Good corporate governance is vital to the long-term wellbeing of a company as it means strong management, a happy workforce, confident shareholders and robust financial health, said a senior oil industry official.

Majid Jafar, the CEO of Crescent Petroleum, one of the Middle East’s oldest private oil & gas companies, and also the vice-chairman of the Crescent Group, was speaking at the 7th Hawkamah Mena Corporate Governance conference held recently in Dubai.
 
Highlighting the importance of high standards of corporate governance in the growth of the region’s companies and overall economic development, Jafar said: "Once viewed as little more than an exercise in public relations, today businesses throughout the region recognise that good corporate governance means strong management, a happy workforce, confident shareholders and robust financial health."    

The conference, which was organised by the Institute of Corporate Governance Hawkamah, was opened by Sultan Al-Mansouri, UAE Minister of Economy and chairman of the Securities and Commodities Authority (SCA).

The event brought together business leaders, international experts, academics and regulators for discussions on the latest developments in international standards for corporate governance and to draw up recommendations for government regulators and the business community.

Joining co-panellists Osman Sultan, the CEO of du Telecom and Iyad Malas the CEO of Majid Al Futtaim Group on the opening panel discussion that explored the importance of corporate governance for leadership excellence, Jafar, who is also the managing director of the board of Dana Gas and an accredited director of the Institute of Directors (IoDMudara) highlighted the growing importance of the topic to businesses and investors in the region.

"Ten years ago, corporate governance was a new concept in the Mena region, but while some progress has been made already, a second wave now appears to be forming, and its results will depend largely on the capacity of national regulators to enforce existing corporate governance provision," stated Jafar.

“More than ever, the Middle East’s business community understands that corporate governance is vital to the long-term wellbeing of a company, especially given the growth and rapid development of many sectors in this region,” he added.

According to research by the Hawkamah Institute for Corporate Governance, 35 per cent of listed companies in the region do not yet have independent directors serving in their boards. And a survey of 12 private equity companies in the region found that bad corporate governance was generally considered a deal-breaker. Enforcing it means recognising the benefits, said the study.

In a wide-ranging discussion, Jafar touched on research conducted by McKinsey & Company, in cooperation with the World Bank, showing that investors are willing to pay a higher premium for companies with corporate governance practices versus those without such practices, and a recent IFC report, profiling successful corporate governance stories in the region which highlighted improving employee motivation, managing risk and managing growth as among the strongest success factors associated with strong corporate governance frameworks.

"The news is not all negative at all," said Jafar. "Overall, the benefits of good corporate governance are increasingly recognised in the region. In the past several years, at least four new institutes of corporate governance or institutes of directors have been established, demonstrating the growing demand for corporate governance information, training, and guidance for companies to improve their practices," he stated.

Many countries - including Algeria, Egypt, Bahrain, Lebanon, Morocco, Oman, Tunisia, and the UAE - have issued new corporate governance codes, he added.-TradeArabia News Service