These unfortunate developments have raised concerns among experts and after some dissections and fact-finding moves, the whole mess in the financial services sector has been blamed on poor corporate governance.

According to BusinessDictionary.com, corporate governance is “The Framework of rules and practices by which a board of directors ensures accountability, fairness and transparency in a company’s relationship with all its stakeholders.”

On the other hand, OECD.org defines it as the “Procedures and processes according to which an organisation is directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among the different participants in the organisation – such as the board, managers, shareholders and other stakeholders – and lays down the rules and procedures for decision-making.”

It is imperative to note that, many of these definitions, among others, place significant emphasis on enterprise value preservation, which largely comprises of rules, regulatory compliance, risk management and other types of watchdog activities.

It is evident that value preservation is an important duty of the Board of Directors and, therefore, under no circumstance should it lose sight of that fact.

Considering the enormous responsibilities and importance of a board of a company, there is the need for owners of institutions and corporate organisations to ensure that the personalities they appoint to sit on such boards are people of integrity, strong reputation and who are highly knowledgeable. They should be people who can stand their ground to ensure that the mission and vision of the companies or institutions they oversee are not compromised in any way or form.

The GRAPHIC BUSINESS shares in the observations made by experts who blame the mess in the banking sector on poor corporate governance practices. We have observed that some of the personalities who sit on boards of some of the banks in the country were placed there not on merit but as a favour. Against this background, they are not able to make any meaningful contribution towards the sustenance of the institutions they have oversight responsibilities for.

This is not only unacceptable but most unfortunate because the actions and inactions of such boards can have a telling effect on shareholders and stakeholders of these financial institutions. We cannot also gloss over the impact of the incompetence of such board members on the economy in the medium to long term.

Many have blamed the central bank for sitting aloof all this while and allowing such unfortunate incidents to happen, only for it to react when things get worse.

We know the value and importance of the central bank and also understand the enormous powers that it wields to prevent such incidents.

Against this background, we prevail on the central bank not to succumb to any pressures from any quarters to treat collapsing banks with kid gloves.

We want such institutions dealt with without fear or favour because that is the only way to ensure the sustenance of the financial services sector. — GB