One hundred directors and officers of publicly listed companies (PLCs) associated with the Lopez Group underwent corporate governance (CG) training on September 16 at the Penthouse of 8 Rockwell, the newest office address in Rockwell Center, Makati.

Conducted by the Institute of Corporate Directors (ICD), the training covered topics mandated by the Securities and Exchange Commission for the continuing education of professional directors and officers of listed companies.

ICD chief executive officer Ricardo Nicanor Jacinto reviewed the ASEAN CG Scorecard (ACGS) and compared the rankings of individual companies against other PLCs and those in the same industry. He focused on possible areas for improvement and introduced Singapore Telecommunications Limited as a case study for effective governance captured by the ACGS.

ICD fellow Frank Numann spoke about “Battling Fraud through Effective Whistleblowing.” With fraud typically estimated at 5% of revenue, he made the business case for whistle-blowing as part of good governance.

“Fraud that lingers gets expensive,” said Numann, presenting findings of the latest ACFE (Association of Certified Fraud Examiners) Global Fraud Study. Fraud perpetrated for six months or less cost companies surveyed $45,000 on the average, while fraud that went on for over five years cost companies $850,000 on the average.

Numann discussed case studies involving corrupt corporate officers and encouraged board members to simplify the reporting process to encourage whistle-blowers to come forward without fear of retaliation.

ICD fellow Carmelita Araneta tackled “Related Party Transactions (RPTs),” drawing on 19 years as a central banker and 15 years as chief risk officer of a top universal bank.

According to International Accounting Standards, RPTs refer to “a transfer of resources, services or obligations between related parties… (where) one of them has the ability to control, joint control or to exercise significant influence over the other one in making operational or financial decisions.”

Araneta said RPTs are generally allowed, “provided that these are done on an arm’s length basis and conducted free of conflicts of interest from the related party.”

Current CG guidelines place much responsibility on independent directors and board-level audit committees of PLCs to review significant RPTs. They aim to prevent abusive RPTs and insider trading. (Story/Photos by: Carla Paras-Sison)