KARACHI (January 08 2005): The role of Securities and Exchange Commission of Pakistan (SECP) in enforcement of corporate governance is not satisfactory as it fails to check corporate irregularities. The SECP definition of corporate governance itself is not only vague, but is also not applicable to the government organisations such as Water and Power Development Authority (Wapda), Karachi Water and Sewerage Board (KW&SB), Railways, etc, and to other institutions like universities, hospitals, housing societies, etc.
Honda Group of Companies Chairman Yusuf H. Shirazi expressed these views, while giving a presentation on “Code of corporate law and business ethics” at the Goethe Institute here on Friday.
The programme was organised by the Pakistan-German Business Forum.
He expressed concerns over existing standards of evaluation, monitoring and implementation of corporate governance and declared the set sanctions against transgression and more importantly imposition of these sanctions as not well defined.
He said that the regulating mechanism for stock markets was imperfect and criticised the shareholding spread and its impact on minority shareholders.
Substantiating his arguments, he referred to various corporate frauds without disclosing their names. Alluding towards a limited capacity of the SECP to govern, he said that a listed cement company made 10 years prolonged default to 53 financial institutions, while several textile mills were under multiple charges. Similarly, an automobile company was a big defaulter of public money, he added.
He held CFOs, CS and heads of internal audit mainly responsible for most of the corporate irregularities and criticised the regulators' incapability to manage these high profile people. He said that the corporate dynamics followed the government dynamics and as such it was a function of effectiveness of state.
While criticising the role of judiciary, he said that the judiciary was hardly helpful in implementing rule of law in the country. The courts invalidated own judgements with change in political, economic and social scenarios, he added. In this backdrop, he said that ad hocism in dynamics led to an environment where foreign and local investors are shying away.
Criticising country's heavy dependence on foreign aid and the role of international donor agencies in poverty alleviation, he quoted Wolfensohn as saying, “While poverty has grown in Pakistan over the last decade, the proportion of people living in extreme poverty globally has been reduced by half, over the last 30 years. There were five billion people in developing countries and one billion in the developed world, but it was the developed world that held over 80 percent of world's wealth.”
He gave the example of France, Japan, India and Malaysia who instead of depending on foreign donor agencies had followed indigenous policies and proved the International Monetary Fund and World Bank wrong.
Earlier, Pakistan-German Business Forum President Razzak Bengali introduced Yusuf Shirazi, while Vice President Salahuddin Ahmed presented the vote of thanks.