THE CORPORATE world has gone through turmoil in recent months, and the bandwagon which started with the Enron has a new passenger on board, the Qwest. None of these scandals have originated from any Muslim state, or else the western intelligence and its media would have definitely found a link with the Al-Qaeda.

The memories of the BCCI still haunt us which had proudly carried the Pakistan flag in the financial world. The BCCI’s senior management was termed incompetent and fraudulent. The bank was said to be involved in from money laundering to questionable accounting practices. However, no words are needed to describe as to what is going on in the corporate west, particularly the Corporate America. The US companies have always taken pride over their financial might and growth patterns. The basic economics tells that the competition is good for society, as it encourages growth and brings in ideas and concepts which when put into practice lets a common man enjoy items which were mere luxuries of the past.

However, this “open competition” has proven to be more expensive then usual. Competition in the telecommunication industry has put pressure on companies like the Qwest and the WorldCom to “cook” their books, resulting in shattered investor confidence, $4.8 billion misappropriation and 17,000 job losses. The time has come for President Bush to seriously think on initiating plans to “save the corporate America”.What has fascinated experts over the past few months is the ease with which these accounting malpractice were initially reported. Lately, the Qwest’s Chief Executive Officer, Richard Notebaert termed the accounting misstatement of more than one billion dollars as an “error” in books. How many more of these “errors” are on their way? Only time would tell. But what must be understood is that the companies have “managed” their earnings in the past and will do so in the future. What should be questioned is the fine line with which this practice is allowed, and now should it be allowed by the accounting standards and the associated legislation.

Think tanks have come up with a solution which lies in “corporate governance”. The Securities and Exchange Commission of Pakistan (SCEP) has taken the initiative and implemented the “code of corporate governance”, which lays down the clauses to regulate the affairs of the listed companies. It covers a wide range of issues right from the appointment of directors to the company’s external auditors. What the law does not address, and to a certain extent it cannot, is the “corporate leadership”.What is to be understood is that these “financial mishaps” did not occur due to the lack of good corporate governance but due to the lack of a good corporate leader.

To be fair, the companies are looking for “bottom line”, which is the value of a company. The Enron, the WorldCom and the Qwest were all multi-billion dollar giants and the bluest of the blue chips. The question is how good was their corporate leader?

The corporate governance is a bridge far ahead. If there is a good corporate leader than good corporate governance will be a part and parcel of the package. The question is: What is a “corporate leadership?”

The corporate leadership is when an action of a person, or a group of persons impacts not only the profitability of the company but also enhances the welfare of the community in which the company is operating. Therefore, corporate leadership is a tool which must be practiced within and outside the company. Indeed, the covenants on corporate governance have been advanced by many corporate leaders who have recognized that to prosper in long term requires balancing business objectives with the society’s concern. The company that does not have transparent activities and fails to act honestly and responsibly with its partners (employees, suppliers, banks etc.) does more harm to the country’s business environment than any single corrupt government official. Several enterprising groups build reputation of their businesses only to see it collapsing due to the action of a single corrupt person, resulting in a diminishing investor confidence thus slowing down the momentum of the economic growth.

Enough has been said about the duty of the senior management towards its shareholders which is also defined by law. Let’s look at things which are beyond the shareholders, the much neglected subject of the employees of the organization and the society in which they operate. If employees are not fairly and ethically treated by their corporate leaders, it weakens the companies ability to grow in case of competition, just because the employees would not feel the pinch which the organization might be feeling. Thus, the corporate leaders should ensure that the employees are made part of the planning process. The process should be managed in such a way that the staff develops a feeling of contribution. They should be heard and their values and visions incorporated and implemented. The corporate leaders should make sure that the process is open and conforms to the accepted rules of communication. Everyone who wants to participate should have the opportunity, and even the reticent staff members should be encouraged to involve themselves. Above all, these leaders should ensure that their staff members develop the ability to have a vision, which should allow them to see their organization as something beyond an organization.

The corporate leaders have to recognize the need to strengthen their community base. A healthy community can be an important factor in business growth and hence much later on, as an export giant. Companies can take the lead in developing local economic conditions through the following activities:

*Improving the local labour base by investing in education and training;

*Coordinating with the government to improve infrastructure and enforcement of regulations;

* Working with local suppliers to encourage regional economic development and the growth of an integrated and competitive economy.

If a company can be a separate legal entity, then a good corporate leader is also a corporate citizen in the democratic process. If the leader does not participate actively then the needs of his/her industry may go unheard or may get damaged by those who participate in the political process. That is one of the reasons why we have institutions like the chamber of commerce and various associations and groups, who are constantly involved in voicing the needs and the problems faced by their respective industries. Thus by joining these associations and groups, businesses can bring about effective changes, which in turn encourages democracy and the growth of the market economies.

Democracy demands participation, thus a good corporate leader participates through legal channels in a transparent fashion. As with corruption, those who seek to effect policy changes through smoke-filled rooms and questionable methods inflict long-term adverse effects to the basic business environment and the democracy than any short-term gain.

As with all business activities, the idea of corporate leadership should undergo a cost-benefit analysis. From a strategic perspective, by building a broad-based public/private commitment to economic growth and development. The benefits of corporate leadership affect the community and the company.