Corporate Governance in Asia-Pacific
(Applicability among Philippine Water Districts)
By Atty. Antonio P. Acyatan

Atty. Antonio P. Acyatan is the managing partner of A.P. Acyatan & Co., Certified Public Accountants - Philippine member firm of DFK International Group of Accounting Firms (IGAF) and Philippine correspondent firm of several Asian and European accounting and consultancy firms (Lai & Fau, Hong Kong). He is a management, legal and tax consultant to more than twenty business firms and organizations engaged in varied businesses like banking, realty development, construction, cooperatives, department stores and supermarkets, among others. He is also attached with several consultancy firms doing work for the World Bank, ADB and USAID. Atty. Acyatan is presently the managing partner of the Acyatan, Guerrero, Acyatan and Omana Law Offices and is the charter president of the CPA-Lawyers' Association of the Philippines.

Understanding Corporate Governance

CORPORATE GOVERNANCE has been defined as: "the processes and structure by which the business and affairs of the company are directed and managed, in order to enhance long term shareholder value through enhancing corporate performance and accountability, whilst taking into account the interests of other stakeholders".

The definition can be simplified by saying - "it is the system by which organizations are directed and controlled, in order to achieve its goals of serving the interests of its owners and other stakeholders".

CORPORATE GOALS can be classified into those that: (1) Serve the better interest of corporate owners, including return on capital. (2) Enhance the benefits to the workers of the company. (3) Facilitate improvement of services for the corporate customers.(4) Ensure the observance of terms and conditions imposed by creditors. (5) Optimizes the benefits for the community and the general public as the national economic order is promoted. (6) Provide due observance of sustainable development and the protection of the environment.

In the case of water districts, it must generate maximum revenues, which will be utilized to optimize public services from water (district) utility operations - even as efficient service to concessionaires is maintained. GOOD CORPORATE GOVERNANCE for Water Districts comes about through an efficiently and effectively working, strategic Board, and appropriate, productive Management System of Local Utilities. Absence of such governance can be a "deterrent to economic growth, hazard to public health, and irritant to the spirit and well-being of the citizenry."

WHO ARE INVOLVED IN CORPORATE GOVERNANCE?

We can categorize the participants in CORPORATE GOVERNANCE as the:

(1) SHAREHOLDERS-MEMBERS - They define the expectations from the Operations of the Entity. The Privilege of Appointing Directors/Trustees is in their Consolidated hands.

(2) DIRECTORS/TRUSTEES - Sets the Goals, Objectives, Operating Policies of the Corporation. Holds the Authority to Hire and Fire (Executives, Supervisors), and Appoint and Remove Staff. - In the case of members of the Board of Water Districts - the appointing power rests with the (political) Administration of territory covered by the sources of the Water Districts. Each of the Directors must be nominated by and from the sectors identified in the law.

(3) MANAGEMENT - Implements Policies and Strategies which are approved by the Board, as well as those that are normal to company operations . - The WD law grants the General Manager full powers of operational management, guided by the policies adopted by the Board. The Board members are not allowed to engage in detailed management of the District. On balance, the Board has the power to remove the General Manager, for cause.

SUDDEN INTEREST IN CORPORATE GOVERNANCE

When the 1997 Asian financial crisis came to the fore like a thunderbolt - it was found out that among the major causes of the unexpected failures of erstwhile huge and profitable giants of the corporate world - were discovered weaknesses in corporate governance which rendered many companies vulnerable to losses and failures.

Five Asia-Pacific countries - previously labeled as new tiger economies or upcoming economic "miracles" - were among those most seriously hit by the financial crisis. These are: Indonesia, Korea, Malaysia, Philippines and Thailand. An ADB study showed that these countries had common weaknesses (although in varying degrees) in the regulation and actual management of corporate affairs.

