Declaration Of Interest

I  received an e-mail from my company today. The subject was a daunting one –  “Declaration of Interest”. In the body of the email sent to all employee was this text:

Fill up your name and IC number and read carefully.

Declare any family/relative that have conflict of interest with the company:
a. is in competition with the company
b. working in the same company
c. has an ongoing business with the company

There is an attachment in the e-mail. The attachment was a very legal-like document requiring employees to fill up a table with names of family and relatives, what business relationship they had and the period of this relationship – e.g. if my spouse worked with the competitors of the company, I need to spell out the dates.

We have to sign the attachment and submit to HR. This has to be done yearly, because relationship and things will be different the following years.

This is what transparency and governance is all about. It’s about employees declaring that they do not have any vested interest in the business of the companies. It’s about the ability to take disciplinary (and legal) actions against someone who did not follow the rules of conduct. If you are found to not abide by the conduct of business spelt out, you have to leave the company.

It is mandated in the Malaysia Companies Act for directors to disclose their interest, direct or indirect in contracts, properties, offices etc. And the interested director shall abstain from discussion and voting in respect of the said contracts during meetings.

These are to ensure that those transactions entered into are at arm’s length and based on commercial terms not more favorable than those available to the general public, in the best interest of the company and not detrimental to the interest of the shareholders.

Though it is mandated for directors to disclose their interest under the law, however many companies through their HR policies also make it compulsory for the employees to declare their interest as well.

Does SGM practice the above? If not, are there any plans to do so in the future? The crisis in the past couple of years demand such declaration, otherwise, what is stopping staff and top management of SGM from awarding contracts to their relatives? And are these contracts awarded at arm’s length and based on commercial terms not more favorable than those available to the general public?

One classic example is Mr TKH, the ex-State Chairman of Johor. He authorized payment of benches to Perniagaan F, a company he owned, to supply benches to Johor Kaikan. This is one example that was documented by the internal review conducted by SGM to look into the Johor financial management practices. This review was presented to Johor leaders, on January 17 2016 in the Johor state All Leaders Meeting. So it is a fact. And if this can happen in Johor, it could happen elsewhere.

If you observe who’s who at the top of SGM leadership, it has slowly become a dynasty of certain C family. Is this healthy? What are the businesses that C family run outside of SGM? Are they potential suppliers and contractors to SGM? Do we know? Is there any declaration of interest from these top chiefs?

What about those leaders who want to dialogue with you? Those leaders that keep asking you to support GD, keep blaming “sansho shima” and negative forces for what is happening in SGM now.  Perhaps we can openly asked them to declare their interest, whether they have an direct or indirect (through family members) dealings with SGM before, either for their own business or the company they work for. If they are in construction, have they ever been awarded contracts and jobs by SGM? Sure, they might have publicly tendered and won the project fairly. But, the fact that they have made money out of SGM means that their dialogues with you is not impartial anymore. They have vested interest to protect SGM.

Until we see this type of documented declarations from the decision makers (ECC and the General Councils), we cannot be assured that there is governance in place. We cannot be assured that the interest of SGM’s members are being protected.

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One thought on “Declaration Of Interest

  1. I totally agree. I work with few European companies which uphold the code of conduct to ensure transparency and to prevent any conflict of interest. Staffs are required to declare not only material gifts such as festive hampers and are encouraged to distribute the items inside the hampers to the entire department if the items are food, otherwise we could only bring the items home after they are checked by departmental secretaries. Even with the hampers given by suppliers, it shall not result in giving them the project naturally because of material gifts, they still need to go through the tendering process. We are not allowed to accept valuable gifts as well by turning down the gifts immediately. The code of conduct is not only restricted to material gifts, it also spells out if two persons develop personal relationship they shall report to their immediate superiors for assessment to prevent conflict of interest that could affect the company. One of them may get transfered to another department that is more neutral coz you will never know what will happen if both are working in the same department such as Finance or HR department. Prevention is better than cure.

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