By Bola A. Akinterinwa
The Institute of Directors (IoD), Nigeria, held its 2018 Annual Directors’ Conference on Thursday, 8th November, 2018 at the Congress Hall of the Transcorp Hilton Hotel, Abuja. Unlike the 2017 Conference which addressed ‘Implementing Best Corporate Governance Practices in Nigeria’s Public and Private Sectors,’ the 2018 Conference shifted attention from what obtains in Nigeria to the global settings, with the theme for 2018: ‘Global Best Practice in Corporate Governance: Way Forward for Nigeria.’
The implication of this theme in terms of analytical challenges cannot be far-fetched. It is multidimensional in scope, very tasking in choice of which best practice, and thought-provoking when considering the way forward. First, the IoD is thinking of the ‘best global practice.’ This simply means ‘the best out of the best practice.’ This is simply because every Member State of the international community has its own self-evolved best practices. The intellectual challenge now is the determination of the best amongst the best.
Second, to what extent does Nigeria’s best practice compete well with that of that countries? Can’t Nigeria’s best practice be the best in the event of experimentation? Perhaps more important, whose global best practice should we be talking about, especially when considering the implications for Nigeria or drawing lessons for Nigeria.? In the thinking of the IoD, good corporate governance is necessary if the national economy is to be strengthened. This partly explains why in the recommendations of the 2017 Conference as reflected in its communiqué, all Nigerians were advised to ‘demand accountability and good corporate governance practices from public institutions to ensure that the objectives of public interest and public good for which they were created is accomplished and tracked.
Thirdly, in reflecting on the way forward for Nigeria, one cannot but remember what Charles Caleb Colton, an English cleric trained at the Eton and King’s College, said in 1820 in his Lacon, ‘men will wrangle for religion, write for it, fight for it, die for it, do anything but not live for it.’ Explained differently, there is nothing man will not do for religion except putting religious virtues in action. The essence of writing or fighting is meaningless if one is not complying with what is being preached. In fact, when Caleb Colton made his observation long time ago, he apparently did not think of corporate governance by then, and he may not be blamed for that, because there was simply nothing like corporate governance. What really is Corporate Governance? What do we really mean by Sound Corporate Governance? What are the best practices in corporate governance?
In seeking answers to these questions and in the belief that there is also the need for regular training in corporate governance and strategy for all leadership and key staff of public sector institutions, the format of the 2018 Conference was specially organised: participants were drawn from both the public, private and not-for-profit sectors. The conference has particular foci and the resource persons with experience, professional touch, and with integrity, were also carefully chosen.
In the words of the President and Chairman of Council of the IoD, Alhaji Ahmeed Rufai Mohammed, the IoD Nigeria’s ‘prime professional organisation concerned with the entrenchment of good corporate governance and development of the capacity of Directors and leaders’ both in the private and public sectors.
The objective of the conference, President Rufai Mohammed further submitted, is ‘to create an avenue for corporate Directors to discuss Nigeria’s experience and performance in the entrenchment of good business ethics and sound corporate governance in our private and public sectors.’ More important, it is also to ‘evaluate the business and public sector environment and, where necessary, propose policy options that would bring about the desired adherence to the principles of good Corporate Governance and by so doing, assist our corporate leaders to win the war against corruption, impunity and bad leadership.’
The conference was structured into four sessions in dealing with the analytical challenges: opening session, first plenary session, second plenary session, and dinner/communiqué session. The opening session was designed to provide a methodological direction in the articulation of the problems and the challenges facing Nigeria in corporate governance, as well as the determination of the best way forward for Nigeria.
One point that generated much interest during the opening session was the point of the keynote speaker, Professor Bola A. Akinterinwa, President/Director General of the Bolytag Centre for International Diplomacy and Strategic Studies, who considered that political governance is largely predicated on much wastefulness, the environment of corporate governance in Nigeria is corruption-ridden, and that there is no way good corporate governance can thrive with the corrupt environment in the country.
The first plenary session, moderated by Professor Nat Ofo, a Fellow of the IoD, focused attention on ‘Corporate Governance Practice and Organisational Performance in Nigeria’ and made efforts to compare and contrast the public and private perspectives. The paper of Mrs Winifred Ekanem Oyo-Ita, Honorary Fellow of the IoD and Head of the Civil Service of the Federation, provided a good illustration of the public sector perspective. The President of the Nigerian Stock Exchange, Mr. Abimbola Ogunbanjo, addressed the experiences of corporate governance in the private sector.
