A world-renowned expert in governance is urging Arab Inc to be more cautious over unethical business practices, as a little negligence can result
22 Dec 2004MUSCAT - A world-renowned expert in governance is urging Arab Inc to be more cautious over unethical business practices, as a little negligence can result in corporate turmoil.
Talal Abu-Ghazaleh, president of Arab Knowledge Management Society, based in New York, told Times Business that if corporations continued to remain dismissive in tackling potential dangers arising out of unethical business practices, they would experience unlimited financial problems.
"Years ago, an external auditor was unwilling to accept a cup of coffee from an audit client. He was unwilling to join his client for lunch even if he was paying for it," Abu-Ghazaleh said.
"To accomplish an internationally competitive corporate governance structure, the Arabs Inc. has to work collectively. The auditors, board of directors and regulators have to come out in the open to promote governance and quality.
"To form a collective opinion, we need to establish an Arab corporate governance forum that can promote the concept of governance and establish corporate governance guidelines and principles that are appropriate to the region," Abu-Ghazaleh added.
He said Oman has been in the forefront to implement international corporate governance standards. The credit, indeed, goes to the Capital Market Authority and the Central Bank of Oman.
Abu-Ghazaleh, who is also the president of Arab Society of Certified Accountants, based in the United Kingdom, said: "Arab countries are blessed with the expertise of several professionals, who can deliver more, if we strive hard to unify our standards and endeavour to accomplish sound governance, based on the region's rich heritage and culture and other salient features. Transparency and accountability can be achieved only when we start looking at those governance issues on a macro level."
"We have to build an atmosphere of trust in our institutions, both the public and private sectors. You will never achieve sound governance unless you look at the issues collectively and constructively," Abu-Ghazaleh said.
He argued that good governance rests on the twin values of transparency and accountability. A strong internal accountability is a major element that would bring in transparency and efficiency. Arab countries must expand the comprehensiveness of governance to strengthen transparency and trustworthiness.
Of late, a chartered accountant based in Mumbai told Times Business that the so-called chieftains, mostly deputy bosses, of many corporations, very often ask experts, "Who are you to talk about governance?" Sadly speaking, it is their inefficiency and lack of professionalism that force them to/Delhi speak so.
One journalist from New Delhi had said: "An official in the Arab region during an international meet, warned him that he would face legal action if he changed (edited) the words the official used in a press release."
The journalist, however, said that he saw a relatively better media industry in Oman.
The World Bank once said: "Countries, both their governments and people, need to commit to a programme to enhance governance. Moving towards greater inclusiveness and accountability requires time, because it involves changing traditions and confronting privileged interests.
"It requires tolerance of compromises and mistakes, while the institutions required for good governance, especially those of citizen participation, gain capacity and credibility. But there are ample grounds for optimism, stemming from experience both globally and within the region." "Trust is the backbone of businesses and partnerships. When foreign investors seek new markets, partners and business opportunities, the first thing they ask for is 'a way' to trust their international partners," Abu-Ghazaleh said.
Basically, good governance is a matter of creating sound systems that build trust between shareholders and partners in businesses and societies. "Absence of trust is the most common relationship killer in the world of business. Any decline in trust will reduce the total volume of business, trade and investment. We, therefore, need to think about these issues in a historic sense, and explore how good corporate governance is ultimately a way to build trust between businesses, society and the government," Abu-Ghazaleh concluded.
(Times Business met Abu-Ghazaleh on the sidelines of a recent seminar on corporate governance organised jointly by the Capital Market Authority and Talal Abu-Ghazaleh Organisation.)
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