Business, government leaders urge closer attention to corporate governance
INSEAD’s sixth edition of the Global Business Leaders Conference was held at the St. Regis Saadiyat Island Resort, Abu Dhabi on Monday, bringing together leaders from the private and public sector to discuss the growing significance of corporate governance.
The event was presented under the patronage of H.E. Sheikh Sultan bin Tahnoun Al Nahyan, Member of the Executive Council. Ahead of the event, H.E. stated, “Government organisations have a distinct role in steering corporate governance due to their direct influence over the regulatory framework on how business is done. The public and private sectors need to work more closely so that our economy remains dynamic and set standards and practices that can advance transparency, corporate integrity and efficiency.”
Ilian Mihov, Dean of INSEAD, Professor of Economics and The Raising Chaired Professor of Economic and Business Transformation added, “Governance has classically been associated with private organisations, but is of increasing significance to the public sector due to strict policies being implemented around quality management and fair practice to a company’s multiple stakeholders.As we shift towards more market-based economies, private and public companies have to start meeting the expectations for greater accountability and transparency, and that extends to the boardroom. Board members and managers in both sectors need to be equipped with new skills to face this evolving paradigm of pressures, paradoxes and challenges. INSEAD as a business school has decided to play a leading role in developing effective directors for the global business scene.”
Ahead of the event HRH Prince Khaled bin Alwaleed bin Talal, Founding Chairman, KBW Investments commented on why entrepreneurs too, should pay attention to corporate governance, which certainly is not everyday practice in an already crowded agenda.
“The hype around being an entrepreneur and running a startup often eclipses the real needs of launching, maintaining, and managing a successful business. INSEAD’s 2016 Global Business Leaders Conference acts as an important reminder that corporate governance – not considered the most exciting nor the most critical part of a new venture – is a pillar of every solid and scalable business. Leading educational institutes like INSEAD often act as a feeder to entrepreneurial ecosystems, so in tandem with encouraging a culture of innovation, a focus on the practical aspects of business is needed as well, and this includes governance” said HRH Prince Khaled bin Alwaleed bin Talal.
H.E. Dr. Ali Rashid Al Noaimi, Director General, Abu Dhabi Education Council (ADEC) and Vice Chancellor, UAE University spoke about the success in public governance efforts in the UAE and why governance in education and of schools is of paramount importance.
Speaking of education governance reforms in the emirate of Abu Dhabi, H.E. Dr. Ali Rashid Al Noaimi, commented, “Public governance is about the design, execution, and management of public institutions and affairs to ensure accountability, transparency, effectiveness, equity, and broad-based participation by stakeholders. Good governance in education, in particular, is concerned with how the funding, provisions, regulations, policies, and ownership of education are set up, coordinated, and operated, and how these have responsively translated into efficient delivery of educational services, desirable educational outcomes and improving stakeholder satisfaction and engagement.”
The plenary session ‘The Changing Face of Corporate Governance in the World’ reviewed the main changes, and progress of governance around the world and expectations from the industry. Mahmood H. Alkooheji, Chief Executive Officer, Mumtalakat; Pekka Hietala, Professor of Finance, Chair, Finance Area, INSEAD; Mishal Hamed Kanoo, Chairman, The Kanoo Group; Ludo Van der Heyden, Academic Director, INSEAD Corporate Governance Initiative, The INSEAD Chaired Professor of Corporate Governance, INSEAD; Dr. Adnan Soufi, Founder, DAS Partners and Former Commissioner, Capital Market Authority shared their views during the session.
The panel was moderated by Peter Zemsky, Dean of Executive Education, Dean of Innovation, Professor of Strategy, The Eli Lilly Chaired Professor of Strategy and Innovation, INSEAD. One of the conclusions was that governance systems in the world are still distinct, even if slowly converging.
But the main issues that governance addresses, and should respond to, still present differences across the world. All agreed that we have entered a new era where governance is becoming a key competitive necessity and foundation, and no longer a purely formal or legal exercise.
Syed Akhtar Mahmood, Lead Private Sector Specialist, Trade & Competitiveness Global Practice, World Bank Group presented initial findings of a report on Privilege-Resistant Policy Making that discussed whether conditions in the region are optimised to allow the private sector to contribute its full potential to sustainable economic growth and transition from an era of growth that has mostly been public-led.
The World Bank report underlined that shortcomings in policy areas such as regulatory policies, service delivery and compliance enforcement (including business entry, customs and tax administration, licensing, and inspections) and government interventions, incentives and support to businesses (such as access to finance, state-owned land and public procurement contracts) potentially lead to non-competitive outcomes in the marketplace, and a limited only contribution from the private sector.
The study advises instituting an effective competition policy framework that curbs natural anti-competition behaviors by leading incumbents, along with clear and transparent public accountability arrangements. Any privilege seeking and giving need to be curbed by reducing potential conflicts of interest , encouraging greater financial disclosure and increasing the public’s right to information.
The report finds that the eight MENA countries (which do not include the UAE or Saudi Arabia) do not fulfil their full potential despite having incentive policies in place. It identifies a gradual way forward for policy makers and many better practice provisions.
Syed Akhtar Mahmood’s suggestion is for regional governments to carry out regular reviews of the relevance and appropriateness of the incentive policies in place, as well as regular assessments of the fiscal costs associated with the incentive regime. The World Bank is eager to make such review results public, so local governments can learn from each other, and so their learning can be made available to the world. The full report is expected to be published by the end of the year.
The plenary session titled ‘Corporate Governance in the Middle East: Real Change or Lip Service?’ explored the issue of whether governance change in the region is occurring or will occur; what needs to change; and what remaining issues need to be solved for governance to contribute to a sustainable growth scenario for the region. Along with Syed Akhtar Mahmood; H.E. Saeed Mubarak Al-Hajeri, Chairman, Abu Dhabi National Energy Company PJSC (TAQA); H.E. Fatima Al Jaber, Board Member, Al Jaber Group; Majid H. Jafar, CEO, Crescent Petroleum; Osman Sultan, CEO, Emirates Integrated Telecommunications Company PJSC – du joined the session.
Ilian Mihov closed the evening highlighting in his speech the importance of the three fundamental pillars for economic growth and greater people engagement: Leadership, Institutions and Education. These pillars are key to improving the regions’ global competitiveness and ensuring sustainable progress.