Malla Praveen Bhasa

Global Corporate Governance: Debates and Challenges

Modern day business is beset with changing operating paradigms. Economies with efficient economic policies and stable political systems are a big draw among the investors. Countries that have opened themselves to world markets and that have good legal systems in place, providing protection to investors have attracted more capital in the process of globalization. As the demand for capital is growing in both the developed and the developing economies, the need to establish good governance practices has gained momentum. Governance practices however, are not uniform across nations. This diversity may be particularly because of the different legal structures and cultural settings adopted by different nations. This paper tries to explore the arguments on convergence and divergence of corporate best practices, keeping in view the various governance models currently in practice. Explaining the rationale behind the emergence of corporate governance as a movement, this paper attempts at discussing the various prevalent systems of governance. In the end an attempt is made to address the challenges to corporate governance in the context of globalization of best practices. Given the cultural settings of different nations it is argued that it would never be possible for corporate laws to converge universally. New models of corporate governance are likely to emerge given the large‐scale experimentation done by transition economies.

Understanding the corporate governance quadrilateral

This paper wades through the extant corporate governance literature and identifies the existence of four different governance models in practice. Though market‐centric and relationship‐based models have been widely discussed in corporate governance literature, a dearth of two other governance models viz., transition and emerging governance models have not been extensively covered. This paper tries to identify the existence of the transition governance model and also a new governance model that is emerging in some developing countries. An attempt has been made to narrate the way all the four governance models function in different economies, and assumes that understanding the governance quadrilateral would be a pre‐requisite for understanding global corporate governance.

Corporate Scam, Indictment and Reform: Louis Berger’s Values-based Approach to Reform

Abstract Corporate improbity and greed invariably impact a multitude of stakeholders both within the rogue corporation and beyond. Codes of conduct when breached violate the principles of morality and cause a lot of dismay to those impacted. A novice student of corporate governance might struggle to articulate the boundaries of morality. In situations where there is a conflict between corporate morals and corporate profits, what should take precedence – values or benefits? Louis Berger is a US based international consulting behemoth that provides infrastructure and economic development services across 80 countries globally. Embroiled in a whistle blower’s litigation and subsequent investigation by the Department of Justice it was caught defrauding the US taxpayers for well over a decade between 1997 and 2007. The company is a good example of how a global corporation enmeshed in indictments of wilful fraud by its former CEO and reckless violation of penal statutes by its senior employees is trying to reinvent itself to become a model corporate citizen. Its success or failure in becoming so will largely depend on the robustness of its corporate governance mechanisms and its willingness to leave behind its historic blunders.

BUMI Plc: Case of Contrasting Governance Cultures?

For an inquisitive student of corporate governance, the BUMI Plc case offers an extraordinary insight into the nuances of contrasting corporate governance cultures and their associated problems. The marriage of the East–West governance models and its subsequent failure has brought to the fore the vulnerability of the Anglo-Saxonic corporate governance model in the face of entrenched relationships characterizing Eastern governance structures. Western investor Nat Rothschild joins hands with the Bakries of Indonesia to build a mining behemoth. Despite the Bakries’ supposed lack of governance integrity, Nat allies with them with the confidence that the demands of Anglo-Saxonic corporate governance model would play a great leveller in ironing out any mis-governance-related issues. Whether he was too confident of the Western model of governance, or on his own competence as a successful investor, or whether he failed to grasp and appreciate other models of governance is a matter of debate. Suffice it to say that Nat sensed a huge business potential in Indonesia, and despite a contrasting governance model followed by Indonesian businessmen, he partnered with them in the hope that at the end the Anglo-Saxonic governance model would prevail and maximize shareholder value. Was he proven right or whether he misjudged his partner’s governance model forms the basis of this case. The case does not argue for or against any governance model. Instead it draws the student’s attention to the existence of different governance models and their interplay in a unified setting.