This article first appeared in The Edge Financial Daily on October 26, 2017

KUALA LUMPUR: Public listed government-linked companies (GLCs) should be run by professionals.

“If you are, for example Felda (the Federal Land Development Authority) or Sime Darby, you have to make sure that your board [members] are experts in the field [and] who have a good track record,” said Malaysian Institute of Corporate Governance (MICG) president Datuk Yusli Mohamed Yusoff.

“I think the GLCs [in general] are in a good position to be appointing professional boards, but we will still see a lot of ex-politicians and ex-civil servants on [the] boards. [It is] not that I am saying they are not good, but I’m just saying are we getting the best quality people on these GLC boards.

“The likes of Khazanah Nasional Bhd, MoF (finance ministry) and Perbadanan Nasional Bhd, they could easily assemble the best boards for their companies and in many cases they do,” he told the audience at the Business Foresight Forum 2017 yesterday.

Speaking at the session on “Business Leadership, Governance and Market Reputation”, Yusli said the MoF should play a role in regulating the activities of non-listed GLCs. Yusli, the former chief executive officer (CEO) of Bursa Malaysia Bhd, stressed that it was important that the MoF regulate these non-listed GLCs as they are dealing with public money. “MoF should be making sure that companies under their wing are practising the highest standards of corporate governance, because when you talk about public sector companies, my personal view is that the standards of corporate governance required in those companies should be even higher than what we impose on our financial institutions and public listed companies.

“This is because these public sector companies are funded 100% by public money, and there’s no room for error on whom you appoint to the board of these companies. That’s my personal view,” he said.

CIMB Asean Research Institute chairman Tan Sri Dr Mohd Munir Abdul Majid, who was also a speaker at the session, said that the “tone from the top”, is very important in cultivating corporate governance in an organisation. “The tone from the top — a personal message from the CEO or chairman or director — is very important. For example the Financial Services Professional Board (FSPB), whose function/role is to have the financial services industry introduce the standards themselves and not just rely on statutes and regulations ... the experience from that is the top people in the financial institutions are not always the most interested people in what the FSPB is doing, [as] generally the people at the top do not have the time”.

PricewaterhouseCoopers Malaysia managing partner Sridharan Nair who also shared his views during the session, concurred. “As Lou Gerstner, the well-known ex-chairman of IBM said, the secret to corporate governance is when it is really practised, and not just preached but practised by the owners themselves.