Citing the case of San Miguel Corp. (SMC), the ICD said that the food and beverage giant is a rare case in the Asia and Pacific region.
"The case of San Miguel Corp. is a unique case due to the presence of government appointees of the Presidential Commission on Good Government (PCGG). Under our corporation law, which is consistent with international law, the moment the PCGG nominees become directors of SMC, their duty and responsibilities is not to government, but it is to the corporation," said Dr. Jesus P. Estanislao, president and chief executive officer of the ICD. Estanislao is also a professor at the University of Asia and the Pacific (UAP) and former finance secretary.
Twenty-seven percent of SMC’s common shares of stock is sequestered or under the control of the National Government through the United Coconut Planters Bank (UCPB). The bank’s board members are also PCGG appointees.
Government has been trying to take complete control of SMC from its incumbent chairman and chief executive officer Eduardo "Danding" Cojuangco Jr.
However, the PCGG nominees in both the SMC and UCPB boards have been voting in favor of their respective corporations, which has been frowned upon by the government.
The ICD said that it is not the first time, and it should not be the last time, that government representatives sitting at the board of a private corporation vote in favor of the firm.
"It has happened already in San Miguel a couple of years ago where a PCGG nominee voted against the government. And the reasoning was that he was voting for the best interest of the company and not necessarily for government, and I think that that position has been sustained not only by the literature but by our courts, by our legal tradition," the ICD chief executive said.
When a director is elected to a board, he or she does not represent any single party or interest in a corporation. He or she must represent the entire corporation and that includes PCGG representatives.
Meanwhile, the Organization for Economic Cooperation and Development (OECD) said it was prepared to extend assistance for good corporate governance education.
However, OECD director William Witherell said in terms of technical or financial assistance, the institutions that would be in the best position to carry this out would be the World Bank and the Asian Development Bank (ADB). In the case of the World Bank, there is the Global Corporate Governance Forum as the vehicle for bringing in bilateral governmental financial help that would go into technical assistance.
"But some of the assistance should come from the private sector, which could go into the training of directors," Witherell added.
The ICD, along with the World Bank and the OECD, is undertaking a campaign for good corporate governance in the region.