Yesterday -24 November 2013- a referendum was held in Switzerland about justice regarding income disparity in major corporations. The problem has arisen on account of a bonus payment handed to a Chief Executive Officer which an ordinary employee would need to work for a whole lifetime to earn. Surely this is something that cries out for a remedy.
The referendum is about limiting the salary of the top management to no more than 12 times what the lowest worker is paid. Twelve times more seems to be reasonable but the big shots in the corporations are fighting hard not to get the referendum to pass.
Mauritiuswhich we market as a ‘plaisir’ destination is not one for the lowest paid employee in the banking sector. While the major banks brag about the billions of rupees in profit which they are making , they do not seem to be honouring the labour and efforts that were responsible for the result in the fi rst place. As December approaches, the banks will hold their annual general meetings and shareholders will dutifully be sent their convocation to attend the rubber stamping exercise. There will be some tea and cakes served at the end of the meeting but , at the heart of the meeting where the ordinary shareholder is supposed to have a say , the latter is not given the right to ask pertinent questions about recruitment, procurement, salaries, perks, contracts for services and the exorbitant rates charged for professional services. In a word, management gets away with whatever it proposes and the same auditors keep getting appointed year in and year out.
It is important to make the point that it is part of the reforms brought about after the debacle of the banking sector in 2008 that there must be a rotation of auditors regularly. This does not seem to have any impact as we are engrossed in our ‘plaisir’ island.
In fact the law seems to protect the management from the probing eyes of the shareholder. In other countries laws have been changed to give to shareholders the right to question and to approve or reject the salaries and perks of directors. This happened in the wake of the collapse of Lehman Brothers and major international banks. Those of the banks that were bailed out by public money were chastened.
Powers were clawed back from the management and were given to the shareholders to keep in check the excesses of the directors. Abuses exist in our country as well and, until the law remains as it is, the board of directors will continue to ride over the shareholders with impunity.
This cannot continue. A short audit of how professional services are dished out will show the extent of cronyism, nepotism, favouritism that prevail. This is why the Bank of Mauritius must send its inspectors to ensure whether whatever is done at the banks, particularly those where public funding is present, is in compliance with the standards of transparency and the need to get value for money. Too much waste has occurred already to the detriment of the shareholder.
If the Bank of Mauritius cannot or is unwilling, then the Prime Minister must have a look at bringing urgent reforms.