The "discovered" weaknesses of the business corporate sector were: over-capacity, poor quality of investments, excessive diversification by large business groups, excessive exposure to bank debt, especially short-term debts denominated in foreign currencies without benefit of exchange hedges. Other findings pointed to weak or lax internal controls, poor audits, loose legal enforcement, lack of adequate disclosure by management, and ineffective directors manning the Board. These are in effect, FAILURES IN CORPORATE GOVERNANCE.

That financial crisis in East Asia in 1997 brought up the challenge of corporate governance into the limelight. The business failures then underscored the critical importance of structural reforms in the governance of the business enterprises in the Asia-Pacific Region.
Yet the East Asian corporate meltdown was not the principal reason for the clarion call for improvements in corporate governance. As early as the beginning of the 1990s there were already some corporate scandals in the United Kingdom. The big destructive waves that hit the American Corporate World - bannered by the failures at Enron and World.com, which in the process brought down Arthur Andersen, SGV's erstwhile global affiliate and one of the BIG FIVE accounting firms - triggered the widespread interest in corporate governance.

PROMOTION OF GOOD CORPORATE GOVERNANCE

The initial advocacy for corporate governance came about in late 1992 in the United Kingdom. It came by way of the publication of the Report of the Committee on Financial Aspects of Corporate Governance as established by the Financial Reporting Council, the London Stock Exchange, and the accounting profession of the U.K.
The report was referred to as the Cadbury Report, which featured on addressing how Boards of Directors should carry out their "fiduciary responsibilities to better ensure the reliability of company accounts in the face of a number of accounting scandals". The Cadbury Report provided a Code of Best Practice as an instrument for guiding a director's behavior.

Said vital report was soon followed by other reports released starting in 1992:

1 Greenbury Report in 1995 (on Director's pay).
1 Hampel Report in 1998 (on Code of Practice).
1 Turnbull Report in 1999 (on Risk Management).
1 Higgs Report in 2003 (Role and Effectiveness of Non-Executive Directors, And limiting the number of directorships).

AROUND THE CORPORATE WORLD

Sometime in 1999, the Organization for Economic Cooperation and Development (OECD), the Commonwealth Association for Corporate Governance, and the International Corporate Governance Network, released their respective principles on corporate governance. Many countries adopted the OECD Principles and they became the template for most national codes of corporate governance.

The OECD advanced FIVE KEY PRINCIPLES.

1. The rights of shareholders
2. The equitable treatment of shareholders
3. The role of stakeholders in corporate governance
4. Disclosure and transparency
5. The responsibilities of the Board of Directors

IN THE USA AND EUROPE

The eventual collapse of global business that Enron (and its external auditor and consultant Arthur Andersen) caused or triggered - raised questions and required investigations that were geared to get to the heart of performance reality and authenticity in business operations, more especially in the field of finance, accounting and auditing.

During the subsequent quest to restore public confidence in the stock market, the Securities and Exchange Commission of the U.S. asked the New York Stock Exchange (NYSE) and NASDAQ to review their listing requirements. The Management of the top 1000 corporations (US SEC-registered companies) were required to certify as to the accuracy of their annual reports.

On the legal and regulatory part - the US Congress passed the Sarbanes-Oxley Act in July 2002 setting corporate governance and oversight functions in companies. The Act created a Public Company Accounting Oversight Board. The law has given rise to drastic changes in the way that accountants and corporate financial officers practice their professions.

Since early 2002, European countries likewise reviewed their corporate governance practices. Major initiatives were undertaken by Germany, Switzerland (July 2002), and Greece (December 2002). These initiatives focused on corporate structure, executive and supervisory boards, such as 2-tier boards, stock options, remuneration, and others.

The European Union came out in November 2002 with the Winter Report (chaired by Jaap Winter) which created a high level group of company law experts appointed by the Internal Market Commission, and which provided among others measures to strengthen shareholder rights and protect employees and creditors and provided for the adoption of company law and corporate governance principles.

