Disclaimer: This is an original by the Maldives Capacity Development and Governance Institute (MCDGI) word-for-word; without any editorial changes by the MBR.
This is a slogan that MCDGI often uses in its governance training.
It is universally well known and accepted preposition that effective corporate governance is key to preventing fraud and corruption. Hence the policy makers should take steps to implement strategies and best practices within the pillars of RAFT- Responsibility Accountability Fairness and Transparency to safeguard against fraud and corruption.
The responsibility for implementing effective corporate governance should come from the top as the saying goes- A fish rots from the head down. Leadership can cause success and failure.
Taking into consideration the importance of corporate governance for development of the Code of Corporate Governance was implemented in 2004 as an initial step to inculcate an environment to operate businesses to an internationally accepted standard. Since then, the heads of corporates started to understand and use the corporate governance norms for seamless running of corporates as well using the best practice tools to mitigate fraud and corruption.
Quoting from the CMDA Corporate Governance Code, corporate governance ensures that companies are directed and managed at board and management level in a fair and transparent manner. It provides guidance on how the objectives of the company are set and achieved, how risk is monitored and assessed, and how performance is optimized.
While we all know that good corporate governance practices are critical in frightening and perceiving fraud and corruption, we should understand that implementing a code by itself will not stop frauds and business failures. However, these types of guides can ensure transparency and answerability in an establishment and protects stockholders’ rights.
Maldives currently ranks a 93 out of 180 countries according to the Corruption Perception Index of Transparency International and this gives an indication of the rampant level of corruption in general. As the government is also a major competitor to the private sector in the business sector with many state-owned enterprises, the government’s responsibility for implementing good governance increases manyfold.
Shedding a light on the Maldivian companies in general, lack of transparency is one of the critical elements that lacks in the governance systems. Implementing a formal corporate governance framework for over 15 years, nevertheless corporate corruption and fraud narrative about companies have not subsided.
Hence, Maldives should take concrete steps to implement a strong governance framework, backed by legislative power if we want to develop a conducive environment for companies to thrive profitably and increase investor confidence for the development of Maldives economy. Furthermore, as the government takes concrete steps to modernize the financial sector and open internationally into new areas of finance and investments with specialised institutions, it must have grit to strengthen the governance full spectrum across all institutions.
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