Governance and Ethics - Current Events –Strengthening Corporate Governance and Ethics in Business

Since the global economic collapse happened in September 2008, many scholars started to study the reasons which lead to the depression of world financial markets. It was reported that the factor of corporate governance and ethics had influence upon the global financial markets. By learning the experience, companies paid many efforts to improve their governance and ethics.

 

After the financial crisis in the year of 2008, by setting the ceiling level of executive compensation, many companies in America made great progress to enhance their sovereign from management and CEOs. In the July of 2010, President Barack Obama recommended “the Dodd–Frank Wall Street Reform and Consumer Protection Act” to encourage the reforms under the supervisory system. It was reported that the average salary of large company CEO in U.S was 225% more than it of large company CEO in other main industrial countries.

 

In recent years, corruptions and malpractices happened more often especially in the banking system. There were many big banks, such as Nepal Share Market Finance (NSMF), Capital Merchant Banking, Gurkha Development Bank (GDB) and People´s Finance Limited, had to stop their business due to the corruptions and malpractices. Dambar Bahadur Tamang, former chairman of Gurkha Development Bank (GDB), was nabbed for releasing illegal loans. Another malpractice case is that Jhalak Subedi, former chief of Credit Department of Muktinath Development Bank, was arrested for irregularities in faking bank loan.

 

Apparently, these corporate corruptions and malpractices have revealed not only the terrible consequences, but also the importance of corporate governance and ethics. As a result, the regulatory system of corporate governance and ethics must be paid more effort to establish to avoid those corruption scandals and corporate fraud happening in future.

 

In addition, in order to prevent corporate fraud and corruption, some international convention and laws are applied. For example, “the 1999 OECD Anti-Bribery Convention” and “the United Nations Convention against Corruption (UNCAC)” are used to develop anti-corruption policies. It is obvious that corruption scandals happened these years had significantly negative influence upon company’s reputation and even life. Thus, companies will be much more willing to develop more business ethical policies and practices.

Reference

“Ethics in business”, Pranav Bhattarai, July 2012

http://www.myrepublica.com/portal/index.php?action=news_details&news_id=37894

“Dodd–Frank Wall Street Reform and Consumer Protection Act”, Wikipedia

http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act