The recent past banking industry crisis that consumed some financial institutions has been cited as an example of conflict of interest and its implications on corporate existence, hence a lesson for others.
It showed how disclosures fell short of standards at the prompts of various promoters of the interests, which eventually reduced the financial institutions to mere corporate contraptions.
The Chairman of Ecobank Nigeria, John Aboh, made the observations in Lagos, on Tuesday, at the 2017 Audit Committee Conference of the Audit Committee Institute Nigeria (ACI).
While admitting that corruption is not implicit in every conflict of interest, he described its existence as the mother of all vulnerabilities and not easily controlled, but required courage, vigorous governance and force.
He charged the members of the committee to raise the bar in playing the governance roles of gate-keeping, which involves the protecting and safeguarding wealth, ensuring proper governance of the
“To be effective at the role, they need to become sufficiently aware of the risks the entity is facing in its daily operations – the factors that militate against the achievement of set goals, which conflict of interest is one,” he said.
But quoting the PricewaterhouseCoopers, he added: “organizations that establish programmes to find and mitigate individual conflicts of interest likely pay less to administer such programmes that to repair financial standing and/or reputation.
“A lack of comprehensive and effective programme can hamper disclosure and management of individual conflicts of interest, potentially resulting in regulatory and civil penalties, along with collateral damage to a company’s brand and reputation.”
Earlier, the Chairman of ACI, Christian Ekeigwe, in his welcome address, noted that the institute is an independent advocacy for financial reporting focused on bringing to the agenda of governance critical issues affecting integrity of financial reports.
According to him, independence and self-discipline are important audit tools of ensuring that the committee’s voice in defense of shareholders and other investors cannot be manipulated.
Ekeigwe said conflicts of interest has been an underestimated problem and denied in most societies because it naturally combines with related parties or parties with deep familiarity.
“It is the most dangerous low visibility governance vulnerability because it is predatory and not easily controlled. Gradual, but harmful, it injures the systemic governance dynamics on which the prosperity of the organisation depends.
“It evades conventional controls, weakens the audit function and unleashes indeterminate consequences as it ‘normalises’ anomie in the organisation,” turning people to cowardly do the bidding of the promoters,” he said.
Describing the ugly trend as a prescription for governance failure and value erosion, he said there is a need for intellectual understanding of the risk it posed to attracting the right quantity and quality of attention required to match the potential consequences.