INITIATIVES IN ASIA-PACIFIC

Awakened by the Cadbury Report and enlightened by the OECD principles, many Asia-Pacific countries committed to bring up and adopt their own corporate governance principles. These included those with close ties and under the sphere of influence of the United Kingdom and those that adhered to the corporate structure instituted by the United States. These countries included:

1Singapore : 1994
1New Zealand : 1996
1Hong Kong : 1997
1India : 1998, 1999
1Japan : 1998
1Thailand : 1998
1Korea : 1999
1Malaysia : 2001
1Philippines : 2001, 2002

The Philippines, as APEC member, backed the call for corporate governance as a key concern for the financial health of the region. APEC Finance Ministers called for "closer integration in monitoring, in promoting sound practices to reinforce macroeconomic fundamentals, in supervising the financial markets, in developing the capital markets, in improving transparency as well as in the phasing in of reforms to keep in step with a world that was becoming increasingly open, free, and interdependent."

The APEC Finance Ministers required concerted efforts towards a thorough review of, and the establishment of concrete standards for governance issues in order to regain investor confidence in the region.
The move labeled as the Manila Initiative, stressed that improved governance must include:

1 Establishing strong prudential standards and supervisory procedures for banking systems.
1 Greater transparency in financial reporting standards and accounting requirements.
1 Improvements to many opaque, and sometimes even vague, legal areas, such as more practical bankruptcy procedures and better mediation services.
1 Stronger corporate governance standards and requirements, clarifying the legal underpinnings of corporate governance, especially to protect minority shareholders.

RP CORPORATE GOVERNANCE

The enactment of important legislations paved the way for upgrading of Philippine corporate governance practices. The General Banking Act of 2000, replaced the old GBA - and provided for a "fit and proper rule" for bank directors. The Securities Regulation Code, also passed in same year, similarly revised previous laws governing the regulation of securities in the Philippines and reorganized the Securities and Exchange Commission.

Pursuant to the GBA of 2000, the Bangko Sentral ng Pilipinas (Central Bank of the Philippines) issued Circulars No. 283 and No. 296 in May and September 2001 to enforce the "fit and proper rule". Bank directors are now required to undergo training in corporate governance practices. In the same light, the Securities and Exchange Commission issued Memorandum Circular No. 2 on April 4, 2002, promulgating a Code of Corporate Governance for publicly listed companies and other identified covered companies. The Code moreover required said companies to submit their Manuals of Corporate Governance to the SEC (to be made available to company shareholders).

The Office of the Insurance Commissioner issued its Circular on Corporate Governance (Circular Letter No. 13-2002) to all life insurance companies, non-life insurance companies, professional reinsurers and urance intermediaries requiring an annual report on Corporate Governance. The OIC aims to enhance corporate accountability of insurance transactors and promote the interests of their stakeholders including policyholders, claimants and creditors.

The Circular requires insurance companies to make a general disclosure of their corporate governance practices. It uniformly covers:

1 Definition of Corporate Governance.
1 Importance of Corporate Governance.
1 Definition of a Director, including Definition of Independent Director.
1 Powers and Responsibilities of the Board of Directors and Individual Directors.
1 Qualifications (and Disqualifications) of a Director.
1 Qualifications (and Disqualifications) of an Officer.
1 Distinction between the Board and Management and delineation of their accountabilities.
1 Creation of Board Committees: Audit, Nomination, Remuneration, Corporate Governance, and Executive Committee.
1 Internal Controls and Risk Management.
1 Disclosure and Transparency; Reportorial Requirements.
1 Public Accountability.
1 Rights and Protection of Investors (including rights of minority interests).
1 Monitoring and Assessment.

