WITH reference to Errol Oh’s Optimistically Cautious comment titled “Fining directors a good move, but more protection needed” (StarBizWeek June 25), I applaud Bursa Malaysia’s decision in fining the directors and not the company, which will only add to the woes of the minority shareholders, who have already been burdened by questionable acts or omissions. I strongly advocate proper and adequate corporate governance, given the debacles of late involving our listed companies and those that have occurred overseas.
The culprits, primarily the executive directors and officers of the holding companies and relevant subsidiaries, must be brought to task over these issues and penalised accordingly, where it hurts most ... their pockets.
However, while sharing and advocating these important measures, you may wish to consider the pathetic position the non-executive independent directors are placed in. Bursa Malaysia has penalised ALL directors of late, with Golden Plus Holdings Bhd (GPlus) being a case of point.
The independents are there to act as a check and balance to corporate mismanagement. They are, in most cases, paid very small monthly retainers and meeting allowances only.
To subject these directors to such hefty fines and penalties seem rather harsh, more so when they are not in any position to control events, which are mainly the domain of the executives. The members of the audit committee and in particular, the audit committee chairman, are there by reason of a Bursa Malaysia listing requirement. At least one of them must be a member of the Malaysian Institute of Accountants (MIA).
They are only able to play a role of advising at directors’ meetings and/or not approving questionable acts and transactions, but are never in a position to dictate when an act is to be accomplished by the company, for example, the issuance of quarterly financial statements, annual audited financial statements and the like.
These matters are directly under the control of the executives, who if they choose not to comply on a timely basis for whatever reason, leave the non-executive directors with almost little or no choice in being able to ensure timely adherence.
To penalise the non-executives seem rather unfair especially if one looks at GPlus’s non-executive directors – a former senior judge, a former senior civil servant, a former Chief Police Officer and two practising accountants. In view of the enforcement actions taken by Bursa Malaysia on the GPlus directors, both accountants have had their audit licences restricted.
There appears to be no direct correlation between the ability of the relevant individuals to perform audit work for their clients and being a representative on a board, but nevertheless this is the actual sad state of affairs.
I wonder what would happen if all practising members of the MIA refuse to accept any appointment as a “watchdog” for the miserly director’s fees paid. In any case, most of these practitioners don’t really need the money but do take up such board positions for a variety of reasons, including social responsibility.
Datuk Jeyaraj Ratnaswamy
Partner of Mustapha Raj and independent non-executive director of GPlus
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