OK4u is a company with diverse operations across two continents. Originally a small textile manufacturer, OK4u now also operates a large electronics company, hotels, a leisure chain and owns a household cleaning brand. The company is not listed in the UK and therefore is not subject to the UK Listing Rules and Corporate Governance Code (which are intended to help achieve good corporate governance). Last year, the fortunes of OK4u\'s major rival, IPP, took a downturn following a fraud investigation. Certain allegations were made against AK, the high profile entrepreneur at the heart of IPP\'s business empire and IPP\'s share price collapsed. AK, who acts as IPP\'s Chairman and Chief Executive, now faces charges of theft totalling millions of dollars. Press reports suggest that his individual control over finances allowed him to transfer funds, take money for personal use and borrow to buy IPP shares without requiring another director\'s counter- signature. Each quarter, exceptional profits were reported and the share price soared -until the dramatic collapse. One influential newspaper suggested that AK\'s individual power was able to grow because of a lack of corporate governance and a \'cultural tolerance in the countries within which IPP operated\'. Naturally, OK4u wishes to distance itself from the actions of its rival, particularly as both companies operate in the same markets. In a press statement, OK4u confirmed its commitment to \'serve rather than exploit our stakeholders\'. Following a complete review, led by an independent management consultant, the company has appointed a new Director of Compliance and Ethics. Her role is to implement the consultant\'s report, encourage ethical operations and strengthen OK4u\'s system of corporate governance. She has also announced an intention to establish a minimum professional standard amongst all OK4u\'s managers and is interested in the lessons that can be learnt from existing established codes of professional practice. Explain the benefits of good corporate governance for both OK4u and IPP. Solution According to the Cadbury report, corporate governance is the system by which companies are directed and controlled. During the last twenty years or so press coverage of high profile scandals similar to that of IPP led to a public questioning of the effectiveness of company boards in monitoring the actions of executive management. Following several influential reports many organisations of all kinds now adhere to certain key principles of good corporate governance such as:.

1. OK4u is a company with diverse operations across two continents. Originally a small textile
manufacturer, OK4u now also operates a large electronics company, hotels, a leisure chain and
owns a household cleaning brand. The company is not listed in the UK and therefore is not
subject to the UK Listing Rules and Corporate Governance Code (which are intended to help
achieve good corporate governance).
Last year, the fortunes of OK4u's major rival, IPP, took a downturn following a fraud
investigation. Certain allegations were made against AK, the high profile entrepreneur at the
heart of IPP's business empire and IPP's share price collapsed. AK, who acts as IPP's Chairman
and Chief Executive, now faces charges of theft totalling millions of dollars. Press reports
suggest that his individual control over finances allowed him to transfer funds, take money for
personal use and borrow to buy IPP shares without requiring another director's counter-
signature. Each quarter, exceptional profits were reported and the share price soared -until the
dramatic collapse. One influential newspaper suggested that AK's individual power was able to
grow because of a lack of corporate governance and a 'cultural tolerance in the countries within
which IPP operated'.
Naturally, OK4u wishes to distance itself from the actions of its rival, particularly as both
companies operate in the same markets. In a press statement, OK4u confirmed its commitment to
'serve rather than exploit our stakeholders'. Following a complete review, led by an independent
management consultant, the company has appointed a new Director of Compliance and Ethics.
Her role is to implement the consultant's report, encourage ethical operations and strengthen
OK4u's system of corporate governance. She has also announced an intention to establish a
minimum professional standard amongst all OK4u's managers and is interested in the lessons
that can be learnt from existing established codes of professional practice.
Explain the benefits of good corporate governance for both OK4u and IPP.
Solution
According to the Cadbury report, corporate governance is the system by which companies are
directed and controlled. During the last twenty years or so press coverage of high profile
scandals similar to that of IPP led to a public questioning of the effectiveness of company boards
in monitoring the actions of executive management. Following several influential reports many
organisations of all kinds now adhere to certain key principles of good corporate governance
such as: