CAIRO: Representatives from eight countries met with international consultants for a conference on corporate governance this week in Cairo. The conference was organized by the International Finance Corporation and held under the auspices of the Global Corporate Governance Forum, which was created in 1999 to facilitate the development of good business practices in the private sector. The forum holds meetings and workshops internationally to help local organizations implement corporate governance practices. Corporate governance is considered to be a key strategy in promoting economic growth by combating serious issues facing businesses and economies including corruption, poverty and unemployment. The concept of corporate governance gained popularity in the 1990's as an offshoot of management science. Attention to its practices has increased recently as a result of the current financial crisis, which can be partially attributed to bad corporate management practices. The second in a series on corporate governance basics, the conference brought together regional representatives from Egypt, Lebanon, Pakistan, Morocco, Tunisia, Algeria, Abu Dhabi, Dubai and Oman. The conference moderator, Emmanuel du Boullay, a senior consultant to the Global Corporate Finance Forum and independent director of the French Institute of Directors (IFA), led the group through an intensive series of lectures and exercises designed to help local organizations develop and market corporate governance training programs. Daily News Egypt spoke with one of the presenters, Leonardo Viegas, director and founding member of the Brazilian Institute of Corporate Governance (IBCG), and Emmanuel du Boullay to find out more about the impact of corporate governance, and what it has to offer companies in the throes of financial crisis. Daily News Egypt: How did the conference attendees respond to the information presented in the conference? Do you think they will be successful in implementing corporate governance at home? Viegas: Well, each country in attendance has unique characteristics; some, like Tunisia and Lebanon have developed private sectors, while others such as Algeria have barely any private enterprises. So, each country has to move at its own pace when implementing corporate governance practices, and the representatives need to adapt what they've learned to local circumstances. I think that the people in attendance have great potential to plant roots for corporate governance at home - they are the educated elite and need to educate their fellow citizens about what they learned here and help them understand and implement it. Is that what you tried to do in Brazil? Viegas: Yes, the corporate governance movement in Brazil started with a group of businesspeople that wanted to improve the economic situation in the country. We'd just come off a long period of debilitating inflation and mismanagement in the economy and it was time for a change. We started early - the IBCG was created in 1995 with a handful of members. Today we have 1,400 members and the IBCG is an active non-profit organization. Brazil's economy has seen great improvement and expansion, especially in the stock and capital markets. We like to think we helped make that happen. So there is a direct link between corporate governance and economic progress? Viegas: Yes, I believe there is. The goal of corporate governance is to make everything run more smoothly, including infrastructure, so companies can operate more easily and attract capital. Good corporate governance brings credibility to companies. How did the movement evolve in France? Boullay: Actually, our organization only began in 2003, so it is relatively new but we've made a lot of progress. We have 2,000 members as well as 40 larger associate members. We are trying to implement corporate governance in all areas of the private sector, and we are looking to adapt the practices to fit different kinds of businesses and industries. Has corporate governance changed the business climate? Boullay: Yes. I think the biggest improvement has been increased democracy on company boards. Ten years ago boards were basically useless, but since the internet crisis, boards and shareholders have become move involved in running companies. They are doing more to oversee and challenge decisions and policies, and this process has led to more diversity on boards, which is very positive. People are taking more initiative to actually understand the business model and participate in improving it. What is the role of corporate governance in the financial crisis? Boullay: The crisis definitely renewed interest in corporate governance, largely because the problems can be traced back to bad governance. People became addicted to profits and disregarded the fact that bad decisions were being made for too long. There was not enough oversight; no one questioned what was happening. Deep changes need to be made in the governance of large companies - attitudes need to shift and embrace good practices. Brazil has a lot of social problems that are being made worse by the crisis - does corporate governance address this? Viegas: Yes, corporate governance helps society as a whole and we are committed to social responsibility. In Brazil, our activities are largely focused today on small family businesses and improving their capacity and quality to create jobs. This is very important to our future in Brazil and I believe helping small enterprises is an important frontier for improving society. Where do you see corporate governance heading in the future? Boullay: I hope people continue to invest in the importance of corporate governance and don't lose sight of its value. It has brought a lot of positive changes to France and I hope that other countries can implement it as well. Each country needs to focus on different sets of issues regarding implementation, but corporate governance can help everyone, and I think the forum provides a great area to motivate and inspire people to make beneficial changes in the private sector.
