There can be no substitute for good governance!
There is no shortage of cases of greed, misconduct, corruption, and fraud, amongst other similar criminal acts, perpetrated by executives and senior management of large multi-national companies and which have resulted in the destruction of shareholder value, loss of employment, reputational damage, and in the worst case, companies going out of business.
I have no doubt that most (if not all) of these companies have well-documented ethics and compliance policies and value statements that are stressed to both new and existing employees as part of their ethics and compliance training programs. In many cases, these policies and value statements were signed and endorsed by the very executives who have perpetrated the wrongdoings mentioned above!
The question is: Are they above these policies and values that everyone else in the organisation is expected to abide by?
The answer is: Obviously not. It remains the responsibility of the Board and its oversight structures (sub-committees) to ensure that these executives, and in turn their managers and employees, comply with these policies and values and are held accountable. The Board and it’s sub-committees are assisted by the relevant assurance functions in the organisation i.e. internal audit, compliance, risk management, corporate secretarial, amongst others to identify and report on any transgressions without fear or favour. Aligning all these oversight activities in a large organisation is no easy task, but it is no excuse for not doing so. It requires the Board and executive management to take responsibility for the promotion of good governance, transparency, and accountability across the organisation, including the C-suite. At the same time, the Board and its sub-committees should encourage an open line of communication between itself and the assurance functions they have tasked to perform an oversight role on its behalf. The Board must also show its commitment to employees voicing or raising their ethical concerns by establishing an independent whistleblowing hotline, and taking action when wrongdoing occurs. Ultimately the Board has to take responsibility. There can be no substitute for good governance!
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