Unrealistic targets encouraging book padding, says Adegboyega

Says not enough sanctions to discourage corruption
The rising incidence of padding of books by corporate organisations has been traced to pressures based on unrealistic targets set by shareholders and the society.

Increasingly, corporate governance is being sacrificed by boards of directors and managements to make companies “look good” even when they are in dire states, and is fast gaining grounds as there are not enough sanctions to serve as deterrent.

But the discerning publics has become more suspicious of corporate accounts with some shareholders putting the boards to task during annual general meetings.

Tajudeen Akande Adegboyega, the Senior Partner, PKF Professional Services, Lagos, Nigeria, a global firm of Chartered Accountants, in an exclusive with The Guardian, blamed the incidence on poor quality of leadership and low integrity and public and private organisations.

He argued that given the level of collusion among board members and managements in the “looking good” business, the best way to stem the corruption is to institute proper checks and balances in the system.

According to him, “If you allow one person to supervise and control and conduct transactions, it is so easy to manipulate. But if a transaction process needs to through two or more people it is more difficult to influence.”

Speaking on the poor state of corporate governance in both the public and private sectors of the Nigerian economy, Adegboyega said: “It is all about leadership. Good leadership is about integrity. People who want others to follow them must have integrity, and integrity has to do with not giving in to compromise.

“Again, the rising incidence of collusion may be linked to pressure. There are pressures here and there. The way the world system is packaged could be a reason. You have people who are given jobs to do and are also given targets, which are unrealistic. From the marketing executives to the CEO, they are compelled to meet certain targets. Most shareholders expect so much profit and dividends. Sometimes, when the numbers do not represent what they are supposed to, it is not in all cases that they are pure misappropriations, some are just window dressing the numbers, it is fraud. It is just to show result that is rosier that the actual performance. So it is societal pressure and the value system where everybody just wants to be known. We need to do something about our value system, and leaders must prioritise ethics and leadership. There must also be a monitoring system.”

The Chartered Accountant, with over 29 years hands on experience, further noted that collusion in the make believe corporate world is on the rise because rather than sanctions, culprits are celebrated.

In his opinion, “To be honest, I don’t think we have enough sanctions. What I have seen is too much of celebration of discoveries. I don’t see how that will serve as deterrent. A person is accused of doing something wrong and instead of dealing with the person, the person moves on to something else. We are not doing enough to be honest. We must impose sanctions and the process must be transparent because every single issue is quickly politicised.”

Against this backdrop, Adegboyega said the incidence of whistleblowing may come to the rescue, but warned that the system must be robust enough in such a way that whistleblowers are not sacrificed on the altar of integrity.

He further argued, “Every infraction is committed with the intent to cover the tracks, and the only other way round it is to have whistle blowers. But when you hear that a whistle blower has been sacked, then the purpose is defeated because how did they even get know who the whistle blower is?”

Apart from the incentive to give certain percentages of the monies recovered, the Federal Government has also promised to protect whistleblowers in both the public and private sectors.

The Minister of Information and Culture, Lai Mohammed, on Monday, assured that “For those who may have suffered any backlash as a result of the information they provide, their cases will be reviewed and appropriate mitigating actions taken.”

He added, “Whistleblowers have nothing to fear, because the committee has put in place the necessary measures to safeguard those who give useful information. As a matter of fact, whistleblowers have everything to gain and nothing to lose.”

But not leaving everything to the government alone, the Lagos State Chapter of the Institute of Chartered Secretaries and Administration of Nigeria (ICSAN), is planning to hold a business meeting on, “upholding ethical practice and achieving corporate objectives in a recessed economy,” as a way of boosting corporate governance among institutions.

ICSAN members, who visited The Guardian on Tuesday, led by its Chairperson, Bunmi Adefolu, agreed with Adegboyega that “the dwindling state of the Nigerian economy has amplified pressure on corporate boards to rise up to their responsibility of strategic governance of companies.”