Commonwealth Caribbean Corporate Governance

Suzanne Ffolkes-Goldson

• Publisher: Taylor & Francis
• Year: 2015
• Print ISBN: 9781138794696
• eBook ISBN: 9781317638018
• Edition: 1
• Topic: Law
• Subtopic: Commercial Law
• Index: Law

Corporate governance initiatives have been developing at a rapid pace in the Commonwealth Caribbean through legislation, case law and codes. Commonwealth Caribbean Corporate Governance offers an overview of current practice and legal developments in corporate governance, highlighting the interpretation of the legislation through case law and the codes of corporate governance which have now been implemented. It also considers the challenges which emerging markets face in an attempt to adopt the corporate governance initiatives of developed markets.

This text explores the emergence and development of corporate governance in the region from a range of angles, including the protection and empowerment of shareholders, the impact on government agencies, and the role and responsibilities of directors and officers in companies and in government agencies.

Written by a panel of academics, legal practitioners and experts working in business, this book will be an invaluable resource for judges, lawyers, corporate executives and students of business, corporate law and corporate management.

Chapter 1
Corporate Governance, Emerging Markets and Development

The Commonwealth Caribbean

JANET DINE

Introduction

When I was invited to write a chapter in Commonwealth Caribbean Corporate Governance, I was hopeful that the situation that I depicted in Companies, International Trade and Human Rights¹ would be healthier. In some ways, I argue, it is, and on the other hand it is worse. It is better because many people understand what is happening although they are not able to change the situation easily. It is worse because of the debt situation in some Caribbean countries.² There is a proliferation of Bilateral Investment Treaties (BITs) and Multilateral Investment Treaties (MITs) involving the Caribbean countries. The grip of the neo-liberal economic paradigm is pervasive as shown by the interference of the International Monetary Fund (IMF).

The brief of this chapter was to update some of the chapters in the 2005 book especially as far the Caribbean countries were touched on. This is an ambitious brief because the Caribbean area is enormous with about 7,000 islands,³ different political systems, different cultures, histories and corporate governance regimes.⁴ The remit of this chapter is narrower because the book only includes the Commonwealth Caribbean countries;⁵ however, it is a large task and inevitably I will only be able to touch on a few countries in any detail.⁶ However, I am sad that the preface that I wrote in 2005 is still resoundingly true and I am still angry about the inequality between individuals and countries. I wrote:

This book is written from a perspective shared with Thomas Pogge; We, the affluent countries and their citizens, continue to impose a global economic order under which millions avoidably die each year from poverty-related causes. We would regard it as a grave injustice if such an economic order were imposed within a national society. We must regard our imposition of the present global order as a grave injustice unless we have a plausible rationale for a suitable double standard. We do not have such a plausible rationale.⁷

First I must define the parameters of the chapter. Why is the chapter talking about ‘corporate governance’ while considering international trade treaties, the international financial institutions, economic theories, inequality and climate change? For this I will go back to an earlier text, The Governance of Company Groups⁸ where I wrote:

My colleagues have commentated frequently on my propensity to see company law illustration for (nearly) discussion, accusing me of expecting company law to ‘take over the world’. This is the book where I discover that not company law but companies have all but done so and confront us with the frightening reality of polarisation of incomes and the globalisation of poverty.⁹

I have now broadened the focus because of the prevalence of the recent phenomenon of ‘corporate governance’ a term that cannot be easily defined:

One would think that the issue of corporate governance would be a purely technical and slightly legalistic one falling within the ambit of what we define rather strictly as company law. Therefore, the issue in question would fall within the interests of mainly academics or corporate lawyers. The truth however is very different. Corporate governance found itself at the very centre of a debate that relates to the very cultural identity and basic political choices made on the part of societies. The fact that corporate governance has provoked a debate, which effectively touched upon the fundamental ideological choices of the societies in question, clearly revealed the true parameters of the issue and its far-reaching effect. The reason behind the debate that has generated hundreds of academic articles and books,¹⁰ a very lively exchange of ideas and opinions on the part of politicians, industry and society and sometimes a rather overt confrontation between important parts of the society such as the employees and the employers is the fact that corporate governance requires the effective engagement of actors that lie at the heart of the most important issues for humanity. To consider ‘Corporate Governance’ is also to consider competing models of capitalism and competing global economic models.¹¹

