and bust cycle, the commission in 2012 set up a multi-stakeholder Corporate Governance Working Group (CGWG) with membership from across the Nigerian telecoms industry, the Commission and Corporate Governance practitioners to determine the industry’s corporate governance needs.”

Danbatta said the CGWG developed the Code of Corporate Governance for the telecoms industry, which was published in 2014. “Essentially, the Code was developed to protect interests of investors and stakeholders in the industry, as well as promote time-valued principles of accountability, responsibility, transparency, integrity and ethical conduct”, he further said.

The NCC boss said also, that with a formidable corporate governance structure and effective implementation of the Code, it is hoped that the country will witness increased foreign direct investments in the industry.

Also at the Breakfast meeting, the Chairman, Association of Licensed Telecommunications Operators of Nigeria (ALTON), Gbenga Adebayo, said his role is to ensure that they promote the development of the industry and foster the best operating environment for members as well and maintain good interface with critical stakeholders such as the regulator and the policy makers as well as the consumers.

“The telecom industry is one of the most important sectors of our economy and the industry has evolved over the last 12 years, many of these changes were influenced by the convergence of technologies of voice, data and video on smartphones, tablet computers and the internet and other information services which has led to the era of the Information Society”, he said.

Adebayo equally said: “Report shows that the ICT sector accounted for about 10 percent of nominal GDP in 2014 with a direct contribution of around N600 billion to the economy in the same year. Our sector accounted for over 30 percent of the Nigerian Foreign Direct Investment (FDI) since deregulation in year 2001 and well up to half of our country’s FDI in between some years since 2001. This sector has created over 20,000 direct jobs since liberalisation and over 1.5 million indirect jobs since deregulation”.

The ATON Chairman added: “The principles of good corporate government are the key to our members and we continue to operate in accordance with the laws of Nigeria and in line with best practices. Also we will continue to work according to the provisions of the Communications Act and all guidelines as provided from time to time by the Nigeria Communications Commission.”

He equally expressed worry that, “many of the service impacting issues are caused by factors outside our control. We would encourage impacted government and other agencies to also live up to the highest governance standards so as to make things easier for all.”

“Unfortunately, not all operators keep to these high standards in fulfilling debt obligations as they fall due. Take the issue of interconnect debt for instance. We are deeply sad to note that operators are owing each other up to N30billion in unpaid interconnect debts. While some operators are very punctual with theirs, others deliberately withhold theirs.

This is a very reprehensible conduct, which shows a failure of governance. It is more unacceptable because interconnect payments in most cases are pre-paid by customers, withholding the payment for long periods is therefore anti-competitive and unfair.”