Tuesday, January 20, 2009
Something Rotten in the State of our Public Companies
When Maldives Tourism Development Corporation (MTDC) was launched friends advised me to buy its shares. I refused. From the less-than-respectable history of public corporations in the Maldives I had my doubts. One year later when MTDC paid a dividend nearly equal to the original investment my friends had triumphant smiles. The smiles faded last October when the company’s audit report was released.
With Bank of Maldives I was less cautious. This may partially have been because when the company went for a public issue, it had been apparently running professionally and efficiently for some years –long enough to lull my suspicions. It may partially also have been because I had worked earlier in a bank and was a bit familiar with the internal safeguards that operated in banks. But the audit report released on Sunday indicates that my confidence was misplaced. Probably I’ll lose my investment in the bank. Fortunately my savings are not in Bank of Maldives.
From Qaumee Company to MITE and MTCC to MTDC, the plight of ordinary shareholders has been the same. Forget about getting any profit, they should consider themselves lucky if they manage to get their investment back. These companies were all formed with the lofty goal of giving ordinary people the chance to invest their meager savings. But they all end up with unscrupulous managements fleecing unwary shareholders.
Today there is a Company Law and a Registrar of Companies established under the law. There is a Capital Market Development Authority and a Monetary Authority to regulate the financial sector. But things are only getting worse if any. At least in the 1960s those responsible for swindling Qaumee, Orchid and MITE companies were prosecuted and brought to book. But later those who swindled FPID, MIFCO, MTCC, STO, STELCO and MTDC were not only left scot free, but also given promotions, many to ministerial level.
Taking action against perpetrators of economic crimes is not just a question of recovering stolen money. It’s more a question of reestablishing the moral norms of our society. An entire generation has been brought up believing that corruption is the smart thing to do. If another generation goes that way, the word corruption itself will have no meaning at all. Surely that’s not the good governance we want to establish in the Maldives.