CORPORATE GOVERNANCE: THE TURNING POINTS - UBA Plc

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CORPORATE GOVERNANCE: THE TURNING POINTS - UBA Plc

The GMD’s Inspirational LectureIn my view, this is what corporate governance is. A journey onwhich the different stakeholders in a corporation are embarked,and for which they have assigned roles to play interactively withothers, and in the course of which they will encounter challengingsituations confronting them with difficult choices requiringdecisions to be made that would impact on the long-term fate oftheir corporations.CORPORATE GOVERNANCE AND THE CONCEPT OF CORPORATION:Before I talk about corporate governance, let me touch briefly onthe concept of corporation, or what in this clime is more popularlyknown as company. There are numerous definitions of theconcept of which I think we should be satisfied with just two, whichin my opinion are particularly apposite to the focus of this talk.A classical definition goes as follows:“When they (the individuals composing a corporation) areconsolidated and unitedinto a corporation, they and their successors are then considered asone person in law … for all the individual members that have existedfrom the foundation to the present time, or that shall ever hereafterexist, are but one person in law – a person that never dies: in likemanner as the river Thames is still the same river, though the partswhich compose it are changing every instant 2 ”A more modern definition of the concept states that:“… a corporation is a mechanism established to allow different partiesto contribute capital, expertise, and labor, for the maximum benefit of2 Blackstone4 | P age


The GMD’s Inspirational Lectureall of them. The investor gets the chance to participate in the profits ofthe enterprise without taking responsibility for the operations. Themanagement gets the chance to run the company without taking theresponsibility of personally providing funds. In order to make both ofthese possible, the shareholders have limited liability and limitedinvolvement in the company’s affairs. That involvement includes, atleast in theory, the right to elect directors and the fiduciary obligationof directors and management to protect their interests. 3 ”The truth of the two definitions is immediately obvious when yourelate it to an institution such as UBA. What is today’s UBA originallycame into existence in 1961. Although many, if not all of us here,must be familiar with this fact, it is not impossible that it has neverstruck some of us here that may have been born after 1961 thatthe institution is actually older than we are. Even for any of us whomay be older than the institution, the fact that we find ourselvesworking for the institution is in itself a significant fact. How many ofthe original owners are still alive? Could anyone of them haveforeseen that you will be working for the institution at this time?When you are sixty years old or have put in certain number ofyears in the service of the company, I assume as is the case withmost other banks in Nigeria, that you will have to departcompulsorily, if you had not before then left voluntarily or forcompulsorily for some other reasons. In effect therefore, UBA hasthe potential of surviving all of us here. This is the truth in the firstdefinition which ascribes immortality to a corporation andcompares it to a flowing river which remains the same “though theparts which compose it are changing every instant”. But note thatI have not gone as far as to agree with the ascription in thedefinition of immortality on a corporation, but have instead limitedthat quality to mere potentiality. Corporations do die. A mostrecent ready example which you will be familiar with is Lehman3 Ibid5 | P age


The GMD’s Inspirational LectureBrothers which practically died on the 15 th day of September 2008when it filed for bankruptcy after existing for about 158 yearshaving been formed in 1850.To this extent, corporate governance is about how a corporationmay realize its latent potential for immortality.The second definition is also true about UBA. Today’s UBA is aconglomeration of at least three banks (the original UBA, theerstwhile Standard Trust Bank and the erstwhile Continental TrustBank). According to information on your website:“Today, the consolidated UBA is the largest financial servicesinstitution in West Africa with total assets in excess of one trillion,six hundred million Naira (over USD14b) and more than sixmillion (6m) customer accounts, operating out of 7 economiesin the West, Central and East African sub-regions, Nigeria,Ghana, Uganda, Cameron, Cote d’Ivoire, Liberia and SierraLeone. It has over seven hundred (700) retail distribution centresacross Nigeria, its main operation base, 16 branches in Ghana,5 branches in Uganda and 5 branches in Cameroon. OutsideAfrica, it also has presence in New York, Cayman Island andLondon”This phenomenon growth has been made possible because a lotof investors have pooled their meager resources together andemployed key expertise in various aspects of banking and financeand related fields to manage it for the mutual benefit of allstakeholders involved. These stakeholders are of course not limitedto the shareholders and the managers or employees alone. Theyextend to your customers, regulators, creditors and suppliers, aswell as the members of the communities in all your countries ofoperation. It is therefore not for nothing that some legal scholarsprefer to define a corporation simply as “a nexus (bundle) of6 | P age


