Spare The Cane, Correct The Commerce

What has started as a mere drive to protect consumers' rights develops into debate that demands attention and further discussion. As soon as the Ramzan started a drive led by a government agency to oversee violation of consumer rights was initiated. One of the officials came to the attention of the media after he had fined top beauty parlors and shopping mall. There are no short of panegyrics for him. But it was his action against country's top fashion outlet, which maintains a well-organized supply chain of handicraft items, that provoked a debate, opening new avenues for serious thought.

He fined the outlet because it sold one kind of panjabi at two different prices in a week. Owners called it "human error" and apologized to people. But the misogynist official broadcast his actions on his social media account and even gave interviews to private TV channels. Soon news broke out that he had been discharged from his duty. The decision was made prior to his drive against the fashion outlet. But sympathy for him deluged the social media and his removal was attributed to the foul play by the outlet. Alerted by the reactions, a minister came forward to tell the press that he had been reinstalled. But decision and counter decision did not stem the debate but left many questions unanswered.

In our country , public officials face some restrictions while giving frank views and opinions to the press. They usually need superiors' nod. Has there been any change to such rule? If not , then how could he appear before the TV and broadcast his actions on Facebook?

Most of his victims are non partisan brands and many are run or operated by women. Some of the charges were whimsical. For instance a renowned beauty parlor was fined because it kept imported goods that had no validity date. For that reason, he slapped exorbitant fine to the parlor. The fashion outlet in question is run by world's largest NGO. It is also country's biggest marketplace for numerous  local artisans scattered across the country. Most of the profits earned have gone to support social and developmental programs run by this NGO. NGOs have a tough time during the tenure of this government.

The drive did not insinuate a conspiracy theory. But given the type of entrepreneurs who bore fully the brunt of this campaign , it would not be exaggeration to call it a publicity stunt.

The timing of the drive also calls into question the motive of this drive.The drive disported the people but disquieted the business community. This kind of trumpeted campaign cannot be seen throughout the year. Just a year ago similar campaign at a mega shopping mall during the Ramzan brought forth the issue. Back then, a raiding team seized cache of mobile phones from a mobile shop. Ramzan is the month that accounts half or quarter of the annual sales of boutique shops and markets. Retailers often hoard imported goods sold by migrant workers and these goods do not have any valid documents. Furthermore, businessmen have tendencies to stock goods due to the surge in demands in this month. Just imagine how much a mobile shop owner could stock in this month. Now should it be punished for illegal hoarding?

In a corruption-stricken country where businessmen are paying unofficial levies to stalwarts, men-in-uniform and functionaries regularly, they can only stay at the business by compromising consumers' rights. This is perhaps the case in Bangladesh.

In a country where party apparatchik and former foot-soldiers became editor ,owner  of media and journalists , there have been growing tendency to portray business community as "blood sucker", "money making machine" and "super normal profit maker", this vilification made a banal impression among consumers about them.

To my dismay, I noticed none of businesses associated with parties or defense establishment were touched. Eventually the motive of such drive came under closer scrutiny.

I am not against this kind of drive. But it was not done in an even handed way. And vindictive behavior may soil its fruition. Such harsh measures may lead to dishonest practices at a later date to recuperate the "loss" the businessmen incurred during the drive. So instead of improving consumers' rights this kind of action may further worsen it.

I also noticed this kind of drive was blind to the roadside illegal markets that generate steady-stream of revenues to cadre-based parties. I have no issues with such market if it really lifts a person out of poverty. Last year I noticed a recruitment advertisement of an SME financing company operated by a principal law enforcement agency. How could a state organ that is supposed to  do a certain task run such business that may lead to contradict the very objective it is designed to do? If microcredit institutions or SME financing companies were to finance the markets then there would be no issues until they operate within some legal framework. But recently we witnessed incidents of attacks against grass-root level workers of microfinance institutions and mobile financial services. This is more true for the high-end garments boutique owner NGO that also operates a mobile financial service.

Another thing that came to the light is that we really do not have any standard of consumer goods, rating of businesses. It will be wrong to treat a family run business with that of a conglomerate, to equate a street food seller with a posh restaurant , to compare the services of a chain boutique shop on a per with those of a retail clothes seller. It is unjust to expect hygiene and services exist in developed country from a local restaurant and retail shop as we do not see and practice here the degree of governance  prevails in those countries.

Many developed countries in fact are on the verge of changing the rules to make business economically viable and to better use of resources. For instance, France is making a law that requires unsold nonfood goods closer to the end of their shelf life be banned from destruction and be recycled , reused and remade. Not all parts or ingredients become redundant after a certain period. Some of them could be reintegrated into the production process. This is called smart policy making. Bangladesh should take cue from France.

Before securing consumers' rights, we need to rank our businesses, to rationalize quality standards of goods and services.We need to introduce Corporate Governance Index.For that a dialogue is needed between government and guilds and between consumers and guilds.