The public sector perspective as explained by the Head of the Civil Service, is quite interesting but raises questions as to the extent to which there is commitment to the underlying principles of corporate governance. For Mrs. Ekanem Oyo-Ita, corporate governance ‘deals with the structures and processes for decision-making, accountability, control and behaviour at the top of organisations, as well as addressing matters of interrelationships between Boards of Directors, senior management and relationships with the owners and other interested parties in the affairs of an organisation.’
Additionally, Mrs. Oyo-Ita believes that ‘good governance aims to add value to the organisation, reduce all forms of risks, strengthen shareholder confidence, help in fraud prevention and unethical behaviour. In summary, corporate governance is about how an organisation is directed and controlled.’ The direction and the control is ensured through the Public Service Rules, Financial Regulations, Guide to Administrative Procedures in the Public Service, Public Procurement Act, 2007, and Fiscal Responsibility Act, 2007.
What is more interesting about the principles of corporate governance from the perspective of the Government of Nigeria is that they are best in selective non-compliance. They are respected when convenient. In explaining the roles and responsibilities of Boards of Parastatals, Mrs. Oyo-Ita said ‘a board shall not be involved directly in the day-to-day management of a parastatal or an agency.’ The Head of Service cannot be more correct as this is the true position of the rule.
However, this rule is hardly respected. When it is respected, it is selective. The rule is that of self-deceit. When the Major-General Ike Nwachukwu-led Governing Council of the Nigerian Institute of International Affairs was directly intervening in the day-to-day administration of the institute, what did the Ministry of Foreign Affairs do in its capacity as the supervising authority? What did the Office of the Head of Service of the Federation do?
For ease of reference, the attention of the Ike Nwachukwu-led Governing Council of the NIIA was drawn to various acts of serious misconduct, ranging from multiple dates of birth by administration staff, thanks to the fact that they are in charge of the files, both open, confidential and secret. The Council was told about falsification of promotion examination results by the Director of Administration and Finance. The Council was also told about the revelation of the identities of assessors of professorial candidates by the Director of Research and Studies, etc. It is not known in contemporary academic history in Nigeria where a Governing Council would not only dictate contents of the letter to be written to assessors, but will also compel the Director General not to send the papers of professorial candidates to international assessors as traditionally done by previous Directors-General. Is this not a manifestation of corporate governance in Nigeria?
Indeed, the Ike Nwachukwu-led Council under the pretext that the Director General did not follow due process, the Council never visited the international conference centre the Director General was building. In 365 days, a Governing Council, which Mrs Oyo-Ita has an oversight function of ensuring that the Federal Government of Nigeria long-term interest is served, as well as promote sustainable and cost-efficient activities of the organisation, could not visit the project site. How do we explain the best global practices in this case? And true enough, money was the only thing the Council was interested in. It was never interested in the achievement of the mandate of the Institute.
This empirical case is given in order to draw attention to the non-seriousness of purpose of whatever is regarded as corporate governance in the public sector. The PMB administration preaches the gospel of anti-corruption at the top while consciously wetting the stem, the root of corruption without due regards to the implications for the future. As Director General, I drew attention of Government at the relevant levels to the various infractions but, at various levels, they were covered up to the extent that even my entitlements were not paid. And true enough, the Director of Administration and Finance, Miss Agatha Ude, removed all the documents. All the members of staff whose names were also listed for payment could not be paid. This is an illustration of what corporate governance means in the context of the public sector. Thus, corporate governance in the public sector is a problem of its own and should not be put at the same level of corporate governance in the private sector.
Mr. Abimbola Ogunbanjo’s paper, as well as the positions of the two discussants, Professor Chris Ogbechie of the Lagos Business School and Mr. Ikem Mbagwu, founder and Chief Executive Officer of the Cumbrian Consult Limited, are consistent with accepted best global practices to which we shall return hereunder.
Regarding second plenary session, which focused on the ‘Impact of Good Corporate Governance Practice in an Emerging Economy: the Experience of Mauritius.’ The session was moderated by Mrs. Amina Oyagbola of the IoD and the guest speaker was Mr. Eddy Jolicoeur, the Chief Executive Officer of the Institute of Directors, Mauritius. The discussants were Messrs. Adedotun Sulaiman, the Chairman of the Financial Reporting Council of Nigeria and Rob Newsome from South Africa former Partner Emeritus, Pwc.
This session is particularly interesting because what is taken as not being a big deal in Nigeria is seriously sanctioned in Mauritius. As explained by Jolicoeur, corporate governance in Mauritius is largely predicated on the Ibrahim Foundation Method, built on four pillars: safety and rule of law, which emphasizes accountability, personal safety and national security; participation and rights of everyone and gender; sustainable economic opportunity with special focus on public management, business environment, infrastructure and rural sector; and human development, especially in terms of welfare, education health.
