Large Corporate Failures

8/19/2019 Large Corporate Failures

1/8


2/8

Recogni/ing the increasing importance of corporate governance, government and

"usiness associations in many countries, "oth industriali/ed and developing, have

started to develop or improve national systems of corporate governance. Since

011), do/ens of countries have started national initiatives to improve corporate

governance in their economies. Countries such as the nited States, 2ermany,

Australia, 3ra/il, South 'orea, Thailand, &alaysia and 4ndia have dra#n up

national reports and started to implement, on government and on company level,

recommendations dra#n up "y e%pert groups.

4n Asian countries, the development of corporate governance is an important part

of the economic reforms that are essential in overcoming the economic crisis.

+

5o#adays #e increasingly hear and read a"out 6corporate governance6. The term

6pu"lic governance6 appears to "e ne#ly $no#n and emerged during the past

several years and some identity this #ith 6pu"lic administration6. 3efore this, in

4ndonesia #e had a 2ood Corporate 2overnance 5ational Committee or 2C2

5ational Committee headed "y 4. 5yoman T7ager. Since 5ovem"er )--8, the

5ational Committee of 2overnance Policy or the '5'2 has "een esta"lished "y

9ecision of the Coordinating &inister for Economic Affairs num"er:

'EP.81;&.E'a$arta Stoc$ E%change.


3/8

Corporate 2overnance tal$s a"out proper corporate management of companies

#ith its four main pillars "eing transparency, accounta"ility, responsi"ility and

fairness. ntil no# the point of focus of efforts in the enforcement of good

governance is on the corporate sector. 4f #e use the overall or holistic approach,

the corporate sector does not stand alone "ecause it is certainly lin$ed to the

pu"lic sector that is varied "eginning from the 2overnment as regulator, as

Shareholder in State Enterprises as #ell as other elements such as the parties from

the legislation, prosecutors, investigators, court proceedings, etc.

There is no use in us trying to enforce 2C2 solely in the corporate sector #ithout

conducting the same in the pu"lic sector including to#ards the apparatus of ta%es,

the Regional 2overnment, customers and e%cises, permit regulators and so forth.

4n fact in this case, the pu"lic sector, specifically the 2overnment as e%ecutive

&ST give a good e%ample. This is also lin$ed to various transgressions

conducted in the corporate sector that o"viously #ould not happen if there #as no

6counterpart6 or more accurately descri"ed as 6partner6 opposite the corporate

sector.

Li$e the motto that spea$s a"out transgressions for e%ample corruption or "ri"ery

namely 4T TA'ES T?< T< TA52


4/8

theory6, 2C2 has the o"7ective to create a "usiness #orld that competes in a

healthy manner and provides optimum contri"ution to the state in the form of

ta%es. Bo# a"out 2P2 or 2ood Pu"lic 2overnance According to


5/8

competitiveness in facing private as #ell as glo"al competitors and operate

efficiently and transparently.

?hat is actually the main issue faced "y State Enterprises in their relationship

#ith the 2overnment as o#ner 4n the


6/8

The e%istence of a Final Assessment Team or TPA results in o"scurity continuing

all this time and a firm line is needed concerning procedures for appointment of

mem"ers of the 3oard of 9irectors as #ell as the 3oard of Commissioner and

their relationship #ith the TPA. The 2overnment must reali/e that the main

sta$eholders of State Enterprises are the PE


7/8

"e impossi"le in a country li$e 4ndonesia. 5ominations and appointments of the

3oard of 9irectors must "e transparent and "ased solely on competence and

e%pertise. 4gnorance of competence and e%pertise factors, for e%ample "ecause of

camaraderie or political consideration #ould sooner or later damage the

performance of the company.

The 3oard of 9irectors has to "e empo#ered through various means such as:

+ Confirmation pertaining to the mandate of the 3oard of 9irectors and respecting

their independence #ithout interference in decision ma$ing. The mechanism of

responsi"ility #ould "e esta"lished on its o#n #ithout having to "e damaged "y

interference from the 2overnment or Shareholders.

+ Confirmation pertaining to the role, o"ligations and duties of the 3oards of

Commissioners and 9irectors. 4ndeed, statutory stipulations already regulate this

issueH ho#ever in several cases the uncertainty of the 3oard of Commissioners

constitutes the trigger to internal chaos. 4t often occurs that the 3oard of

Commissioners is not in a position or is reluctant to act firmly in correcting a

decision of the 3oard of 9irectors or not follo#ing up a resolution already agreed

upon @5< ACT4


8/8

Transparency must "e encouraged in each State Enterprise. This can "e done

through various steps:

+ Strengthening of internal control efforts

+ Application of international standards in the process of company audit

+ 9isclosure and e%planatory for each unconventional income of funds including

aid from the state

+ 4ssuance of overall performance report i

Documents

Large Corporate Failures