CORPORATE GOVERNANCE AT THE LOCAL WATER DISTRICT

Corporate Governance is about protecting stakeholders' rights by way of continuously optimizing public service. This squarely applied to the operations of our Water Districts. At the Board of Directors' level, the individual directors - although they are appointed by a political personality of the Administration, are accountable not only to the appointing authority but more so, to the general stakeholders - the concessionaires and the public in general. Once a director is appointed to a directorial seat, he takes on fiduciary responsibilities for the public. Even if he came from a particular sector, the director is not in that WD Board to represent specific interests.

PROMOTION OF GOOD CORPORATE GOVERNANCE

A good number of Good Corporate Governance proponents including Chair Celso Vivas of PICPA's Corporate Governance Committee opine that Corporate Governance can be promoted within the organization - in our case in the Board of Directors of our Water District - through the observance of:

- FAIRNESS
- ACCOUNTABILITY
- TRANSPARENCY

We can say there is FAIRNESS when - among others -

1 Individual directors willingly submit themselves to continuing education to ensure their effective participation in board activities.
1 A director sincerely considers resigning or at least taking a leave of absence, whenever he is unable to do his part for whatever reasons or whenever his contributions became marginal, or whenever he has continuing conflict of interest of material nature.
1 The directors see to it that the Board does not serve as a mere rubber stamp to formalize decisions made by the appointing authority (or owners) and top management.
1The individual directors abstain from voting on matters involving conflict of interest of which he or his related interest is a party.
1 The Board, its individual directors and top management, submit themselves to a fit and proper test regularly.
1 Individual directors observe confidentiality, i.e., not disclosing confidential information to any particular shareholders or stakeholders, to whom they owe any private allegiance, without authority from the Board.
1 The directors avoid individualism and promote the spirit of unity within the Board.
1The Board and individual directors respect and protect the rights of all stakeholders.
1 In fine - there is fairness when the Board and individual directors keep good governance culture alive and make sure that it is rooted throughout the organization - top to bottom.

Delegation is one of the wonders of our corporate world - more so coming from the Board in terms of the affairs and operations of the company. But the ACCOUNTABILITY of the Board of Directors and of the individual directors cannot be passed on to others. They will always be held accountable for each and every decision and action they make in and for the company or entity.

ACCOUNTABILITY is achieved by creating a strategic, working Board of Directors - with proper mix of directors with related board experience. This is the spirit observed in the filling up of directors' seats in our Water Districts.

There must be a measure of the effective and efficient performance of the Board, the individual directors, and the Management of the entity. The assessment should be continuing and proper evaluations conducted at appropriate times.

Corporate governance should ensure the installation of fair system of checks and balances not only in business operations but also in the safeguarding of company assets and the limitation of liabilities to the truly correct and appropriate. The management of usual and unusual risks faced by the entity must be ever on alert and upgraded. Ethics also dictate that management of the company - starting from the establishment of policies must be in accordance with law and the very source of its creation - its charter or Articles of Incorporation and By-Laws.

TRANSPARENCY is about openness, willingness to share important corporate details and information to all governance players including the owners, appointing power, government, customers, and the public it serves. The Code of Corporate Governance and Code of Conduct for directors are set-up and strictly adhered to and when public disclosure of corporate governance performance evaluation results are allowed when asked.
The most critical test of TRANSPARENCY refers to the preparation and release of financial statements. The norm is for financial statements to be prepared in accordance with the Generally Accepted Accounting Principles, and audited based on Generally Accepted Auditing Standards and Practices. Both accounting and auditing standards in the Philippines are required now to be adhered to international standards.

With regard to the stakeholders and the public it serves, Corporate Governance requires that policies insuring open and honest channels of communication be installed. There must be two-way system of communication so that comments, and even adverse views can be reported or relayed to the Board and Management.

For Local Water Districts - it can be said that GOOD CORPORATE GOVERNANCE is akin to a WORKING, STRATEGIC BOARD COMPOSED OF HONEST AND OBJECTIVE MEMBERS - EQUIPPED WITH RELEVANT EXPERTISE, TRAINING AND EXPERIENCE.