The GMD’s Inspirational Lectureanswers reflect what is best for the creation of long-term,sustainable value. When that structure gets subverted, it becomestoo easy to succumb to the temptation to engage in selfdealing”6Expressed or implied in the above definitions of corporategovernance is an intricate web of relationships and interestsreflective of the dimension which modern corporations havetaken. Corporate personality in its earliest manifestation in England(which gave the concept to the world) took the form of municipaland educational corporations granted perpetual existence andcontrol over their own affairs as a way of removing them from theall-encompassing power of the King. In the scramble for coloniesin the 17 th Century, the State created corporations for the specificpurposes of settling colonies. A ready example was the RoyalNiger Company, which to all intent and purpose was a privatelyfunded company granted a charter to settle most of the territoriesconstituting the present day Nigeria. The risk of such venture waslimited to the amount actually invested into it by the adventurers.In so far as in its earliest form, corporate personality was a privilegewhich the King or the State may confer or withhold from asubject/citizen to engage in commerce other than in his/her ownindividual natural capacity, no governance issue arose.However, the advantage of this system as an instrumental forfacilitating the establishment and conduct of business in generalsoon resulted in its transformation from the status of anextraordinary privilege to be specially or specifically conferred orwithheld by the State on favoured subjects, to one commonavailable by law to all citizens wishing to engage in business bythat mode.6 Robert A.G. Monks and Neil Mino, Corporate Governance (Blackwell Publishing, 2007) p. 98 | P age


The GMD’s Inspirational LectureEven with its adoption as a common form of engaging orconducting business, no governance issue arose as long as bothownership and management were combined in the samepersons. Such owner-managers are generally free to apply theircorporate assets, being essentially their own private property,whichever way they liked, to their own profit or ruin andbankruptcy.Subsequent technological advances leading to new economiesof scale in the early 19 th century necessitated the requirement oflarger capital beyond the resource of a single or few individualsand family unit. The attendant diffusion of ownership ofcompanies across several individuals and families ultimately led toa fissure in the previous combination of ownership andmanagement. Today’s UBA for instance has shareholders in thehundreds of thousands and their identities as well as the extent oftheir ownership stakes in the business are constantly changing as aresult of the easy transferability of the shares they own. The interestof most of such shareholders is less concerned about whomanages the business, and more about the returns they get fromtheir investment. And because of the large pool of capital,majority of such shareholders are infinitesimal in their holdings andare absentee owners who are completely dependent on themanagers of the business who themselves may not own anyshares in the business, or whose total holding may be tenuouscompared with the aggregate held by the non-managerialcontributors to the capital of the corporation. In this situation,managers have the responsibility to efficiently use the corporateassets to ensure the attainment of the corporate objective anddeliver value to its diverse owners.9 | P age


