SEQUEL to the findings of a corporate governance audit on Ecobank Transnational Incorporated (ETI), the Securities and Exchange Commission (SEC) has sought the overhauling of governance codes to address the gaps identified during the course of investigation.
Consequently, the commission advised ETI to convene an Extra – Ordinary General Meeting (EGM) of shareholders to deliberate and pass resolutions on the critical findings and recommendations of the corporate governance audit before the end of February 2014.
According to the commission, the move became important following the findings discovered in the course of investigating the allegations of breaches in corporate governance practices against the board of directors and certain principal officers in August 2013.
A statement obtained by our correspondent from the commission explained “the commission engaged KPMG to supplement its efforts and make recommendations on the way forward. The gaps identified from the review include the absence of a clear vision and strategy to drive the institution; inadequate transparency in the recruitment procedures and mechanisms for board members and executive staff, which fostered conflicts of interest, weaknesses with respect to the tone at the top.
Others are governance culture, communication, remuneration for board members and executive level personnel, decision making, absence of dedicated channels for whistleblowers to report instances of anomaly, and the often compromised autonomy of governance mechanisms such as Internal Control, and the audit and compliance committee of the board.
The statement added that “the board’s specific weaknesses include its inability to manage its own activities and its role in monitoring management and evaluating its performance against defined goals. Furthermore, the board’s role in overseeing the achievement of ethical behaviour in the organisation; and its responsibility towards shareholders and other stakeholders and accountability for their interest.”
Based on the recommendations, the SEC expects ETI to develop a one year remedial plan with specific measures to address the specific governance gaps observed, noting that in the public interest, it will also expect a quarterly report from ETI on progress being made.
Further requirements include the need for ETI to appoint a substantive chairman, who will lead the effort to attain an improved governance climate.
“It will be important that such an appointment is the result of a credible selection process. Such a chairman also needs to have the relevant experience and skills to guide this remedial plan. The Chairman should have integrity, independence and should not have the potential for conflict of interest in the discharge of the role.
“Steps should also commence to ensure that ETI has board members and a management team that have the requisite skills and experience to oversee or manage the affairs of ETI at this time. The SEC is certain that the implementation of the recommended remedial plan will eliminate the governance lapses and will further strengthen ETI”, SEC added.