ACCOUNTANCY PROFESSION INITIATIVES

The Philippine Institute of Certified Public Accountants (PICPA), as the national organization of CPAs, undertook a number of initiatives promoting good governance. PICPA - working with the Board of Accountancy and the Professional Regulation Commission - established a Quality Assurance Board, geared to ensure the quality of Philippine CPAs. Among its tasks is to monitor and advocate pending legislation regarding the accountancy profession.

The new Accountancy Law (imposing preliminary work experience for would-be external auditors, and continuing professional education for CPAs) was recently approved - but the other bill also intended to strengthen the Philippine Accountancy profession is still pending. This latter bill proposes the establishment of a Corporate Oversight Board. Meanwhile, the Board of Accountancy has passed a resolution that provided for the creation of a Quality Review Committee.

PROMOTING GOOD CORPORATE GOVERNANCE

The promotion and upgrading of corporate governance covers several levels:

Regulator Level

The strengthening of regulations for the domestic financial system was a proper response to the Asian financial crisis. Bank regulators saw the need to improve banks supervision and regulations to enable banks to perform their role as external monitoring and control agents of their corporate debtors.

While the Asian financial crisis principally referred to corporate governance malpractices in banks and the financial institutions, those that happened in the Western Hemisphere relate to huge corporate scandals involving public companies, which eroded investor confidence. In the Asia-Pacific, the goal was to beef up the financial system,. the West went for the upgrading of capital markets restructuring and the covering regulations. Both areas called attention to the need to likewise upgrade and safeguard the sanctity of financial statements - and to further professionalize accountants and auditors.

The Sarbanes-Oxley Act of the USA called for Corporate Governance, which require "further strengthening of independence, integrity, proper oversight, deterrence, accountability and certification, transparency and disclosure and strong internal controls." There is a pending bill in our Philippine Congress adopting some aspects of the Sarbanes-Oxley Act:

1 Creation of an independent Public Accounting Oversight Board to enforce professional standards, ethics, and competence for the accounting profession.
1 Requirement that CEOs and CFOs personally vouch for the veracity of their financial statements and provision of much stiffer penalties for fraud.
1Strengthening of disclosure requirements for public companies, notably in areas of off-balance sheet transactions and insider trading.
1 Protection of the independence and objectivity of securities analysts by directing the SEC to review rules ensuring their independence.
1Directing the SEC to undertake a comprehensive review of corporate governance, the separation of audit and non-audit work, and the role of credit rating agencies.

The Sarbanes-Oxley Act reaffirms that the CEO and CFO carry primary responsibilities, requires that at least one member of the Audit Committee is a financial expert, establishes a financial standard that is broader than Generally Accepted Accounting Principles (GAAP), and necessitates the independence of external auditors in fact and in perception.

Board of Directors Level

With the new laws and regulations - responsibility for a company's corporate governance belongs to the Board Directors. Its members must realize that their collective basic functions are:

(1) Strategic direction and formulation;
(2) Policy setting;
(3) Monitoring and supervision; and
(4) Accountability.

We say for emphasis that the Board is responsible for setting the direction for the company. This is not Management's responsibility, so the Board should not relegate this duty to Management. Likewise, the Board of Directors must set the ethical culture of the company.

The company's success or failure is the Board's responsibility. The Management simply implements the directions and policies approved and ratified at the Board level. In line with this precept, the directors or trustees must see to the fulfillment of their adopted strategies by way of good monitoring. But first, the Board must be satisfied that the goals and objectives it has set for the Company and its Management are achievable.

As created, the Board of Directors of LOCAL WATER DISTRICTS are to be composed basically of five (5) members representing:

1 Civic-oriented clubs
1 Professional Associations
1 Business, Commercial or Financial Organizations
1 Educational Institutions
1 Women's Groups

The composition mix is intended to provide the necessary conglomeration of knowledge and variety of culture within the Board of the Water Districts.

