Strategies for Improving Corporate Governance by Organizations in Nigeria
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[a] Ph.D， Professor of Management & Entrepreneurship， Kogi State University， Anyigba， Nigeria.
[b] Ph.D， Senior Lecturer， Department of Marketing， University of Port Harcourt， Nigeria.
[c] Lecturer， Department of Business Administration， Kogi State University， Anyigba， Nigeria.
[d] Lecturer， Department of Business Education， Federal College of Education， Okene， Kogi State， Nigeria.
* Corresponding author.
Received 5 September 2013； accepted 8 November 2013.
Abstract
Global trends in corporate governance have led to series of legislations， regulatory frameworks and codes of conduct by governments， international organizations， professional bodies and other interest/pressure groups. Corporate malfeasance is more common in the third world nations， including Nigeria， than in the advanced countries. We read daily of many corporate malpractices in this country and their negative impact on the economy. Our efforts in this article have been geared towards highlighting major strategies that will improve corporate governance in Nigeria， if religiously implemented， which in turn will enhance corporate and economic development. The quest for Nigeria to be a global economic player by the year 2020 can be attained faster if our indigenous companies operate more professionally， ethically and are in a position to compete internationally.
Key words： Corporate governance； Code of ethics； Board of directors； Management system； Self-Regulation； Strategies
B. Chima Onuoha， Chinedu N. Ogbuji， Abu A. Ameh， Oba， Unoiza Oregwu （2013）. Strategies for improving corporate governance by organizations in nigeria. International Business and Management， 7（2）， 26-31. Available from： http：//www.cscanada. net/index.php/ibm/article/view/j.ibm.1923842820130702.1105 DOI： http：///10.3968/j.ibm.1923842820130702.1105
INTRODUCTION
From the tulip mania in Holland in the mid1630s to the ultimately disastrous speculative rush for shares of the Mississippi Company promoted by John Law and his Banque Royale in Paris in the early 1700s， from the South Sea Bubble in London in the same period （to which Sir Isaac Newton lost a princely ￡20，000） to the great Wall Street Stock Market boom of the 1920s that preceded the Great Depression and on to the global financial crisis of 2008 2009， the history of finance over 500 years has been marked by frequent booms and busts （Moghalu， 2013）. A discussion of economic management of nations will be in complete without the issue of corporate governance.
This country needs well governed and managed business enterprises that can attract investments， create jobs and wealth and remain viable， sustainable and competitive in the global market place. Good corporate governance， therefore， becomes a prerequisite for national economic development.
2. CORPORATE GOVERNANCE MECHANISMS AND CONTROLS
These refer to all the necessary internal and external measures put in place to encourage motivate and enforce the promotion of accountable， transparent and responsible corporate leadership and reduce conflicts and corporate failures. In other words， they are similar to principles of corporate governance.
Agbonifoh （2010） has done some good work in this area， in addition to those of Maier （2005） from which we shall borrow extensively.
2.1 Internal Mechanisms and Controls
These include：
（a） Board Structure and Performance.
The key issues in board structure which may have far reaching implications for quality corporate leadership are：
Whether there is a two-tier or one-tier structure. In conglomerates， there may be a two-tier board with one board at the divisional （SBU） level and another at the corporate level；
The size and composition of the board；
The diversity of board membership；
Separation of the position of Chairman and Chief Executive Officer （CEO）；
The presence and role of independent non-executive directors；
The independence of otherwise of the Audit Committees （The main responsibility of the audit committee is to monitor and review the integrity of the company’s financial controls， the external auditor’s independence and objectively and the effectiveness of the audit process as a whole） （Maier， 2005）.
（b） Management System.
The major issues of interest here include：
Internal control systems and procedures， including the internal auditing system；
Employee training；
Compliance monitoring；
Whistle-blowing procedures and an effective whistle blowing system；
Reporting practices （which should include details of breaches and enforcement）；
Corporate culture；
A regular review of code （Maier， 2005）； and
Remuneration disclosure in order to ensure that remuneration is tied to performance/contribution.
（c） Code of Ethics.
This covers the following important matters：
Obeying laws and regulations；
Prohibition of giving and receiving brides；
Restrictions on giving and receiving gifts；
Prohibitions of facilitation payments；
Prohibitions of donations to political parties；
Conflicts of interest；
Ethical competition；
Anti-competitive practices；
Use of company resources.
2.2 Internal Mechanisms and control
These are externally induced pressures on corporations for better corporation governance. Some of them include：
Government regulations including those imposed by regulatory agencies；
Competitions；？ Media pressure；
Criteria for listing companies on the Stock Exchange；？ Strong regulatory legislations that promote good governance； and
Shareholders activism.
3. WEAKNESSES IN THE CORPORATE G O V E R N A N C E P R A C T I C E S B Y NIGERIAN ORGANIZATIONS
Some of the major weaknesses of corporate governance in banks， as stated in the code of corporate governance by the Central Bank of Nigeria （2006） include：
Disagreement between Board and Management giving rise to board squabbles.
Ineffective Board oversight functions.
Fraudulent and self-serving practices among members of the board， management and staff.
Overbearing influence of Chairman or MD/CEO， especially in family controlled businesses.
Weak internal controls.
Non compliance with laid-down internal controls and operational procedures.
Ignorance of and non-compliance with laid down rules， laws and regulations guiding business enterprises.
Passive shareholders.
Poor risk management practices resulting in large quantum of non-performing credits including insiderrelated credits.
Abuses in relation to firms’ source of funds in terms of overdrawing them.
Sit tight Directors even where such directors fail to make meaningful contributions to the growth and development of the firm.
Succumbing to pressure from other stakeholders e.g. shareholder’s appetite for high dividend and management quest for higher remunerations.
Technical incompetence， poor leadership and weak administrative ability.
Inability to plan and respond to changing business circumstances.
Ineffective management information system and external government influences.
The above weaknesses are also， found to a large extent in many other corporations in the country.
Few examples here will suffice. The failed bank syndrome of the 1980s and the financial crisis of 2008 2009 which necessitated Sanusi’s banking reforms， were all aftermaths of poor corporate governance. Between 2004 and 2006， the British airways （BA） and Virgin Atlantic Airways （VAA） colluded and started a conspiracy to fix periodically， increase and maintain a passenger fuel surcharges （PFS） list as a component of the fare passengers pay to travel. Over that period， the surcharges rose from￡5 to ￡60 per ticket for a typical BA or virgin Atlantic long haul return flight. Thousands of Nigerians were ripped off in the process. This corporation malpractice came to the knowledge of the United Kingdom’s Office of Fair Trade （OFT） and the United States Department of Justice（DOJ）. For this， BA and VAA were sanctioned. BA paid a criminal penalty of $300 million in the United States and￡121.5 million in the United Kingdom. Virgin Atlantic was exempted from this time， because， under the principle of full immunity of OFT’s leniency policy， on its volition， VAA reported itself to OFT （The Nation， 2011）.
（9） Finally， this country needs a similar commission or organization like the UK’s Office or Fair Trade （OFT） or the USA’s Department of Justice （DOJ）. This agency should empowered and committed to ensuring that there is effective competition， especially in relation to price fixing and otherinfringements. We do not have anti trust laws in this country which most companies， particularly in the oligopoly market to do whatever they like， to the detriment of the unsuspecting consumers. The compliance in this direction is to be led by boards and senior management and supported by effective risk management systems and corporate governance. Given the harsh economic environments under which business enterprises operate in the country， and these usually lead to unethical practices， the need for effective risk management mechanisms cannot be underscored.
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