Corporate Governance SAFA Conference 10 Nov Final

7/28/2019 Corporate Governance SAFA Conference 10 Nov Final

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Mohammad Iqbal Ghori FCMA

Chief Financial Officer FESCO

Corporate Governance in Public

Sector


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1. What is corporate Governance?

2. Why for Public Sector?

3. Code of Corporate Governance for Public

Sector

4. What Matters in Code of Corporate Governance

5. Issues

6. Recommendations

7. Question & Answers

Scheme of Presentation


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Corporate Governance involves a set of

relationships between a companys management, its

board, its shareholders and other stakeholders.

(OECD Principles Define Corporate Governance Comprehensively, 2004)

Corporate Governance?


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Openness

Accountability

Fairness

Transparency Responsibility & integrity

Efficiency and effectiveness

Balance between International Standards and

local need and realties

Core Values of Corporate

Governance


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Private sector PSE

Objectives

Clear focus on value

maximization

Pursues of efficiency and social

distributional objectives

Agency issuesBungle agency - concernedabout self-interested behavior

by managers or controlling

shareholders

Multi agency - concerned aboutself-interested behavior by

managers and politicians /

bureaucrats

Incentives/Discipline

Strong market-driven

incentives and discipline Weak non-market mechanisms

Transparency

High level of disclosure (for

listed firms)Low level of disclosure

ADB Report on Governance

Private Vs Public Sector


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An imperative concernExcessive confidentiality in decision making

Conflict of interests?

Inefficiency in public expenditure

Non-transparency

Now greater demand for:

Openness and accountability in government,

with Greater willingness to challenge decisions

Stakeholders Participation

CCG Why in Public Sector


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Corporatization cannot be successful without

CCG

Commercialization

Privatization

Ultimate Goal of

Corporatization


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Building Firewall between the Government's policy making role andownership role.

Strengthening of BoDs

as envisioned under

the Companies

Ordinance

Professional andcommercially orientedmanagement selected by

the BoDs

GoP

BoD

Management

Objective of Corporate

Governance


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Composition of Board Role of Chairman and CEO

Responsibilities, Power and Function of Board

Related Party Transaction

Board Capacity Building

Board Committees

Qualification of CFO and Company Secretary

Directors Report

Conflict of Interest

Internal Control Board Committees

Remuneration of Board

Self Evaluation

Corporate Governance in

PSE


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More focused on independence than specialization /

discipline

Qualification of CFO and Company Secretary

Member of ICMAP or ICAP but still backdoor is open for

conventional and rankers

Conflict of interest can compromise Self Evaluation

Mechanism

Ministerial Responsibilities of Members of Board of

Directors Influence of Ministry / GoP

Unresolved Sector specific issue

Corporate Governance could not work in power sector

Immature regulatory regime and Readiness

Issues


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Recommendations


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Transparent and merit based selection and appointment of Boar of

Directors

Skilled Based Nomination Process

Sector Specialist instead of Generalist

Professional from at least Accounts/Audit, Law and H.R

Discipline

Establishing clear terms of reference for Board Sub-Committees

Independent mechanism to eliminate conflicts of interest

Prioritizing the issues that need the attention of the Board to ensure

focus on items of material nature

Selection and Ethics


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Performance Contract between BoD and GoP

Implementation of Integrated Reporting in Public

Sector Entities

Mandatory Third Party Corporate Governance Audit

Establishment of Holding Company to formulate

Policy and monitor Performance Help construct talent pool for all sector

Settlement of Sector specific Issues Regulatory - Pricing

Political

Establishment of Corporate Planning and Control

Department

Performance


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THANKS

Corporate Governance SAFA Conference 10 Nov Final

Documents