However, there are certain issues and concerns that have to be checked and verified if we are to fully promote Good Corporate Governance within the Board of LWDs. This may be true or not in certain Water Districts:

1 Lack of financial & risk management literacy
1 Lack of relevant experience
1 Insufficient knowledge of LWD's operations, business or industry
1 Inadequate knowledge of duties, responsibilities, rights & liabilities as directors
1 Lack of necessary training on corporate governance
1 Absence of Code of Conduct for directors and the Board itself
1 Lack of commitment on the part of the directors
1 Insufficient discussion/consultation among members and with Management
1 Lack of credit and financial management know-how
1 Lack of transparency and financial disclosure
1 Political Interference from without and from within.

The Audit Committee

The most vital committee in the pursuit of good corporate governance is the Audit Committee. The new legal and regulatory framework for Philippine corporations emphasize the need for an Audit Committee of the Board composed of at least one independent Director (who must chair the Committee) and two others who must be financial experts or have had experience in auditing.

The Audit Committee is responsible for choosing the company's external auditor as well as the internal auditor. This Committee must ensure that the company's internal control and risk management are able to sufficiently safeguard the value of the company, prevent fraud and avoid conflicts of interest. The Philippine Code of Corporate Governance emphasizes that every company must come up with "an independent audit function, through which the company's Board, senior management and stockholders may be provided with reasonable assurance that its key organizational and procedural controls are effective, appropriate, and complied with."

Management Level

The Board sets the direction - but the actual implementation and ensuring that the strategic directions and policies of the company are fulfilled belongs to Management. It is very vital and important that a top Management Team is selected. Among the Board Nomination Committee's functions is the selection of qualified, energetic and committed men at the helm of the company.

Learning from the lessons of the most devastating corporate scandals, men of principle must be chosen, and held accountable for their actions. This is the purpose of the requirement that CEOs and CFOs need to sign on and affirm the veracity of company financial statements and reports.

The promotion of good corporate governance is very much hinged on a Board's ability to choose the right Management Team, and the commitment of such a Team to "actively manage and operate the company in a sound and prudent manner, ensure that there are organizational and procedural controls supported by an effective information and risk management system, safeguard the company's assets and ensure the growth of the company, and be compliant with laws, rules, and regulations".

The law creating our WATER DISTRICTS emphatically provides for the delineation of functions between the Board of Directors and the Management.

Chapter V, Sec. 17 provides: Performance of the District Powers. - All powers, privileges and duties of the district shall be exercised and performed by and through the Board: Provided however, That any executive, administrative or ministerial power shall be delegated by the Board to officers and agents designated for such purpose by the Board.

Sec. 18 in turn provides: Functions Limited to Policy-Making. - The function of the Board shall be to establish policy. The Board shall not engage in the detailed management of the district. (underscoring ours)

The limitation on the "powers" of the Board to engage in the detailed management of the district gives "too much" leeway to the Management - even as the Board, in the perception of the general public - is the body responsible for the operations of the Water District.

At the Investor Level

The development and growth of the Asian capital markets calls for corporate governance to the maximum. In an ADB study, it was noted that "missing middle" investors characterize our Asian capital markets. These big investors are usually the institutional shareholders in developed capital markets like insurance companies, pension funds and mutual funds.

Due to the nature and size of their fund sources, they are able to invest in shares of companies for the long term. They are not the buy-and-sell type of investors. Their presence provides stability to capital markets. To get their investment business, companies must prove to them that their operations are transparent and their regular reports afford institutional investors adequate reading via disclosures. Here is where good corporate governance practices come in pretty handy.

At the Shareholder Level

When the big players cough, the small investors get the influenza. Whenever losses are suffered in the stock market, it is usually the small players that get dumped and trampled upon. Indeed, there is this apparent lack of empowerment of minority interests. Minority shareholders, are almost always deprived of their "say" in the decisions of the companies they invest in. It is imperative that the protection of minority shareholders be a preferential and vital cog of good corporate governance.