The GMD’s Inspirational LectureIt was the perceived abuse or misuse of this enormous power onthe part of managers that originated the concerns aboutgovernance issues.In paragraph 1.1. of the introduction to the CBN “Code ofCorporate Governance for Banks in Nigeria Post Consolidation”, itwas stated:Financial scandals around the world and the recent collapseof major corporate institutions in the USA and Europe havebrought to the fore, once again, the need for the practice ofgood corporate governance, which is a system by whichcorporations are governed and controlled with a view toincreasing shareholder value and meeting the expectationsof the other stakeholders.As implied in the above statement, the concern about corporategovernance did not start recently 7 . Actually, it can be traced tothe events which culminated in the establishment of the first-everSecurities & Exchange Commission (SEC), the United States ofAmerica Securities & Exchange Commission as a measure to curbthe abuses inherent in laissez faire capitalism which before thenbrooked no outside or governmental interference in themanagement of businesses. This event was the U.S GreatDepression of the 1930s, which was largely blamed on corporatemismanagement. As a direct consequence of this event, the U.S.SEC was established in 1934 to reform and regulate corporateownership and control.7 Narayan N.R. Murthy (Chairman, Infosys Technologies Limited): ‘Good Corporate Governance – A Checklistor a mindset? Robert P. Maxon Lecture, George Washington University, Feb. 06, 200610 | P age


The GMD’s Inspirational LectureApparently, the effort of the body did not go very far enough forin the 1970s fresh scandals involving U.S. companies broke outevincing a pattern of corporate misconduct (insider trading,deceitful advertising, creative record-keeping, etc) in U.SCorporations. In the investigations that followed, as many as 500quoted companies were either charged by the US SEC orconfessed to various degrees of misconduct 8 .The occurrences in the U.S. had worldwide reverberations. Severalinitiatives 9 were thus taken in different jurisdictions to developcoherent rules aimed at ensuring that companies function theway they are supposed to function by maintaining a balance ofpower and control among its different stakeholders and preventanyone of them from marginalizing the others to the ultimatedetriment or destruction of the Company which by reason of itsartificiality is unable to act by itself. Addressed by these differentinitiatives are issues touching on transparent and effectivedischarge of the trust vested in those concerned with themanagement of companies, such as the Board of Directors, theManagement, and external functionaries (especially the auditors).Based on these different initiatives, measures have been adoptedin different jurisdictions on the structure, independence andresponsibilities of the boards and the internal control mechanismsfor preventing, detecting, exposing and correcting abuse in themanagement of companies.For fear of turning companies into bureaucracies and shacklingthe entrepreneurial spirit (which is so crucial to the operation ofcapitalism and the growth of businesses) with rules and checklists itwas thought adequate to merely codify the rules of good8 Alton B. Harris and Andrea S Kramer, Corporate Governance: Pre-Enron, Post Enron9 Examples are Treadway Commission and the U.S. SEC Blue Ribbon Committee, the U.K CadburyCommittee, the Vienot Report in France, and the Peters Report in the Netherlands.11 | P age


The GMD’s Inspirational Lecturecorporate governance and encourage companies and theiroperators to voluntarily adhere to them. Such, for instance, is theU.K. Cadbury Code which is operated on a ‘comply-or explain’basis and is therefore mandatory only to the extent that acompany is unable to give a sound reason for deviating from anyof its stipulations. The intention was to preserve operationalflexibility, and not to penalize honest risk-taking by corporationsand their officials acting honestly.As of now, the world is gradually moving away from the era ofvoluntariness in compliance to one of legislating stricter standardof, or mandatory compliance.Again, the United States of America is leading the move in thisnew direction. The proximate cause for this, being the spectacularcollapse, in scandalous circumstances, of a company that usedto be ranked as its fifth largest corporation based on turnover,Enron Corporation, which was quickly followed by others such asWorldcom, Qwest, Tyco, several ‘dot.com’ companies, etceteras.It was following these events that the legislation known as theSarbanes-Oxley Act was promulgated in the United States ofAmerica creating stringent and mandatory standards for therunning of the affairs of corporations including auditing,accounting, quality control, and ethical rules to be observed byboards and executive management of corporations. The Actwent further by creating a Public Company Accounting OversightBoard for independent oversight of the audit record ofcorporations.12 | P age


