Un­der the Unit­ed King­dom Bribery Act 2010 which came in­to ef­fect in Ju­ly 2011, both ac­tive bribery and pas­sive bribery (that is "fail­ure to pre­vent" bribery and cor­rupt prac­tices with­in the or­gan­i­sa­tion and by third par­ties) can lead to un­lim­it­ed fines, prison sen­tences and a de­bar­ment from gov­ern­ment busi­ness. This piece of leg­is­la­tion has a huge im­pact not on­ly on the British busi­ness­es, but al­so on or­gan­i­sa­tions and in­dus­tries around the world. The Bribery Act in­tro­duces ex­ten­sive re­forms to laws against for­eign bribery, with im­pli­ca­tions for Trinida­di­an com­pa­nies op­er­at­ing in the UK, or those that are part­ners or con­tract­ed by British multi­na­tion­als (eg: the BG Group, bpTT and Cen­tri­ca). For the Trinida­di­an con­trac­tor, this leg­is­la­tion pre­cip­i­tates a re­view of the lo­cal com­pa­ny's cur­rent an­ti-bribery com­pli­ance pro­gramme and risk as­sess­ments. The Bribery Act speaks to an in­te­gral part of a cor­po­rate gov­er­nance frame­work. Cor­po­rate gov­er­nance is a con­trol mech­a­nism put in place to pro­mote trans­paren­cy, ac­count­abil­i­ty, and eth­i­cal be­hav­iour in busi­ness­es, forms an in­te­gral part of a cor­po­rate gov­er­nance frame­work. Ul­ti­mate­ly, a cor­po­rate gov­er­nance frame­work helps a busi­ness to be sus­tain­able, es­tab­lish­es clos­er re­la­tion­ships with its stake­hold­ers, and im­por­tant­ly pre­vents in­vest­ment scan­dals and min­imis­es the risk of fraud.

While many as­so­ciate cor­po­rate gov­er­nance with larg­er pub­licly list­ed com­pa­nies, a cor­po­rate gov­er­nance frame­work al­so ap­plies to firms with tra­di­tion­al forms of own­er­ship (eg, a sole trad­er, part­ner­ships or lim­it­ed li­a­bil­i­ty part­ner­ships). Cor­po­rate gov­er­nance does not dis­crim­i­nate against com­pa­ny size. As such ad­her­ing to cor­po­rate gov­er­nance prin­ci­ples is as im­por­tant for a large pro­duc­er of nat­ur­al gas as it is for the own­er of a food restau­rant, a weld­ing shop or even a gen­er­al con­trac­tor. There are key el­e­ments of any good cor­po­rate gov­er­nance frame­work. As a start­ing point, a small busi­ness own­er should have a well doc­u­ment­ed sys­tem of the com­pa­ny's poli­cies, pro­ce­dures and process­es. They are all sim­ple to write and im­ple­ment and add struc­ture to what the busi­ness is al­ready do­ing. A com­pa­ny's pol­i­cy de­fines the com­pa­ny's po­si­tion on var­i­ous is­sues and pro­vides guide­lines. It sets out rules for is­sues such as in­ter­net us­age, drugs in the work­place, etc. The busi­ness' pro­ce­dures in­volve a step-by-step guide to achieve some out­come (eg, pro­ce­dure for op­er­at­ing heavy equip­ment or for re­quest­ing leave), while the process­es are sys­tems for achiev­ing an out­come.

A doc­u­ment­ed sys­tem en­sures that the small busi­ness is run smooth­ly long in­to the fu­ture; it helps to train new staff, gives em­ploy­ees a clear sense of how to op­er­ate in the busi­ness and it en­sures that the busi­ness does not sole­ly de­pend on the own­er, among oth­er things. As part of its cor­po­rate gov­er­nance frame­work, a small busi­ness will al­so need to de­fine and reg­u­lar­ly up­date its risk man­age­ment pol­i­cy. Es­sen­tial­ly, this pol­i­cy iden­ti­fies and ad­dress­es the pos­i­tive and neg­a­tive risks as­so­ci­at­ed with busi­ness op­er­a­tions or ac­tiv­i­ties. It helps the busi­ness adapt to abrupt changes, take ad­van­tage of op­por­tu­ni­ties and mit­i­gate against threats. How would your com­pa­ny be af­fect­ed and re­spond to a fall in the rate of in­ter­est, a hike in the price of key in­puts, a sig­nif­i­cant in­crease in cus­tomer de­mand or even los­ing cus­tomers? A well-de­fined risk man­age­ment pol­i­cy will pro­vide the right an­swers on de­mand. In ad­di­tion, a cor­po­rate gov­er­nance frame­work al­so in­volves doc­u­ment­ing the com­pa­ny's busi­ness strat­e­gy. It pro­vides di­rec­tion for the small busi­ness over a pe­ri­od time (eg three-five years). It de­fines the goals of the busi­ness and maps out how they will be achieved.