The history and therefore the culture of the Caribbean countries are imbued by the tragic events around the transatlantic slave trade.¹² There is more and more research and evidence of the disastrous legacy¹³ of the trade on people in the Caribbean countries and also in the black communities in the United States and in Europe ranging from hypertension in black individuals to the lack of confidence with makes some people whiten their skins.¹⁴ Other colonised people have recognised ‘cultural cringe’,¹⁵ a lack of confidence in their cultural heritage. These issues are wide ranging so this chapter will focus on the ‘modern colonisation’ of small ‘developing’ countries and emerging markets and what this means in the Caribbean. Ha-Joon Chang powerfully illustrates the way that rich nations are bullying less advantaged countries by a web of legal treaties which assumes that the only way that countries can develop is by opening their markets, which is the neo-liberal orthodoxy. This posits a free market, deregulation, a small state and privatisation.¹⁶ Although Chang does not believe that there is a deliberate conspiracy to stop poorer countries developing, this is what is happening because of the rhetoric and implementation of the neo-liberal experiment aided by the international financial institutions, the ‘Unholy Trinity’,¹⁷ the IMF, the World Bank (WB) and the World Trade Organization (WTO). Chang’s thesis is that all of the developed nations historically used a set of instruments, which promoted ‘infant industries’ either by protecting those industries or by subjecting other countries by means of wars, colonisation and unfair trade practices. When the victorious, developed countries are ready they will open their borders because they are able to trade with other parties using their advanced technology.¹⁸ Since the International Financial Institutions (IFIs) are dominated by rich nations other less advantaged countries are cowed by asymmetric treaties.¹⁹

The transatlantic slave trade was probably the largest ‘free-market’ experiment in the western world; it was only free for the rich slave owner, clearly not free for the slaves. Here there are resonance with what is happening in international trade, the rich nations are ‘free’, poor countries are bound with chains. Ironically at the time of slavery there were regulations, an insurance industry, laws about shipping the ‘chattels’ in the home countries and, laws in the colonised countries about suppressing rights for the slaves. Now the IFIs impose ‘conditionality’ on poor states. Small jurisdictions have always been at the mercy of the rules governing international trade and, in that respect, little has changed. In the light of the discussion relating to ‘free trade’ above it is worth reiterating that one of the key points made by those who opposed abolition of the slave trade was that such an abolition interfered with the ‘freedom of trade’ of the merchants involved. It is also interesting to note that the slave trade was ‘free’ from regulation but protected by a network of law, including company, contract and insurance law as well as ‘international’ laws such as the Navigation Acts.²⁰

It is necessary to dissect the dominant ‘free-trade’ rhetoric and realise that the ‘freedoms’ are tilted to powerful and rich interests. ‘The free market’ doesn’t exist. Every market has rules and boundaries that restrict freedom of choice. A market looks free only because we so unconditionally accept its underlying restrictions that we fail to see them.²¹ Laissez-faire doctrines disguise power relations between individuals and countries. Free market economists, while claiming moral neutrality for their theories,²² use a discourse, which has the effect of disguising power differences causing a sliding slope of perception from actual equality to formal equality. Formal equality is not real; economic theories positing equality rest on the concept of equal bargaining power (including equality of information) and the resultant ‘efficiency’. The result of assuming equality of bargaining power means that there is no justification in intervening in the resultant property distribution. Such an intervention is an interference in the ‘freedom to choose’ to carry out a particular transaction. The defence of freedom may thus be prayed in aid of a market system, which is then free to create enormous inequalities. This concept of freedom of choice has considerable resonance both at national and international levels, applying to individuals, corporations and states. Assertions of freedom and equality disguise the real power relations.

Every stable social system possesses an order of power and wealth, but unlike historically prior distributive schemes, the market order avoids the imposition of a detailed pattern. Instead of a structure of rank and privilege fixing entitlements to wealth and power, the distributive mechanism of the market allocates resources to those persons able and willing to pay the highest price for them … The market order avows blindness to claims of privilege or force, so it recognises no claims of an inherent ...

Table of contents

• Cover
• Title
• Copyright
• CONTENTS
• Notes on contributors
• Table of cases
• Table of statutes
• INTRODUCTION
• 1 CORPORATE GOVERNANCE, EMERGING MARKETS AND DEVELOPMENT: THE COMMONWEALTH CARIBBEAN
• 2 EMERGENCE OF CORPORATE GOVERNANCE IN THE COMMONWEALTH CARIBBEAN
• 3 DUTIES AND RESPONSIBILITIES OF DIRECTORS AND OFFICERS
• 4 THE PROTECTION AND EMPOWERMENT OF SHAREHOLDERS AND OTHER STAKEHOLDERS
• 5 THE LEGAL MATRIX GOVERNING DIRECTORS AND OFFICERS OF FINANCIAL SUPERVISORS: UNDERSTANDING THEIR ROLE IN GOVERNANCE
• 6 PUBLIC SECTOR GOVERNANCE: CHANGE, CRISIS AND DYSFUNCTION
• Appendix A: Corporate governance recommendations for the listed companies on the Barbados Stock Exchange Inc
• Appendix B: Trinidad & Tobago Corporate Governance Code
• Index