The GMD’s Inspirational LectureFollowing in this footstep, jurisdictions across the world have eitherenacted similar laws or are in the process of doing so. Nigeria isnot wanting in this direction. Clause 1.7 of the Code of CorporateGovernance for Banks in Nigeria Post-Consolidation stipulates thatthe Code is mandatory. (This is of course debatable because onlyregulations made by the C.B.N. Governor under and inaccordance with Section 57 of the Banks and Other FinancialInstitutions Act 10 is mandatory on banks and other financialinstitutions and/or carries the force of law).BETWEEN CHECKLIST AND INTEGRITYThe relation of power within corporations is simple enough. Intheory, the shareholders are at the top of the power relation as it istheir prerogative to appoint directors and remove them if they arenot performing. The board of directors on the other hand is to hiremanagement staff, monitor their performance and throw themout if they are not performing. At the theoretical bottom are thesenior managers responsible for day-to-day running of thebusiness.In reality, the reverse has been the case in this power equation.This is more so in large corporations. The shareholders are often somany and diffused that they are hardly in any position to use theirpower of appointment of directors in any coherent manner. Inmost cases, their exercise of that ordinarily influential powerconsists of rubber-stamping whoever is recommended to them bythe directors themselves at Annual General Meetings. Thedirectors on the other hand usually owe their positions to10 Cap B3 of the laws of the Federation of Nigeria, 200413 | P age


The GMD’s Inspirational Lectureexecutive management, especially the CEO. In practical terms, itis a situation of the Tail wagging the Dog.In an effort at repositioning this power relation to what itstructurally ought to be, the different codes of corporategovernance have stipulated several rules of best practices to beapplied in the governance of corporations. These rules, with slightvariances dictated by differences in national frameworks of law,provide an objective checklist for measuring corporateorganisations on governance issues within a particular jurisdiction,or across borders or several jurisdictions. These codes, whetheraspirational (like the UK Cadbury Code) or mandatory (like theCBN Code of Corporate Governance for Banks Post-Consolidation) have helped in introducing a certain definitenessto corporate governance which, according to the ancientChinese political theorist ’Shang Yang, is a situation to be alwaysdesired as against an individual’s opinion of right and wrongThe early kings hung up scales with standard weights, and fixedthe length of feet and inches, and to the present day these arefollowed as models because their divisions were clear. Nowdismissing standard scales and yet deciding weight, or abolishingfeet and inches and yet forming an opinion about length – evenan intelligent merchant would not apply this system, because itwould lack definiteness. Now, if the back is turned on modelsand measures, and reliance is placed on private appraisal, in allthose cases there would be a lack of definiteness. Only a Yaowould be able to judge knowledge and ability, worth or unworth,without a model. But the world does not consist exclusivelyof Yaos. Therefore, the ancient kings understood that no relianceshould be placed on individual opinions or biased approval, sothey set up models and made the distinctions clear 11 .11 The Book of Lord Shang (Wordsworth Editions Limited, 1998)14 | P age


The GMD’s Inspirational LectureThe existence of a checklist stipulating best practices of corporategovernance is however only one side of the equation; the otherside is good faith by the operators. Let us look at a few examples.One of the key aims of corporate governance is ensuring thatthose charged with management oversight possess the requisiteindustry knowledge and experience. Take the banking industry inNigeria as an example. No useful purpose will be served having aroad-side mechanic who comes into sudden wealth sitting on theboard of a Bank. He will be mostly useless in the conduct of theserious business of the board. A person cannot perform a role hedoes not understand. (Recall the kebab salesman in ourintroductory story who when asked by a potential buyer what kindof meat (pock? beef? poultry?) was used for the kebab repliedthat it was “stick meat” ostensibly because the kebab weredisplayed on sticks). Thus, Rule 4.11 of the Code of CorporateGovernance For banks in Nigeria Post Consolidation stipulates that“All Directors should be knowledgeable in business and financialmatters and also possess the requisite experience”. There can beno denying the fact that this is a helpful provision which ought tobe rigorously enforced especially against the background ofrecent history, where a record-setting 419ner with no verifiablerecord of previous involvement in any serious business somehowmanaged to wangle his way (presumably with CBN and StateSecurity clearances) into the Board of one of the biggest banks inNigeria.But the fact that directors have the right qualification does notguarantee the fidelity of those directors. Take the Enron case. TheChairman of its Audit Committee was a former Dean of theStanford Business School. Among its directors were numbered aformer member of the British House of Lords and House of15 | P age