More than this a busi­ness strat­e­gy spells out the com­pa­ny's vi­sion, pro­vides a strength, weak­ness­es, op­por­tu­ni­ties, threats-SWOT-analy­sis, and out­lines the com­pa­ny's re­sources, busi­ness ini­tia­tives and sit­u­a­tion analy­ses (eg, an as­sess­ment of the per­for­mance of com­peti­tors). At any point in time, a quick re­view of the busi­ness strat­e­gy will in­form the read­er of the cur­rent po­si­tion and di­rec­tion of the com­pa­ny. It al­lows the small busi­ness to iden­ti­fy loop­holes, re­con­fig­ure its re­sources, meet its stake­hold­er ex­pec­ta­tions and help the busi­ness per­form bet­ter than its com­peti­tors. Clear­ly, these ben­e­fits of a busi­ness strat­e­gy ap­ply to small busi­ness­es. A trans­par­ent per­for­mance re­port­ing sys­tem forms part of a cor­po­rate gov­er­nance frame­work and is ex­treme­ly im­por­tant for a small busi­ness. It al­lows for checks and bal­ances of the fi­nan­cials of the busi­ness and al­lows for com­par­isons of the com­pa­ny's fi­nan­cial po­si­tion with pre­vi­ous bud­gets. These re­ports can be as reg­u­lar as week­ly or an­nu­al­ly (as with an­nu­al re­ports).

In ad­di­tion to pro­vid­ing the met­rics of the com­pa­ny, good per­for­mance re­port­ing in­cludes oth­er as­pects such as the com­pa­ny's pro­duc­tion out­put, the rate of turnover of in­ven­to­ry and staff, the num­ber of in­jury free work days and the num­ber of new cus­tomers. Good per­for­mance re­port­ing is es­sen­tial be­cause in many in­stances, the ten­der­ing process re­quires ap­pli­cants to pro­vide an­nu­al re­ports as a means of as­sess­ing the com­pa­ny's per­for­mance and to en­sure that its per­for­mance is based on eth­i­cal de­ci­sions. When ap­ply­ing for cap­i­tal, fi­nan­cial in­sti­tu­tions al­so re­quire com­pa­nies to sub­mit per­for­mance re­ports. At the same time, com­pa­ny re­ports act as a form of mar­ket­ing for a small busi­ness by in­form­ing key stake­hold­ers about com­pa­ny per­for­mance. To sum it up, ad­her­ing to cor­po­rate gov­er­nance prin­ci­ples pro­vides use­ful checks and bal­ances for the small busi­ness; helps to se­cure con­tracts; it is a tool against fraud and cor­rup­tion; it al­lows for qual­i­ty con­trol and re­duces the risk of los­ing mon­ey; it im­proves ef­fi­cien­cy and pro­motes sus­tain­abil­i­ty in busi­ness op­er­a­tions as the com­pa­ny size in­creas­es. De­vel­op­ing a cor­po­rate gov­er­nance frame­work is a sim­ple task which can be un­der­tak­en by the busi­ness own­er, or a group of ad­vis­ers/con­sul­tants (paid or vol­un­teers). In the in­ter­est of pro­mot­ing trans­paren­cy and ef­fi­cien­cy, a wise busi­ness own­er will en­sure that the frame­work is well com­mu­ni­cat­ed and well un­der­stood by all em­ploy­ees and oth­er rel­e­vant stake­hold­ers.

The En­er­gy Cham­ber's role in push­ing cor­po­rate gov­er­nance

The En­er­gy Cham­ber em­barked on an In­ter-Amer­i­can De­vel­op­ment Bank-fund­ed project aim­ing at strength­en­ing cor­po­rate gov­er­nance in T&T. The project seeks to build in­sti­tu­tion­al ca­pac­i­ty of tar­get­ed com­pa­nies, strength­en cor­po­rate gov­er­nance prac­tices by doc­u­ment­ing and dis­sem­i­nat­ing in­for­ma­tion and mod­els on in­ter­na­tion­al best prac­tices. The project cen­ters on de­vel­op­ing prac­ti­cal guide­lines on cor­po­rate gov­er­nance stan­dards, train­ing/sen­si­ti­sa­tion work­shops tar­get­ing chief ex­ec­u­tive of­fi­cers and se­nior man­age­ment of state en­ter­pris­es and pub­licly-list­ed com­pa­nies, plus a sen­si­ti­sa­tion cam­paign and an eval­u­a­tion ex­er­cise to see how com­pa­nies re­spond to the guide­lines. This cor­po­rate gov­er­nance project is on­ly one ex­am­ple of the cham­ber's at­tempts to im­prove stan­dards. The Safe-to-Work project and En­er­gy In­dus­try Com­pe­tence Ini­tia­tive are two oth­er ma­jor ini­tia­tives un­der­tak­en by the cham­ber which seeks to im­prove safe­ty in the en­er­gy in­dus­try and to raise the over­all com­pe­ten­cy of the en­er­gy sec­tor work­force in the Caribbean.

For fur­ther in­for­ma­tion, con­tact Naz­era Ab­dul-Haqq at: re­searchof­fi­cer@en­er­gy.tt

EN­ER­GY CHAM­BER

www.en­er­gy..tt