Corporate governance and stakeholders value system (II)

Central Bank Digital Currency (CBDC)
Executive Director of eTranzact Ghana, George Babafemi

The story of Chinese bamboos comes to mind in illustrating the effect of good corporate governance practices, as it paints a good picture of an institution that is built on a rocky foundation as compared to the one built on sandy foundation. Wind will blow, storms will come against each category of institutions, but the quality of their foundations will determine what will become of each institution.

The story has it that the Chinese bamboos, after planting, will show negligible signs of physical growth within the first 4 years. No sign of comeliness or beauty to behold within this early period. However, within few weeks of the 5th year of planting, they will shoot up to an amazing height of about 80 feet tall. What then were they doing in the first 4 years?

They were busy taking root downward such that by the time they attained the potential heights, no wind or storm can easily bring them down. Such should be said of any business that is built to last through practices of good corporate governance. Good corporate governance may not immediately yield the needed profitability but it guarantees a rock solid foundation upon which the business will rest, now and in the future.

Every business entity will experience storms and winds as they transverse through stages of development in life. These “winds” and “storms” are forces beyond the control of any business and as such, they are external in nature, just like the natural winds and storms which some legalistically (but erroneous, in my own view) call the ‘acts of God’. These forces could be competition, governmental policies, economic shocks, technological shift, shift in consumers behaviours etc.

Intrincic Values affecting Good Corporate Governance Practices

Often, while discussing concepts such as corporate governance, I have noticed that attentions are hardly focused on intrinsic values of stakeholders in ensuring practices of good corporate governance. Attentions are rather focused on the charter of corporate governance, which are nothing but written documents that are meant to provide the needed guide to practices of good corporate governance.

If these were enough, how can we explain the collapse of Enron? How can we explain the collapse of various institutions that started well but went bankrupt along the line? Would it be sufficient to say these institutions did not have any corporate governance enacted? No! of course. Also, how can we explain that many of these institutions are audited by renowned auditors? Authur Andersen, who happened to be one of the “Big 5”, was the Auditor of Enron.

This also supports that having good corporate governance structure in place does not translate to good corporate governance practices. Indeed, there are institutions today who may not have enacted any governance rule but intrinsically are practicing corporate governance.

It becomes very important then, to have our searchlight on some hidden or intrinsic values of various stakeholders that can help promote practices of good corporate governance.

Ethical Leadership

Research shows that businesses whose leaders act ethically are more sustainable with better long-term financial performance, according to a report published by the Chartered Management Institute (CMI) in October 2019.(1)  of  “The key point is long-term. Every stakeholder has intrinsic values which ultimately drive them in what they do. These intrinsic values must be in alignment with the enacted corporate values before good corporate governance practice can become a culture within a corporate environment rather than being an uphill task.

In the part 1 of this series, I wrote that, having corporate governance framework in place is one of the simplest things to do while establishing corporate governance in an institution. This can be bought with money. However, it takes more than documents to establish a good corporate governance culture within an organization. Having an ethical leader or ethical Directors at the helm of affairs of any institution is a major boost to its good CG practices.

An ethical leader is the one that leads and influences subordinates in doing what is right within the organization. An ethical leader allows the financial principles to work without any interference. A book titled “The smartest guys in the room” detailed the unethical practices of the bosses of Enron which eventually brought that company to its knees. To them, they were being smart!  Unethical practices are not smartness at all, they are business cancers. They will soon bring the most stable-looking institutions down crumbling, if not stopped. They do virtually everything possible to get around an established system to make gains by all possible means. The major problem of unethical leaders is to make profit by all possible means.

They ‘buy’ the consciences of other unethical guys in the authorities, governments, societies, etc. What they fail to understand is that people may be bought, but the systems cannot be bought. Systems are there to stay while managers of systems will come, stay for some time and leave or get relieved. The people that are ‘bought’ today will not be there tomorrow. You will never be sure of when there will be changes that will bring ethical people to the position of authority of a particular system, which will signal the beginning of the end!


Ethics and integrity go in the same direction within an organization setting. Ethics are set of rules that guide stakeholders in a particular profession which if not followed, could lead to undesirable results.  Following those rules make someone ethical. Integrity is the quality of a person that makes him honest and fair in his handling of issues within or without a corporate institution. It is what a person is whether in the office or out of it.  While ethics may be more outward in nature, integrity is internal.

Ethical people are mostly guarded to doing things right to avoid the penalty of not doing so while people of integrity are more intrinsically or self-motivated to do the right thing. People with integrity can naturally follow rules that speak to the benefit of the company, even if they are not actively stated. An institution that is serious about hiring people with integrity may engage ‘pre-integrity test’ during the pre-hiring screening processes. Even if it is not accurate, it can help to a large extent.


When people are greedy, they are greedy! It takes more than following set of rules to become not greedy. Greedy people are selfish and it is always about themselves at the expense of whosoever comes their ways. Greedy people can bypass any laid down principles to get at their goals and objectives, yet, they will make it look like they are stickler to laid down rules. Greedy leaders reward those who increased the fortune of the organization through dubious means and stigmatise and look down on those who are trying to play by the rules.

Greedy personalities have insatiable craves for things – cars, houses, money etc. These are perks of life and they are good if they come through transparent manners or personal sources. However, greedy bosses will get these off the book. If these are clean entitlements by virtue of status, roles and position, this is fine, however, when books are manipulated to make them legitimate acquisition, then it is greed!   This insatiable desire for things can cause even the watchdogs to be compromised.

Human is always the weakest link and greed is the driving force that makes the system’s ‘police’ look the other way. In our example of enron, not only were the top executives greedy, but they were also able to appeal to the consciences of others, using the emotion of greed to make them do the things they wont do normally. This made others like their traders, watchdogs, analysts and bureaucrats looked the other way.

Although the corporate governance was in place, a culture of systemic bypasses by the top executives rendered it ineffective and it was a matter of time before the bubble busted and a company that was touted as “the most innovative company in corporate America” by FORTUNE consecutively for 6 years between 1995 and 2000 came crumbling like pack of cards in 2001(1). No structure can last long on lies! Unfortunately, there is never a place called ‘enough’ when this cancer is allowed to fester. It leads its victim on until there is nothing more to feast on, until the balloon is busted.

I hope this serves as a wakeup call for the executives who are being manipulated by greed and in turn using their positions to reward unethical executives so that the greedy tracks can be covered or cleared.


  1. Enron – Case of Corporate Governance Failure, Rajwani Ishwar, September 2021.

Disclaimer: The views expressed are personal views and doesn’t represent that of the media house or institution the writer works.

About the writer

The writer is the , Executive Director, eTranzact Ghana Ltd

Contact:  [email protected], Cell: +233 244285147


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