1. Business Ethics:
a Cornerstone of
Corporate Governance
Sorana Baciu
Secretary of State
Chancellery of the Prime – Minister, Government of Romania
Bucharest, November 10
2. “Corporate governance is a system of well considered principles and
procedures aimed to responsibly manage and supervise a company with
the objective economic and societal value creation, as well as to
transparently give account internally and externally to all stakeholders
about the enterprise strategy, results and risks”
Development of corporate governance codes and legislations driven by
the need for more transparency and accountability to help restore
investor confidence after damage caused by financial scandals
In Romania, the poor performance of state-owned companies in the last
two decades could only be addressed through a proper delimitation
between the state as a shareholder and the (professional) management
based on clear rules
Corporate Governance enables value
creation
3. State-owned companies still play an
important role in the Romanian economy
State owned companies have a share of 6-8% GDP, and 4% in
total employment in Romania
1300 state-owned companies, of which 253 under central
public authorities and the rest under local public authorities
The rationale for the state-owned companies
Public service
Natural monopoly
Control over natural resources
4. State Ownership Policy approved by the
Government of Romania in September
2016
Law 111/2016 on Corporate Governance
in force since June 2016
Detailed secondary legislation to support
the implementation of Law 111/2016
Corporate Governance system in Romania
has significantly improved in 2016
5. State Ownership Policy approved in
September 2016 …
The State should be an active and informed shareholder
Governance of State Owned Enterprises (SOE) should be transparent,
with a high degree of professionalism and effectiveness
The State should allow SOEs full operational autonomy to achieve
their defined objectives and refrain from intervening in SOE
management
The State has clear expectations from the management regarding:
Business performance (financial and operational)
Risk management and internal control
Environmental protection, and health and safety
Business ethics
6. Shareholder recognition and equal treatment
Stakeholders interest
Board responsibilities clearly outlined
Ethical behavior
Transparency and integrity
Value creation
Accountability and supervision
…and clearly defines Corporate Governance
Principles in line with OECD guidelines
7. Business Ethics is a cornerstone of
corporate governance
Business ethics can be defined as the principles, norms and standards
that guide the way an organization conduct of its activities, internal
relations and interactions with external stakeholders
Maintains high standards of integrity
Protects the reputation of the business
Builds trust
Ensures the sustainability of a business
Increases productivity and the overall employee morale
Increases the profitability of the company
8. All state-owned companies should adopt a Business Ethics Code by the end of
2016
Public available on the company’s website
Training provided to all employees
A compliance and business ethics department should be set up in each
company
Same rules and requirements apply to public authorities
Strict monitoring from all stakeholders
Challenges ahead:
Embed the Business Ethics Code into the corporate culture
Implementing business ethics in SOEs