The GMD’s Inspirational LectureCommons and Energy Minister in Her Majesty’s Government;another was well respected business leader in Hong Kong whowas the co-founder and former president of Gulf and Western;two others were sitting CEO’s of large U.S. corporations; yetanother was a former head of the Commodities Futures TradingCorporation who was one of the many others on the board withdoctorate degrees in fields such as economics, mathematics andrelated fields; there was also a former Deputy Secretary of theTreasury in the U.S. government 12 . Enron, from all indications wasin the good hands giving that its board consisted of qualified,knowledgeable, and widely experienced men. Apparently, thishad no effect in preventing the culture of misconduct and selfdealingfrom which Enron ultimately collapsed.An appropriate local example is the not so distant and not sorecent scandal relating to Cadbury Nigeria Plc. Again, I should beforgiven for assuming that you are all familiar with the case. Whatyou may not be familiar with, and where you are familiar with it,what may not have struck you is the fact that when on June 15,2000 the Nigerian Securities & Exchange Commission incollaboration with the Corporate Affairs Commission inaugurateda seventeen member committee headed by Mr. Atedo Peterside(OON) to identify weaknesses in the corporate governancepractice in Nigeria and fashion out necessary changes that willimprove our corporate governance practices, Cadbury NigeriaPlc was one of the major contributors to the work of theCommittee whose report formed the basis of the 2003 NigerianSecurities & Exchange Commission sanctioned Code of BestPractices on Corporate Governance for public quotedcompanies. This fact was acknowledged and put on record for all12 Robert A.G. Monks and Neil Mino, Corporate Governance (Blackwell Publishing, 2007) p.16 | P age


The GMD’s Inspirational Lecturetimes in the Schedule 3 to the said 2003 Code wherein CadburyNigeria Plc was listed as No. 16 in the “List of persons andorganisations who made written contributions to the final draft ofthe Code”. Cadbury Nigeria Plc must have made weightycontributions to the work of the Committee considering itsconnection to Sir Adrian Cadbury, the well-reputed Chairman ofCadbury Schweppes, and Chairman of Cadbury Commission,which in 1992 published corporate governance guidelines for theUnited Kingdom.Surprisingly, this same company, Cadbury Nig. Plc., and itsdirectors and key senior managers were in the year 2006 found bythe Securities & Exchange Commission to have done so manythings which they would never have done had they seriouslyadhered to the stipulations of the Code which they helpedfashioned. It was certainly not a case of the company and itsdirectors and key executives not been familiar with thosestipulations. No! As already stated, they had helped to fashion it!!!What this shows is that a company and its key operators may beknowledgeable about and even incorporate every governancepractice in form, yet lack them in substance.There is the other ongoing circus relating to the acquisition of oneNigerian bank (the target bank) by another. I am quite consciousof the occasion and would ordinarily not, for obvious reasons,want to use this to illustrate my point. But I cannot resist observingthat from all that we have learnt through the Media, it appearsthat the faction opposed to the arrangement would be satisfied,or at least substantially deprived of lethal ammunition, and theentire brouhaha put to rest if only the post-merger adjustmentsstipulated in the Merger Agreement amongst the legacy banks17 | P age


