Adeboye's resignation and concept of Corporate Governance
The recent retirement of the highly respected and the iconic religious figure, the General Overseer of the Redeem Christian Church of God (RCCG) Pastor Enoch Adejare Adeboye, has thrown into the front burner intensive discourse about the newly-released National Code of Corporate Governance 2016 by the Financial Reporting Council of Nigeria (FRC)
Pastor Adeboye had announced his retirement as well as his successor last Saturday while the church publicist later released a statement to the effect that the retirement was in compliance with the provisions of the National Code of Corporate Governance 2016. The relevant part of the Code to the issue at hand is the provision under the Not-For-Profit Organisations Code which purports to limit the tenure of the Founder of NPFO organisations (where he wields enormous powers) to 20 years, among other provisions.
Since then sustained outcry had greeted the development with many critics pointing accusing finger to the National Code as being too officious by unnecessarily prying into religious affairs.
Not the least the Christian Association of Nigeria (CAN) has come out to condemn the Code as anti-Christian while many critics have also heaped enormous blame on both the Code and even its maker the FRC! The Code itself has been suspended.
But the provisions in the Not-For-Profit Sector Code are generic, written as basic benchmarks on best practices for whopping nine categories of organisations/institutions that fall under the Code purview and not just for religious organisations alone, let alone Christian religion. The NPFO organisations covered are Charitable, Educational, Professional and Scientific, Religious, Literary and Artistic, Social and Recreational Club and Associations, Trade Unions and Others.
Furthermore, contrary to wide held belief, the National Code of Corporate Governance has not just been suspended, rather it has since been under moratorium just a few days after it was officially released since October 17, 2016 by the FRC. The Minister of Trade and Investment under whose oversight the FRC falls had already slammed suspension on the Code before the present developments.
To begin my analysis, let me say a little thing about the Corporate Governance as a discipline and the controversial FRC's Corporate Governance Code. It is really surprising that many people, including educated ones, have not exhibited a firm grasp of the issues and concepts involved here as their comments have shown! Corporate Governance deals with the ways and manners by which a company is directed and controlled. The purpose of corporate governance is to facilitate effective, entrepreneurial and prudent management that can deliver the long term success of the company.
Corporate Governance delves into many areas and subjects that revolves around management of an organisation. Thus, there are many areas in corporate governance like disclosure and transparency, insider dealing, compliance, internal control, directors' remunerations, sustainability etc. which deal strictly with legal and ethical issues, whereas areas like risk management, board composition, succession planning etc. are not strictly ethical matters, but acceptable and prescribed ways of doing things as garnered over the years by experience.
It is generally accepted that observance of Corporate Governance ideals offers certain positive benefits and advantages in themselves. As a matter of fact, many empirical researches have established links between observance of Corporate Governance Code and profitability and, what is more, sustainability.
Many developed countries of the world have evolved Corporate Governance Codes, these Include United Kingdom Code of Corporate Governance (which has been updated every three years since 1992), the United States' Sarbannes Oxley Act and the South Africa's King IV Report.
As a matter of fact Nigeria is a later comer in this regard. We used to have sectoral Codes which regulates certain sectors like Banking, Insurance, etc but the present Code tagged National Code of Corporate Governance by the FRC is the first attempt to fashion out an all-embracing National Code for Nigeria.
The Codes are really three Codes in one with Private, Public and Not-for-Profit sectors having a separate Code each but the collectively combine to form the National Code of Corporate Governance.
The FRC itself is empowered to develop the principles and practices of Corporate Governance applicable in Nigeria (such as the one in question) under Section 50 of the FRC Act 2011. There was wide consultation before it was made, as a matter of fact, there were no less than three Public Hearings on the Code before it was released by the FRC on October 17, last year only for it to be suspended a few days later by executive fiat.
Of course the controversial part of the Code all along has been the Code for Not-for-Profit sector, which is understandable. This being because Not-for-Profit sector is a sector that has been hitherto unregulated by any governance Code and it is natural for people to resist change.
Under its Section 3, the Not-For-Profit Code provides the rationale for having a pragmatic national for the sector when it states inter alia thus "The need for corporate governance in NFPOs is hinged on good governance and orderly succession in view of the volume of funding they attract…
"Apart from foreign donors, domestic donors out of conviction, knowledge, philanthropy, need, deceit or ignorance contribute large sums of money to NFPOs. Many NFPOs operate with unknown frameworks, but with governments completely in the dark as to both their ownership and principal accountability.
"In the context of current global insurgency, the operations and funding of NFPOs raise serious security concerns, hence the need for good governance of NFPOs in the country"
It should also be noted that Founders of NPFOs have no special place in law and provisions of the Code, like other Corporate Governance the world over, focus on institutions rather individuals and principles rather than decrees or orders.
The governance principles being sought to be applied to the NPFOs under the Code apply to all the organisations and associations mentioned above. It will therefore seem strange why the religious group would like to extricate itself.
Why should religious organisations be afraid of the applications of principles which promote greater disclosure, transparency, responsibility and accountability? More so when the principles have been found to be greatly helpful in both the private and the public sector and have been widely applied in developed countries with beneficial results.
More importantly, it needs to be borne in mind that application of the Code for the NPFO is not mandatory, (unlike the Codes for Private and the Public Sectors) the NPFO Code prescribes a "Comply or explain" application mechanism, meaning that any organisation within the fold of NPFO may specifically choose not to follow the principles enunciated in the Code and it that case the only obligation incumbent upon her is just to explain (to the authorities and her members) why she has chosen not to follow the Code.
In the light of all these, the writer fails to fathom he hullaballoo being generated over the Code, especially as regards the NPFOs. The National Code is definitely a beneficial instrument that would take Nigeria to greater heights in all socio-economic ramifications.
Ketefe, a Corporate Governance Professional, may be followed on twitter @Ketesco