Comeuppance and severe chastisement cannot often achieve the desired goals.Failure of two-year-long caretaker government is the stark reminder. It tried to cleanse corruption from politics and business through heavy handed methods. The ensuing result is shocking: old habit did not die , in fact, turned worse and our banks and share market were literally plundered.Innovative ways can be explored eschewing harsh methods. At the end of the day, it is the objective that matters most and if it is achieved by employing mean that inflicts no collateral damage then that is the best alternative mean.

Need For A Corporate Governance Index

As Bangladeshis we are not unknown to various indices propagated by local and international bodies to detect and gauge inveterate issues prevailing in our societies. Some of them are intended to really make a difference in our life, some are to capture gravity of the situation. Time has come to introduce another one: Corporate Governance Index. It will be an index that will trace governance in our corporate sector and will help understand what can be done here.

Before spelling out the core, let us loiter over the prelude a bit more. On too many occasions, we hear people repining over the corporate governance. It is infested with bad lots, our conglomerates do not last long, worker-management relations is not in good shape. Many big groups that faced odds and grew strong in favorable times could not even stand still in the face of the wind of change in adverse conditions. Deteriorating conditions in our big groups are often put our policy makers in quandary as to which side to take. Knavery soiled reputation of corporate sector. Far too many corrupt practices are being detected in recent times. Often powerful political patrons abetted the wrongdoers. Reneging on agreed terms has become commonplace.

Few that eschewed the political influence and achieved a state  of beatitude by getting closer to Men-in-Fatigue also made a mark in the corporate world. And now we see the shadow of the blessed groups transcends the boundary of corporate affairs. Now we can feel their presence in public offices and in professional bodies. 

Often we hold a view that corporate world should be free from any kind of leverage. In a country where business mingled with politics, this kind of view sounds like utopian. But even if we try to achieve or get closer to that undisturbed state of corporate governance, that will be a great leap forward to make things better. A barren land requires rain to rejuvenate its top soil so that microorganism could play their role to make it fertile. Similarly, a Corporate Governance Index (CGI) for Bangladesh will actuate the business groups to act independently and lawfully . It will force the government to act responsibly by restraining ruling party stalwarts.

CGI can be composed of bevy of indicators: ownership, decision making process, dispute settlement, CSR activities, R&D commitments, closeness to political groups, closeness to security establishments, information etc.

Ownership indicator will assay the owners, how they form the company and the percentage of stakes they hold in the company. Political ownership will fetch a low score.

Decision Making Process will try to measure participation of all the stakeholders in decision making, taking into account minority shareholders' opinions, reflections of opinions shared by employees, consumers, influence of outside quarters in the decision making process and respecting minority shareholders' rights.

Dispute Settlement indicator will look into how the company settles its differences with vendors, subsidiaries and employees. Is there any fair representation of stakeholders in the dispute settlement body? Did the aggrieved party acquiesce in the decision made by the board or move to the Higher Court for justice?

CSR Activities will try to fathom the company’s commitment to make lives, society better by patronizing social initiatives and individual campaigns to fight an evil or a social problem. It will also evaluate company’s commitment towards other sectors like arts and literature, sports etc.

R&D Commitments will evaluate a company in terms of its willingness to undertake research and innovation programs within the company and its support for research works at tertiary institutions.

Links With Political Groups will try to measure how far and at what length it supports and finances political activities. What percentage of political activists constitutes its active workforce.  Does the company dole out regular payments to some party workers? Did the company try to take political assistance to get favor over its rivals at any stage of its operation?

Links With Defense Establishment will try to find out company’s milking of senior and influential military/police bureaucrats to get some favor in doing business in Bangladesh. It will also look into involvement of serving officials in a company and business dealings between a defense-run company and a private company. Since such companies are insulated from tribulations from various quarters, it is not just to consider them on a par with companies who face this kind of troubles. So, they will get a low score if there is this kind of tie.

Audit And Tax will assay company’s ability to conduct regular audit and put the recommendation into action . It will also judge tax commitment of the company.

Information will try to find out how willing a company is to divulge critical and sensitive information to shareholders and the press.

Finally, the CGI will be made by adding all the individual scores. High score means better ranking in corporate governance.

A dedicated organization, headed by a retired university professor or banker, can be formed to  create the CGI and publish an annual corporate governance report.  The initiative can be supported by professional bodies of bankers, businessmen, economic and business reporters and business editors. Researchers, revenue bureau and other organizations can throw their lots with this newly created organization. Individuals and philanthropic institutions can pool money for its creation. A year or two later , sponsors and donors will pitch in.

Now come to the crux of the matter: how this CGI will make a difference.  As soon as news of CGI report suffuses  the country, people will look down upon the companies who will perch on the lower rung of CGI ranking. Bankers will think twice to endorse investment/loan proposal of companies who do not have good scores in the CGI. Press will not give them the space and consumers will be cautious about them. This, in turn, will make parties and defense establishment to hide their footprints  in the corporate world , leading to an intervention-free corporate environment.