For their own collective interest, minority shareholders are encouraged to embark on shareholder activism - that is, in actively monitoring the affairs of the company management. The disclosure and transparency rules that are now part of good corporate governance will enhance their ability to keep tabs on their company's Board of Directors and top, senior management.

CORPORATE GOVERNANCE CHALLENGES

From all levels of governance, the performers must - on their own, or in cooperation and coordination with fellow performers, and under the aegis of the company they serve undertake in good faith the attendant requirements and responsibilities.

They are expected to-

1 Be aware of their roles, duties and responsibilities - and how these relate to others.
1 Understand the business and industry of the organization.
1 Hone and continually improve financial and risk management literacy.
1 Know their potential legal exposures and required protection.
1 Always maintain good faith - and faith in God.
1 Preserve their honesty and integrity at all times.
1 Submit themselves to continuing education and developments.
1 Understand and welcome the risk performance evaluations as a key to an effective board.

AT THE WATER DISTRICTS

Corporate governance seems to be a novel buzzword among water districts. It may sound interesting - yet even the industry leaders of the Water Service Industry have but scanty knowledge of the subject. Worse, the ignorance is not being admitted openly.

To enable our industry leaders to be on track of management developments - even as we harvest the benefits of universal approaches, we propose the following strategies/suggestions:

1 Establish the Water Districts corporate VISION and MISSION.
1 Set the Water District's short-term, medium-term and long-term goals and strategies - preferably along the pattern of Management by Objectives.
1 Formalize guidelines for performance evaluation of the board as a whole, and the individual directors as well as the key managers of the Water District. The evaluation can be done say, every semester - simultaneous with the Budget Review.
1 Adoption of a Uniform Code of Corporate Governance among LWDs.
1 Strengthening the capability of Internal Auditors - to serve as the monitoring arm (eyes and ears) of the Board of Directors.
1 Continuing training of finance, accounting and auditing personnel so they can update themselves with the latest global developments.
1Establish a clear oversight structure at the Board level - availing of the individual lines of expertise of the individual directors.
1Creation of Audit Committees of the Board of Directors - chaired preferably by one who has no direct participation in the operation of the Water District and with corporate governance and financial management skills.
1Study the possibility of hiring outside-party management auditors to afford the Water Districts third party analytical evaluation of its organizations and operations. Said auditors can also double as attestors of the financial statements for purposes of the required submissions with the Bureau of Internal Revenue.
1 Continuing attendance by WD directors and key executives in seminars and workshop on corporate governance, financial literacy and risk management.
1 Formally adopt a Uniform Code of Conduct for Water District directors and for senior management.

The above measures are being brought forward - on the presumption that corporate plans and budgeting system are in place - coupled with periodic, regular review of the results in comparison with the pre-set goals and targets. It is also assumed that the financial statements and related (LWUA) reports are being prepared and submitted on time by the WD.

IN CONCLUSION

On the corporate front - there is no debate that good CORPORATE GOVERNANCE is the formula that will entice investors to return to the Stock Exchanges. Once the moneyed sector of our society become confident in the capital system, parking of resources in corporate stocks will come about. Whenever there is good corporate governance, efficient and effective performance will come about as a matter of course. These factors are intertwined and interlinked.

The ultimate responsibility for ensuring good corporate governance rests with the Board of Directors. Yet - the Board of Directors is only as good as the members comprising it. The challenge of being and becoming a better and more effective, efficient director is a personal decision that everyone has to confront himself with.

This challenge applies to all corporate keypeople - and it squarely applies to the men and women in the Board of our Water Districts. As the years go by - and as more and more water service concessionaires enlist for service - problems of Local Water Districts multiply in the same proportion - if not more. One of the best paths to tread in these turbulent times - is the way of good corporate governance, guided by the vision and mission that should characterize all entities belonging to the Water Service Industry.