Corporate governance, which the Mauritius Code of Corporate Governance in 2016 defines as ‘the framework of company processes and attitudes that add value to the business help build its reputation, and ensure its long-term continuity and success, and which the Financial Reporting Council Website noted in 2017 as the protection of ‘the right of stakeholders through a series of codes and practices which are efficient and transparent,’ is built on four main pillars: responsibility, accountability, fairness and transparency.
Three points are noteworthy in the submissions of Mr. Jolicoeur. First is the fact that, in ease of doing business. Mauritius is first out of 34 countries for the twelfth and the 25th out of 190 countries according to the 2018 Mo Ibrahim Foundation Index of African Governance. Second, Jolicoeur has it that the key requirements for success in political governance are leadership, credibility, trust, integrity, inclusiveness, agility, and solid and independent institutions. In fact, as he put it, the basic principle of political governance is nothing more than ‘whatever you accept without correction, you approve. This is the tradition in Mauritius.’ Third, and perhaps most importantly, is the difference in the corporate governance in Mauritius and in Nigeria.
Look at this specific case: the President of the country, Ameenah Gurib-Fakim, had to resign on the basis of using an NGO credit card for private and personal purposes. When Jolicoeur raised this issue, the whole audience shouted and Jolicoeur himself was confused as he did not expect such hilarious reaction but the truth is well known. The offence is pardonable in Nigeria but it is not in Mauritius. This is a difference in cultural attitudes, which necessarily conflicts with the belief that what is good for the goose is also good for the gander.
The last session provided not only for winding down but also for further networking, induction of new members and further exchange of ideas on the many other critical issues which could not addressed during the plenary sessions. But beyond the performance and conformance of corporate governance in Nigeria, what does it look like at the international setting?
Global Best Practices and Nigeria
There is the need to put the understanding of the best practices in corporate governance in the context of its international and national dimensions. At the international level, corporate governance is not only predicated on guiding rules, but is also increasingly taken as a special area of research focus. It is being considered to be an important constituent of global governance, that is, as an important attribute of global governance. And because corporate governance deals essentially with economic businesses, international investors take much interest in its day-to-day development.
In this regard, corporate behaviour has been explained by two main theories: shareholder theory and the stakeholder theory. The shareholder theory, which is a resultant from the Anglo-American model of governance, emphasises the value amelioration of the shareholders. The stakeholders theory, on the contrary, considered to be a Nippon-German model, underscores the welfare maximisation of all parties affected by corporate decisions. Even though many corporate organisations adhere to the stakeholders theory, the truth, again, is that, the problems of corporate governance cannot but arise when the rights of the stakeholders are violated, especially in light of the fact that ‘what may be considered stakeholder rights violation in one country might not necessarily be considered so in some other country. This diversity may be particularly because of the different legal structures and cultural settings adopted by different nations.’ But how is Nigeria impacted upon in this regard?
In countries where best practices have been identified and recognised as models for others, corporate governance has its culture, that is, culture of corporate governance, but that is yet to be evolved in Nigeria. There is the need for one. In Nigeria, there is nothing to suggest for now that heads of public and private institutions are ahead of their various businesses. In normal circumstance, the head must always be ahead in corporate governance.
The current culture of corporate governance in Nigeria is very wasteful, and not future-oriented.
The environment of corporate governance in Nigeria is very corrupt. Societal indiscipline is rewarded with honours at various levels. In fact, if truth be told, corruption has become institutionalised in the country. This is one reason why indices of governance have not been encouraging. For instance, NDIC sources in 2014 have it that there were 2007 frauds in 2008 representing about 18.2 per cent increase. Although the number of frauds declined to 1764 (16 per cent) in 2009 and declined further to 1532 (13.9 per cent) in 2010, the truth is that the number of fraud began to sharply increase as from 2011 with 2352 cases, representing 21.3 per cent increase. In 2012, the number was 3380, representing 31 percent. In terms of global ranking, Nigeria was the 142nd most corrupt country in the world in 2006, the 147th in 2007, 121st in 2008. As from 2009, the situation began to worsen with Nigeria occupying the 139th position in 2012 and 140th position in 2013.
Perhaps more disturbingly, the 2017 corruption perceptions index reported by the Transparency International, Nigeria is the 148th least corrupt nation out of 175 countries investigated. There is no way business confidence can exist or grow or for ease of doing business to improve.
Consequently, there is the need to, first of all, evolve a new Nigeria which will emphasize societal discipline, promote basic corporate governance, as well as evolve good governance culture. And most importantly, a Nigeria where the heads of institutions will always be ahead of their institutions. It is by so doing that a good foundation can be laid for corporate governance can thrive and for a good way forward to be articulated.