Corporate governance as antidote to corruption

Corruption has become a euphemism for plain thievery of public resources through the facilities of witty deception and pure moral depravity. Fraudulent practices by business people, politicians and the well-placed in society wreak greater havoc on society than little crimes committed by street offenders.

Anti-corruption should be seen as a vital objective as corruption has stet negative impact on a society’s development. The paper looks at corporate governance as having profound impact on the level of effectiveness of global anti-corruption measures.

There is strong linkage between corporate governance and corruption, where countries and organisations practicing good corporate governance experience low corrupt practices and transparent problems and vice versa. The vital role of corporate governance in an economy is not fully understood as reflective of the quality of a country’s institutions of governance as a whole.

What is corporate governance?

Corporate governance is a system of laws and sound approaches to direct and control affairs of organisations by focusing on internal and external corporate structures of board, management and other stakeholders, and indicates how the rules and procedures that influence corporate decisions are made to monitor and mitigate agency conflicts and self-seeking misdeeds of corporate officers.

Effective anti-corruption measures against obstacles to transparent institutional processes and mechanism require application of corporate governance processes. Thus globally, corporate scandals, failures and fraud are usually associated with and followed by series of regulatory reforms and enactment of corporate governance codes to guide corporate activities of individuals and organisations.

The gravity of fraud and mal­– corporate behaviour revealed from the Watergate scandal, pushed the US Congress to immediately legislate the Foreign Corrupt Practices Acts (FCPA) whose main focus was the use of internal controls. The Sarbanes Oxley Act 2002 meant to restore public confidence resulted from the Enron and other high–profile scandals and corporate failures. Ghana needs to initiate renewed interest in governance codes and its application to stem the increasing spate of corruption and mal–corporate behaviours.

Accounting and internal controls

There is the need to institute strong accounting and internal controls to make illegal practices more difficult to conceal. Strict application of good internal control and governance processes ensure that the process of selection, procurement and delivery of services and products are more transparent to prevent and reduce rent-seeking and corrupt deals. Anti-corruption agencies must institute accounting provisions and controls in line with the FCPA principles.

The FCPA, not oblivious of unavailability of physical evidence to prove bribery, created accounting requirements through internal controls to make illegal activity more difficult to conceal. Thus failing to comply with accounting requirements or even fraudulent bookkeeping attracts criminal prosecution. Those who violate the accounting provisions such as auditors not reporting illegal payments or wrong transactions are also liable for criminal and civil liability.

Need for regulatory reforms

The nation needs to undertake regulatory reforms to make them more competent on enforcement than is the case now. Regulations should be made more operational and transparent and independent from political pressures and be more accountable to public executive authority, parliament and the judiciary.

Good political governance based on clear separation of powers is practiced to serve as check and balance among the three arms of government as a critical link to help regulatory and enforcement mechanisms to work to provide good political governance.

Enforcement efforts must be stepped up. The judicial system should be relatively strong, politically independent and adequately resourced to complement regulatory enforcement mechanisms as pertains to Brazil and India.

Though the NDC government has retrieved GH¢14.5 million from money lost through the GYEEDA scandal, many view most Commission of Enquiry and presidential directives as smokescreens to avoid culprits from being sanctioned for mal-corporate behaviour. Strict enforcement of laws and protocols to prosecute and retrieve illegally acquired state money is critical and needed for fighting corruption.

To Ex-President Clinton of US, economic security is a part of national security; hence government should seriously tackle and convict individuals and organisations who engage in corrupt practices against the interest of the nation state. The United State (US) witnessed a wave of Chief Executive Officer (CEO) dismissals in the 1990s and a Venezuelan President was ousted all for corrupt business practices.

Serving humanity

The institutions of corporate governance are at the heart of transformation from relationship-based to rule-based economy. Corporate governance, however, envisages that beyond written laws and regulations. Organisations must be encouraged to independently act reasonably and ethically to uphold the interest of the organisation or economy as a whole.

Democratic governance may not be enough to check corruption. A transparent and accountable dealing in economic relationships among all stakeholders is an imperative to enhance the citizenry’s faith in political governance and sustain democratic governance.

Though corruption may have some basis in cultural and moral attitudes of Ghanaians, the greater problem is weak enforcement of western economic and political structures hence the need for aggressive enforcement of economic and political governance structures and rule of law that requires all stakeholders to seriously address.

There is an emerging consensus on the need for good corporate governance and rule of law. In a democracy, corruption has little place and government and institutions of state must promote good governance and strict rule of law. Legislative and executive procedures must be transparent with independent judiciary. We need to shift from rule of persons to rule of law between institutions of corporate and political governance.

However, without ethical frameworks for all stakeholders, even the most prudent norms can still be hoodwinked in a system plaqued with widespread corruption and open immorality. Excessive ill-gotten materialism should give way to greater strive to serve humanity as a means of self-fulfilment and a means of restraining ourselves from using mal-corporate behaviours to amass wealth.