The GMD’s Inspirational Lecturecomprised in the target bank is carried out. If my recollection doesnot fail me, I must as a shareholder of either of the old UBA Plc. orthe old Standard Trust Bank Plc., long after the merger of the twoinstitutions, received some benefits which were said to arise fromsuch post-merger adjustments. In the Spring Bank/Bank PHBsituation, there is ongoing a lot of shadow-boxing across thelength and breadth of Nigeria, in the media, in different courts oflaw and administrative/regulatory offices with many members ofmy profession (and other ring-side consultants and self-servingbureaucrats) encouraging all sides to fire-on, while (as would beexpected) smiling their ways to the Bank. Little or no thought hasbeen given to the damage to shareholders’ interest even if only inthe area of the likely long-term effect of the danger which theconflict constitute to the brand capital of the two institutions; norof the perception of the country in the international businesscommunity as a safe place for international capital; nor thereputation of the regulatory authorities for effectiveness, etc.If therefore there be disorder or failure in corporate governance, itcannot be because there are no rules nor because the rules aredisorderly. What makes the difference between a well governedoperating environment and a poorly governed one is the qualityof the people applying the rules and the integrity of theframework for preventing, detecting, correcting and punishingdeviations. There is no State that I know that does not, forinstance, have laws prohibiting crime and acts of wickedness andstipulating punishment for prohibited conduct. But there is nonethat I know with laws that guarantee conformity with prescribedacceptable behaviour, or that those committing prohibited actsare caught and made to pay the price of their unacceptableconduct.18 | P age


The GMD’s Inspirational LectureRigorous enforcement of rules is therefore crucial for building asustainable atmosphere of good governance in any corporateorganization/environment. To illustrate this point, it may be notedthat what happened at Cadbury Nigeria Plc. was not muchdifferent from what the former management of Lever Brothers Nig.Plc. In the Lever Bothers Nig. Ltd. case, no serious sanction wasimposed on those responsible for, or under whose watch thecompany’s accounting records were cooked-up. Perhaps thesubsequent Cadbury scandal would not have happened had theLever Bros. Nig. Plc. matter not been lightly treated. Compare thiswith the Bernard Longe case with First Bank of Nigeria Plc., wherea Managing Director was severely sanctioned, not for acts ofcorruption or self-serving, but for not complying, amongst otherthings, with the bank’s credit rules, in granting credit to acustomer. Some of the rules allegedly breached relate toexecutive approval limit and single-obligor credit limit. Perhaps theparticular transaction required to be consummated urgentlywithout sufficient time to comply with all approval requirements,so the Executive involved granted himself what in Nigerian speakis called ‘anticipatory approval’. Perhaps it was not even the firsttime he would be doing so to the immense benefit of hisemployer. Perhaps if the transaction had succeeded again, theBoard of his employer would have patted him on the back oncemore as a wonder kid. Unfortunately, that particular transactionturned out a business mistake causing heavy loss to thecorporation. Thus what started out as one of the most promisingbank top executive career in Nigeria was brought to a widelylamented abrupt end. But by demonstrating such firmness in itscorporate governance rules, the concerned bank and its boardsent-out a clear signal to subsequent chief executive officers thatit would not tolerate deviance from those rules. Rules may beinnovated; compliance may not.19 | P age


The GMD’s Inspirational LectureTHE TURNING POINTUsually, corporate failure is not an event caused by a single act ofa single individual, but a process to which many are complicit,sometimes consciously, but most times unconsciously. This takes usback to our introductory story. The question may be asked: whydid each of the characters in the story act the way they did,rather than in some alternative (?) way. It is possible to suggestmany reasons, but I intend to touch on a few which I think arerelevant to this topic.The concept of an organization suggests a group of like-mindedindividuals pursuing an organizational goal. As a corporationgrows, there grows with it a pattern of shared basic assumptionsthat the group learned as it solved its problems of externaladaptation and internal integration, and that has worked wellenough to be considered valid and therefore to be thought tonew members as the correct way to perceive, think, and feel inrelation to those problems. In the immortal words of Thomas Painethat “… a long habit of not thinking a thing WRONG gives it asuperficial appearance of being RIGHT” and a contrary thinkingpromptly “… raises outcry in defence of custom”, healable only byTime which “makes more convert than Reason”.It is important therefore that corporations guide against reducingthe demands of corporate governance to a ‘tick-the-box’ affair,and ensure people don’t get bogged down about how things aredone, rather than with what to achieve. In any case, a ‘tick-thebox’approach does not necessarily ensure fidelity, and may infact foster the growth of bureaucratic entrepreneurs who willexploit it for their own selfish motive by turning it into a hindrance20 | P age


