Reflections from Corporate Governance Business Breakfast Meeting

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Business Excellence and Quality Consulting (Pty) Ltd hosted a Corporate Governance Business Breakfast Meeting on the 17th January at AVANI Maseru. The panel of speakers consisted of Mpaiphele Maqutu, Kabi Kolobe, Relebohile Malahleha, Robert Likhang and Mazvi Maharasoa.

Investopedia defines corporate governance as the system of rules, practices and processes by which a firm is directed and controlled.

Mpaiphele Maqutu, Chief Executive Officer Lesotho Tourism Development Corporation (LTDC)

He focused more on the wheels that make the government function. Those wheels are all of us; they are some of the core fields which are instrumental in trying to shape the government’s frame that we need if we are to make this country a better place.

“When we talk about governance, we are essentially talking about the principle of incapacity which is different from corporate law. There’s no person or entity that you can point out and say you sat down with a government, and then conclude that what they said is actually what the government says, not even LTDC.” He said it’s all because LTDC is nothing but an entity and this also applies to all the organizations we belong to.

With The principle of incapacity, all these entities are nothing but a constitution or an act of parliament and the parliament promulgates that such an entity exists. That entity is nothing but an ink or paper on the shelves and the entity is said to be incapacitated, it has no life, but in legal terms it’s a legal persona.

Appoint human beings into these entities and they will need to bring life into the entities. “This is why we have corporate law and company law which makes it a fiducial duty whereas as a professional you are expected to take the entity, which cannot do anything on its own, and make it function. Implicitly, this includes the decisions that you’ll make and networks that you’ll form as well as your inaction. You can make or break an entity or institution because of inaction so it’s all about what you don’t do that you had a legal duty to do. This is what we call GOVERNANCE.” He added.

Company law says directors or executives who run their business or institutions on a day to day basis will be held accountable if they take a position and make decisions which will lead to the death of an entity. Corporate Governance is about upholding the organization, divorcing all forms of selfishness, which many people fall victim to, and there are rules of engagement put in place that seek to ensure they do everything as stipulated.

Kabi Kolobe, Senior Manager: Finance Business Partner; MTN Group

Corporate Governance.

The fundamental principle of corporate governance is “Agency of theory” which connects to the issue of incapacity. It is fundamental because the problem that arises as part of this agency theory is that the desires of the principal and those of the agent are in conflict.

This maybe due to the fact that the principal is engaged elsewhere and is unable to see what the agent is doing, or the principal has a different attitude from the agent’s or the agent makes decisions that are not in the best interest of the principal but benefits alone.

Fundamentally, organizations as legal entities appoint directors, then appoint executive management who have to take the day to day running of the business. All stakeholders need to gain value of the whole entity and the entity needs to become sustainable so that in future it keeps on growing.

“Corporate Governance in the stricter sense is nothing but a way in which we run companies; we direct companies by governing and controlling them. It defines the relationships to the stakeholders of the company. It is all about the system of controls and processes that are put in place to try and show alignment of both agents and principals and make sure they are corresponding.”

He added that internal controls include a concept called a delegation of authority. “As shareholders we delegate our authority through directors to make sure that they are the ones who are in charge of decision making and that they are the threshold at which we can make decisions on.”

On the Corporate Landscape in Lesotho; last year very few organizations published their financials when banks published their financials.

“If there is no transparency it becomes a challenge moreover if you continue to hear that these organizations are not doing well. There has to be some kind of disclosure in some form of transparency to ensure that all stakeholders are informed on the affairs of their company and how is it managed.”

Relebohile Malahleha – CFO of Avis International

Lesotho and Lesotho crafting.  

“When we look at Lesotho’s craft, we don’t mean Lesotho needs to copy but rather look at principles that drives it and ensure that they are trying to do what they need to do on a daily basis.”

She said that Governance is a discipline that ensures that people are accountable, and this is what borrows are doing, who are accountable.

“We need courage to implement governance, courage is contagious and we need courage to leave a legacy of ourselves and our children and for our country.”

Mazvi Maharasoa- Director of Mazvi Consult (PTY) Ltd

Good governance unlike corporate governance goes beyond the borders because it feels like corporate governance is limited to companies and that is not the case.

“With the view of assisting developing countries and countries with economic transition on how to identify and implement good corporate governance practices, the west are best at this and are going to educate the rest of us on how to do good corporate governance. They also have the goodness of doing so because funding moves from west to east and not from east to west.”

To have a strong corporate governance, a strong qualified board of directors needs to be built, from the beginning till the end in heading your governance correctly, and be able to follow it.

“Follow and explain the guidelines and roles in your entity; who is in charge of what. Emphasize on integrity and ethical dealings, and that’s where we talk about evaluating performance, principle organization, and effective mismanagement.”

She said as Lesotho we should feel privileged because we are a single Basotho nation. When you talk about ethics in other countries, it’s mostly a cultural issue. Our only disadvantage is on our socio-economic development performances.

Robert Likhang- Founding Director of RL Consulting.

How Corporate Governance enhances the National economy based on the definition that says Corporate Governance is an exercise of effective and ethical leadership simply indicates the role of governance in a big economy. Ethical leadership focuses on sustainability.

“When we look at Corporate Governance we need to focus also on the future, beyond the economy and beyond this generation. Thinking of generations to come tells us that on its own as a concept, that application of corporate’s governance is really beneficial not only to us today, beyond the profit issues but just to generations that come.”

He mentioned that there’s also corporate citizenship, where the company realizes that they are citizens as well and they need to take care of the human rights, consider the issue of the environment and be part of a society in which they exist.

Corporate Governance is not only about companies making money for themselves as it used to be the case but it actually goes far beyond, and that’s being ethical as a leader.

The business ecosystem of every country needs corporate governance as an element in an ecosystem.

“The economy of this country will not grow if that element of corporate governance is not strong enough. The reason why we are not developing as a country and as a nation is because we ignore this issue of corporate governance. It is part of the ecosystem of success in any organization. In fact, when investors are investing in any country they look at corporate governance. If there is poor corporate governance they will come but ask for concession, to an extend where that country gets nothing.”

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