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8_ICCA Meetings Association Africa Day_The importance of good ethical practice (B)_Adv Annamarie van der Merwe

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8_ICCA Meetings Association Africa Day_The importance of good ethical practice (B)_Adv Annamarie van der Merwe

  1. 1. Ethics and Credibility in the Business Events Industry Adv Annamarie van der Merwe FluidRock Governance Group, Executive Chair 24 February 2020
  2. 2. Every reputable lawyer must have a disclaimer…… The data and information shown in this document or conveyed in presentation is for general information purposes only, is not intended for any commercial or non-commercial purposes and may or may not represent the current status of the subject matter. No data or information is warranted or guaranteed by FluidRock Governance Group Proprietary Limited ("FluidRock") and its related parties as to its completeness, accuracy, or fitness for a particular purpose, express or implied, and such data and information are subject to change without notice. You should not act on any of this data and information. Any comments or statements made herein do not necessarily reflect those of FluidRock. References to King IV™ are to the King IV Report on Corporate Governance™ for South Africa 2016. Copyright and trade marks are owned by the Institute of Directors in South Africa and the IoDSA website link is: http://www.iodsa.co.za/?page=AboutKingIV
  3. 3. “Power corrupts the few, while weakness corrupts the many." Eric Hoffner
  4. 4. Doing the right things versus doing things right!! Doing the right things (being informed) ▪ Corporate legislation ▪ Constitutional documents ▪ Shareholders’ agreement ▪ Other relevant statutes and regulations Doing things right (act with diligence) ▪ King IV Report ▪ Charter and terms of reference ▪ Delegation of authority ▪ Code of Conduct ▪ Other ethics related policies……….etc etc etc
  5. 5. “Check the scoreboard”…. “It’s not a pretty picture”… 
  6. 6. Criminal case opened against former Tongaat Hulett executive The sugar maker says the police are investigating an unnamed former executive for his role in an accounting scandal that has forced the company to restate financials Business Day 27 June 2019 - 09:42 Loni Prinsloo
  7. 7. Thomas Cook collapse: German company files for bankruptcy…… • Thomas Cook businesses in several other European countries are also trying to survive: • Polish subsidiary, Neckermann Polska, has suspended its activities and said it will file for bankruptcy • Thomas Cook Netherlands, which has 10,000 holidaymakers abroad, said on Wednesday it had been granted a delay on payments while action was taken to secure its future • Thomas Cook France has more than 9,600 customers abroad and will go to court on Thursday in an attempt to go into receivership and find a buyer • Thomas Cook Austria has filed for bankruptcy and has almost 5,000 customers abroad. Founded in 1841, parent company Thomas Cook filed for bankruptcy after failing to secure emergency funding of £200m from the UK government…… BBC News, 25 September 2019
  8. 8. Thomas Cook…….some of the root causes…….. Thomas Cook's dramatic collapse follows years of mismanagement at the tour operator and a failure to keep pace with online rivals. Brexit didn't help either. Analysts say it was one of several factors that led to the 178-year old travel company's demise, which has left 150,000 UK holidaymakers stranded abroad and cost thousands of employees their jobs. CNN Business
  9. 9. Now let’s ask the question again ……Why is corporate governance relevant……….? “Corporate governance, for the purposes of King IV, is defined as the exercise of ethical and effective leadership by the governing body that results in the achievement of the following governance outcomes: • an ethical culture; • performance and value creation; • effective control; and • legitimacy.” King IV Report
  10. 10. The King IV Code - Content 4 Governance outcomes 17 Principles 400+ recommended practices
  11. 11. King IV Code: Principles • Principle 1: Leadership – The Board should lead ethically and effectively • Principle 2: Organisational ethics – The Board should govern the organisation in a way that supports the establishment of an ethical culture • Principle 3: Responsible corporate citizenship – The Board should ensure that the organisation is and is seen to be a responsible corporate citizen • Principle 4: Strategy and performance – The Board should appreciate that the organisation’s core purpose, its risks and opportunities, strategy, business model, performance and sustainable development are all inseparable elements of the value creation process • Principle 5: Reporting – The Board should ensure that reports issued by the organisation enable stakeholders to make informed assessments of the organisation’s performance and its short, medium and long term prospects • Principle 6: Primary role and responsibilities of the governing body – The Board should serve as the focal point and custodian of corporate governance in the organisation
  12. 12. King IV Code: Principles • Principle 7: Composition of the governing body – The Board should comprise the appropriate balance of knowledge, skills, experience, diversity and independence for it to discharge its governance role and responsibilities objectively and effectively • Principle 8: Committees of the governing body – The Board should ensure that its arrangements for delegation within its own structures promote independent judgment and assist with balance of power and the effective discharge of its duties • Principle 9: Evaluations of the performance of the governing body – The Board should ensure that the evaluation of its own performance and that of its committees, its chair and its individual members, support continued improvement in its performance and effectiveness • Principle 10: Appointment and delegation to management – The Board should ensure that the appointment of, and delegation to, management contribute to role clarity and the effective exercise of authority and responsibilities • Principle 11: Risk Governance – The Board should govern risk in a way that supports the organisation in setting and achieving its strategic objectives
  13. 13. King IV Code: Principles • Principle 12: Technology and information governance – The Board should govern technology and information in a way that supports the organisation setting and achieving its strategic objectives • Principle 13: Compliance governance – The Board should govern compliance with applicable laws and adopted, non-binding rules, codes and standards in a way that supports the organisation being ethical and a good corporate citizen • Principle 14: Remuneration governance – The Board should ensure that the organisation remunerates fairly, responsibly and transparently so as to promote the achievement of strategic objectives and positive outcomes in the short, medium and long term • Principle 15: Assurance – The Board should ensure that assurance services and functions enable an effective control environment, and that these support the integrity of information for internal decision-making and of the external reports
  14. 14. King IV Code: Principles • Principle 16: Stakeholders – In the execution of its governance role and responsibilities, the Board should adopt a stakeholder-inclusive approach that balances the needs, interests and expectations of material stakeholders in the best interest of the organisation over time • Principle 17: Responsibilities of institutional investors – The governing body of an institutional investor organisation should ensure that responsible investment is practiced by the organisation to promote the good governance and the creation of value by the companies in which it invests.
  15. 15. It is NOT about ticking boxes……….. “Business culture, ethos and behaviour matter. Mechanically applied rules, guidance and a ‘compliance culture’ are not enough.” Roads to Ruin A report by Cass Business School on behalf of Airmic Sponsored by Crawford and Lockton
  16. 16. Note to self……..(and management) “Tell the truth. Transparency breeds legitimacy.” John Maxwell
  17. 17. Let’s wrap up by reminding ourselves…….. “Good governance is underpinned by good behaviour; no more no less…..Good corporate governance, in turn, makes for sustainable business. A key lever in all this is the values we as individuals bring to organisations, and how we help, or hinder, the collective value system that translate into the culture of organisations….. We contend that governance is the guideline, and behaviour is the driver.” Linda de Beer & MA Tordesillas, Corporate governance outcomes Juta, The Corporate Report, Vol 8 Issue 2
  18. 18. Or, in the words of our own Prof Mervyn King…….. “………the tone at the top, the tune in the middle and the beat in the feet at the bottom……….”
  19. 19. The bad news is………….if we don’t get this right, there are going to be many more Steinhoff’s, Tongaat’s, Theranos’, Thomas Cook’s ………
  20. 20. And remember……… “If people steal for you, they will steal from you….” The Ethical Capitalist Julian Richer
  21. 21. Thank you ……

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