The GMD’s Inspirational Lectureto business. Recall the two Policemen in our story who afterchecking the vehicle particulars, both the necessary andunnecessary ones, and having no valid reason to complain,promptly declared them fake. Such is the banker or credit officerwho in pretended compliance with credit-approval checklist willinsist on citing a Certificate of Occupancy (the prescribed form oftitle under the Land Use Act) even when a Land Certificate (theprescribed form of title under the State Land Law) has beenproduced to him on the justification that the checklist specificallymentioned a Certificate of Occupancy and no other form of title;only to relent when the appropriate negotiated “P.R.” is paid. Bythus escalating a borrower’s cost of credit, bad loans mayunwittingly arise (notwithstanding the appearance of legitimacy inthe booking and disbursement of the loan) that may, many yearsafter, contribute to the failure of the bank and render the officialjobless. A case of unwitting self-harm.Also implicit in organizational culture is the danger of group-think.This is a mode of thinking that people engage in when they aredeeply involved in a cohesive in-group, when members’ strivingsfor unanimity override their motivation to realistically appraisealternatives of action; where people, even if they have differentideas do not challenge organizational thinking and thereforethere is a reduced capacity for innovative thoughts. For instance,in the in-speak of UBA, staffers are ‘lions’ and ‘lionesses’. There is acertain behavioral pattern (e.g. strength and teamwork) signifiedby the Lion which UBA expects to see or inculcate in its staffers. It isnot a place for a camel, for instance. It does not matter thatcamels are in actual fact more resilient and adaptable tochanging conditions than most other animals, including a Lion;which attribute coheres with the ‘R’ (for ‘Resilience’) in UBA’s21 | P age


The GMD’s Inspirational Lectureshared vision (H.E.I.R.), said to denote an innate strength to adaptto fast changing economic trends and cycles.Beyond organizational culture, there is also national culture whichis the way of life, including codes of manners, dress, language,religion, rituals, games, norms of behaviour such as law andmorality, and systems of beliefs as we as the part, of the entiresociety within which a corporation exists. For instance, in peculiarNigerian-speak, bribe (an act of crime) is most commonly referredto as ‘P.R.’ or ‘public relations’ (which is a legitimate undertaking).Your boss in the office is not just some co-worker with a jobdescriptionthat may include supervising your work, but ‘Oga’ inthe same manner that the President of the country is not simply“Mr. President” (a political office holder courtesy of your vote) but“baba” (father), both of whom must be revered, and whosewords, opinions or judgment are final even when patently wrongor harmful to the organization or body polity. (Recall thepoliceman in our introductory story, who, albeit for his own selfishend, insisted on wrong cause on the excuse that he was followingthe superior order of his Inspector General.) This phenomenondenotes the reverence for authority and respect for elders insocieties (such as ours) trapped in tradition. Corporate executivesliving and operating within such a cultural environment must takethe additional care not to allow their in-bred cultural habit toconstitute cataracts blocking their vision of governancerequirements.The way of life and norms of behaviour of the society in which acorporate organization carries on business also impacts on theway the corporation is governed and may impair the judgment ofcorporate executives especially in situations where it is perceived22 | P age


