Corporate Governance – Myth or Reality?

Appavoo Corporate Services Ltd

Alwyna Juttun


One of the best-known explanations of the difference between governance and management was given by Professor Bob Tricker, regarded as the father of corporate governance, in 1984:

 “…if management is about running the business, governance is about seeing that it is run properly. All businesses need governing as well as managing.”

Corporate governance is nowadays of paramount significance to any organisation. Over the past few years, tougher corporate governance regulations have set the trend to counter poor internal controls, ineffective business strategy and inefficient reporting.


Research shows that companies with excellent corporate governance framework produce 18% higher returns and maximise shareholder value.

With a good Corporate Governance Framework in place, organisations are equipped with efficient  processes, reduced costs, smoother running operations and risk management which eventually lead to positive performances, financial viability and a sustainable future.

On a macro-economic level, proper Corporate Governance principles on the part of all stakeholders can provide for a conducive business environment that allows growth sectors to thrive and also  promotes good reputation, increased awareness, and higher market value.


Time and again, the fall of big conglomerates such as Enron, Satyam, Cadbury, Wal-Mart & Xerox has provided impactful lessons on the disastrous consequences businesses and even economies as a whole can face when good governance principles are not adhered to. Some of the infamous failures in history are:

The ’ENRON’ Scandal in USA

The problem faced by Enron in 2001 was, despite having structures and mechanisms in place for good corporate governance, the board of directors had turned a blind eye to violation of the code. Particularly, when it allowed the Chief Financial Officer (CFO) to serve in Special Purpose Entities (SPEs). The auditors failed to prevent suspect and questionable accounting. The auditors did not even examine the SPE transactions. The result was a fall to less than USD 1 in the price of its shares and an eventual bankruptcy which was the largest bankruptcy reorganisation in American history at that time.

The 'SATYAM' Scandal in India

The Satyam scandal was an INR 7,000-crore corporate scandal in 2009 whereby its chairman had admitted, through an email to the Securities and Exchange Board of India (SEBI) and stock exchanges, to have inflated the cash and bank balances of the company. This caused the World Bank to ban Satyam from conducting business for 8 years and the resignation of four independent directors.

The 'FACEBOOK' Scandal in USA

In 2018, New York newspapers reported that a firm called Global Science Research had gathered data from millions of Facebook users in 2013 – without their explicit consent. These details were sold to Cambridge Analytica for the purpose of creating highly-targeted ads to encourage users to vote for Trump and Brexit. This was reportedly done because a previous version of Facebook’s privacy policy had allowed applications to access data about users. This scandal had brought Mark Zuckerberg, the founder of Facebook, to testify in front of the USA Congress.


In Mauritius, a committee known as the ‘National Committee on Corporate Governance (NCCG)’ was set up under Section 63 of Financial Reporting Act 2004 in September 2001 with the mandate to promote principles of good corporate governance. The Code of Corporate Governance for Mauritius (2016) was officially launched on the 13th of February 2017 and became applicable from the reporting year (financial period) ending 30th June 2018. On the 7th of August 2020, Section 20 of The Finance (Miscellaneous Provisions) Act 2020 established the NCCG as a ‘body corporate’. The Code includes 8 principles which revolve around the following:

  • Governance Structure
  • The Structure of the Board and its Committees
  • Director Appointment Procedures
  • Director Duties, Remuneration and Performance
  • Risk Governance and Internal Control
  • Reporting with Integrity
  • Audit
  • Relations with Shareholders and Other Key Stakeholders

Although, the idea of Corporate Governance had been established a decade ago, a lot more has to be done in terms of good governance and this can only be achieved if all relevant stakeholders play their cards responsibly.

A review of the highlights of the Mauritian economy in 2020 cannot go beyond the fact that the paradise island was included in the list of high-risk countries allegedly having strategic deficiencies in their anti-money laundering and counter terrorist financing frameworks (AML-CFT Framework) by the European Union (EU).

The EU identified 5 areas of deficiencies after assessing the latest information in this context from the FATF, namely:

  • Deficiencies in demonstrating that the supervisors of its global business sector implement risk-based supervision;
  • Failure to ensure access to accurate beneficial ownership information by competent authorities in a timely manner;
  • Failure to demonstrate that law enforcement authorities have capacity to conduct complex money laundering investigations;
  • Failure in implementing a risk-based approach for supervision of its non-profit organisation sector; and
  • Failure to demonstrate adequate implementation of targeted financial sanctions through outreach and supervision.

An oversight on the part of the Mauritian jurisdiction to understand the importance of Corporate Governance and provide for its proper implementation in the Financial Services sector of the island’s economy!

It has therefore become vital for all stakeholders to be able to demonstrate good corporate governance practices which calls for resilient processes, transparent reporting and integrity. Without such a robust framework, the corporate well-being of organisations is likely to be compromised which will in turn have a detrimental impact on the economic well-being of our economy.

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