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Basel O. Abu-Ali
‫الشركات‬ ‫حوكمة‬
CorporateGovernance
Bases &Cases
We are in a BIG Trouble!
Preface
• Started in the past decades
• due to Financial Crisis and Scandals
• all over the World starting Asia crisis
199...
Main
Reasons
• Ownership Management
• Weak internal controls
• The power of big shareholders
over small investors
4
led to:
• Trust shook in management
• Trust shook in disclosed financial results
• Trust shook in management's capabilitie...
Worries!
Investors Return
6
Employees
Creditors
Community
Stakeholders
Stability
Salary
Money back
AddedValue
Rights
Corporate
Governance?
No common or unanimous definition:
• Systems
• Policies & Procedures
• Processes
• Internal Controls...
Corporate
Governance?
that
• Controls
• Manages
• Directs
all the parties in the organization
and the relationships betwee...
Corporate
Governance
Parties
Shareholders
Board of
Directors
Senior
Management
10
Corporate
Governance
Parties
Shareholders
Board of
Directors
Senior
Management
11
Reports
Preparing
Control &
Directing
Corporate
Governance
Parties
Shareholders
Board of
Directors
Senior
Management
12
Reports
Preparing
Control &
Directing
The 5 Rights Info
13
The 5 Rights
Info
System
14
The 5 Rights
Info System
People
15
The 5 Rights
Info System
PeopleTime
16
The 5 Rights
Info System
PeopleTime
Decision
17
The 5 Rights
Info System
PeopleTime
Decision
18
CG is a
decision
making
Mechanism!
Concerned
with
• The flows of the information
• Protecting shareholders’ wealth
• Achieving the goals
• Maintaining the re...
Corporate
Governance
Principles
20
Transparency
& Disclosure
Accountability
Responsibility
Equality
& Fairness
Benefits
•Better assets utilization
•Productivity and Growth
•Risk mitigation
•Better controls
•Attract outside investment...
Investors Return
22
Employees
Creditors
Community
Stakeholders
Stability
Salaries
Money back
AddedValue
Rights
23
CASES
24
2001
History
 Enron
 Founded in 1985
 Energy, electricity and natural gas,
commodities and services
 In 2000, claimed reven...
26
2003
History & Scandal
 Parmalat
 Italian diary and food corporation
 1997 began to enter world financial
markets (to financ...
28
2005
History & Scandal
 Ranbaxy
 India based pharmaceutical company
 Manufactures generic drugs for European
and US markets
...
30
2010
History & Scandal
 British Petroleum
 Oil & Gas
 Explosion and fire sank the drilling rig
Deepwater Horizon
 In the Gu...
32
2012
History & Scandal
 Royal Bank of Scotland
 One of the three banks have been found
involved in manipulation of LIBOR rate...
34
2014
History
 Founded in 2004
 Second Largest mobile operator KSA
 Etisalat UAE owns 27.46%
 In 2013 reported net profit of...
Thank you …
Corporate Governance
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Corporate Governance

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Corporate Governance; Bases & Cases

Published in: Business

Corporate Governance

  1. 1. Basel O. Abu-Ali ‫الشركات‬ ‫حوكمة‬ CorporateGovernance Bases &Cases
  2. 2. We are in a BIG Trouble!
  3. 3. Preface • Started in the past decades • due to Financial Crisis and Scandals • all over the World starting Asia crisis 1997 • and lately 2008 financial crisis; • many and huge firms collapsed or went bankruptcy 3
  4. 4. Main Reasons • Ownership Management • Weak internal controls • The power of big shareholders over small investors 4
  5. 5. led to: • Trust shook in management • Trust shook in disclosed financial results • Trust shook in management's capabilities for the future 5
  6. 6. Worries! Investors Return 6 Employees Creditors Community Stakeholders Stability Salary Money back AddedValue Rights
  7. 7. Corporate Governance? No common or unanimous definition: • Systems • Policies & Procedures • Processes • Internal Controls • ALL of the above 8
  8. 8. Corporate Governance? that • Controls • Manages • Directs all the parties in the organization and the relationships between each others; RIGHTS & RESPONSIBILITIES 9
  9. 9. Corporate Governance Parties Shareholders Board of Directors Senior Management 10
  10. 10. Corporate Governance Parties Shareholders Board of Directors Senior Management 11 Reports Preparing Control & Directing
  11. 11. Corporate Governance Parties Shareholders Board of Directors Senior Management 12 Reports Preparing Control & Directing
  12. 12. The 5 Rights Info 13
  13. 13. The 5 Rights Info System 14
  14. 14. The 5 Rights Info System People 15
  15. 15. The 5 Rights Info System PeopleTime 16
  16. 16. The 5 Rights Info System PeopleTime Decision 17
  17. 17. The 5 Rights Info System PeopleTime Decision 18 CG is a decision making Mechanism!
  18. 18. Concerned with • The flows of the information • Protecting shareholders’ wealth • Achieving the goals • Maintaining the reputation, brand, and value of the business plus, • It determines the company’s culture 19
  19. 19. Corporate Governance Principles 20 Transparency & Disclosure Accountability Responsibility Equality & Fairness
  20. 20. Benefits •Better assets utilization •Productivity and Growth •Risk mitigation •Better controls •Attract outside investments •Capital Markets stability •Support the economy •… 21
  21. 21. Investors Return 22 Employees Creditors Community Stakeholders Stability Salaries Money back AddedValue Rights
  22. 22. 23 CASES
  23. 23. 24 2001
  24. 24. History  Enron  Founded in 1985  Energy, electricity and natural gas, commodities and services  In 2000, claimed revenue of $101 billion  Fortune Magazine; “America’s most innovative company”. For six years in a row 25
  25. 25. 26 2003
  26. 26. History & Scandal  Parmalat  Italian diary and food corporation  1997 began to enter world financial markets (to finance international acquisitions)  2001 moved to derivatives  2003 went bankruptcy ($14 billion debt)  Identified by Bank of America 27
  27. 27. 28 2005
  28. 28. History & Scandal  Ranbaxy  India based pharmaceutical company  Manufactures generic drugs for European and US markets  2005, by a whistleblower; a new product with suspect or unreliable clinical data  Inaccurate key information about the product 29
  29. 29. 30 2010
  30. 30. History & Scandal  British Petroleum  Oil & Gas  Explosion and fire sank the drilling rig Deepwater Horizon  In the Gulf of Mexico, April 2010  Million gallons of oil spill for 86 days 31
  31. 31. 32 2012
  32. 32. History & Scandal  Royal Bank of Scotland  One of the three banks have been found involved in manipulation of LIBOR rate to maximize profits, in 2012 (LIBOR Scandal)  Manipulated to benefit their derivatives trading books  Caught by the traders 33
  33. 33. 34 2014
  34. 34. History  Founded in 2004  Second Largest mobile operator KSA  Etisalat UAE owns 27.46%  In 2013 reported net profit of SAR 6.68 b  In June (2Q) 2014 reported SAR 1.312 b  Many investors bought the share  Share price reach over SAR 93 in 30Sep14 35
  35. 35. Thank you …

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