The GMD’s Inspirational Lecturerightly or wrongly that the business survival of the corporationcannot be otherwise secured. In the run-up to the 2003 generalelection in Nigeria, there was an organization called ‘CorporateNigeria’ which canvassed and obtained huge financialcontributions from corporate organizations for clearly statedpolitical purpose. Many corporate executives committed theirorganizations to the cause although they were not unaware ofS.38 (2) of the Companies and Allied Matters Act 13 whichprohibited and criminalize such conduct 14 . Apparently, the threator fear that their organizations may be shut-out of governmentcontracts or patronage to the loss of their investors and theadvantage of their cooperating competitors, pressured manycorporate executives to submit to play along with the illegality.Just like the narrator and his co-travelers in our short story who wasdesperate to arrive Enugu by 5.00pm and feared that they maynot get there safely with their lives, if at all, unless they acceded tothe demands for unofficial tolls, road tax, or payment for safepassage by men of Nigeria’s “Scotland Yard”.The complicit victims were not encouraged to resist morevigorously because those concerned (Inspector General of‘Scotland Yard’) charged with enforcing the law not also beendirectly complicit in the whole affair, or indirectly tolerant of itthrough simulated (selective) blindness. Even in that atmosphere,one policeman, the one encountered in Edo State, stood out.What stood him out was that he went against the grain. He did13 Cap. C20, Laws of the Federation of Nigeria, 200414 “A company shall not have or exercise power either directly or indirectly to make a donation or gift of any ofits property or funds to a political party or political association, or for any political purpose; and if any company,in breach of this subsection makes any donation or gift of its property to a political party or political association,or for any political purpose, the officers in default and any member who voted for such breach shall be jointlyand severally liable to refund to the company the sum or value of the donation or gift and in addition, thecompany and every such officer or member shall be guilty of an offence and liable to a fine equal to the amountor value of the donation or gift”23 | P age


The GMD’s Inspirational Lecturenot demand a toll, and when offered out of gratitude, he did notaccept. In an atmosphere of general failure of governance, hechose to govern himself.In like manner, we all ought to realize that the effectiveness orotherwise of corporate governance starts with self-governance -the choice we make in difficult and potentially compromisingsituations when nobody is looking or breathing down our backs.CONCLUSIONLet me conclude by thanking the organizers of this event andsaying that I feel highly honoured to be considered qualified, fitand proper to speak to you at this maiden session of your GroupManaging Director’s inspirational lecture series. Going by theinformation in the letter inviting me for this occasion, I believe mylisteners are senior executives drawn across the UBA Group. Thisbeing so, and considering our national malady of taking the Hoodfor the Monk, I hope that you are not belittled by the fact that I donot carry such title as ‘SAN’, ‘Chief’, ‘Hon.’, ‘Deacon’, ‘Alhaji’.My invitation says a lot about the new UBA and the direction itwishes to head. When I was first hinted by one of the directors ofthe UBA Academy of the decisions of the organizers of this eventto have me speak at this maiden event, I had sought to knowfrom him “Why me, in particular?” I took something away from therationale he gave to me. It was that the new UBA is looking topartner with anyone who can add value to its business, and willlook for and fish such people out, anywhere and everywhere,without regard for mundane or valueless considerations. Youshould be happy, not only that you work for such an organization,24 | P age


The GMD’s Inspirational Lecturebut also that you are part of those on whom it has placed theburden of leading it in its declared direction. This burden is aheavy one indeed because the corporate entity called UBA is alegal fiction incapable of thinking or acting by itself but throughthe agency of its human controlling minds and employees. I haveoften marveled at the splendor of most of your business offices(‘HEIR Centres’, I understand you call them) across Nigeria, whencompared with those of your competitors. Indeed, since the endof the bank recapitalization and consolidation exercise in 2006, itappears that apart from competing for business, the survivingbanks have also been engaged in stiff competition as to who hasthe most buildings, how big the buildings are, and howarchitecturally outstanding and pleasing to the eye they are.It is good, as signified by this event, that UBA is going beyondbuildings and leaving its competitors behind by seeking to payattention to the quality of its human capital. In a recent cable TVprogramme, HRH Sheikh Salman Al Khalifa, the Crown Prince ofBahrain, made a telling statement on this when he said “Brandnew buildings, outstanding architecturally … are not going tosolve anything unless there are good people inside them” 15It is good, as signified by this event, that UBA is trying to make surethat its own architecturally outstanding buildings are populated bygood people of which you are the crème de la crème.15 In a December 2008 interview by John Defterios on the CNN programme, Marketplace Middle East (MME),25 | P age

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