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Business Connections #11/2008

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Good Governance Seminar 27 February 2007

The market economy has become increasingly global. Leaders in business, government, and non-governmental organizations (NGOs) now see global economic development as “the best way to increase prosperity within and among countries, and to create opportunities for millions of people, especially in the developing world, to secure a decent life for themselves and their children.” The challenge is to find the right balance between emerging global norms, values and standards and local cultures, business practices, and community needs.

A significant increase of a number of shareholders resulting from realization of state and not placed share holdings of many Joint-stock companies into private property is expected within the next few years. Therefore possibility of corporate conflicts, differences in the enterprises' versus new owners' vision of further perspective activity are rapidly increasing, especially versus the position of principal share holders. Thereby, the relevance of introduction of good governance principals and rules into the economic and social community is extremely important.

The subject of Good Governance plays a huge role in the development of the enterprise as a whole as well as in the global development of the country. The Good Governance practice is built on ethical principals in accordance with the Manager's activities of the enterprises that must be fair, transparent and accountable; the managers must be responsible to their actions as well as to all stakeholders and the society; while employees must observe their responsibilities and perform their positive initiative. 

The International Training Seminar: “Practical application of the Good Governance principals to the activities of legal and economic entities in Uzbekistan” which was conducted in Tashkent and jointly organized by The Academy of State and Social Construction under the President of the Republic of Uzbekistan and American Chamber of Commerce in Uzbekistan was dedicated to this important topic.

The seminar took place at the “Fundamentals and Principles of Market Economy” faculty at The Academy of State and Social Construction under the President of the Republic of Uzbekistan, which was established according to the Decree of the President of Republic of Uzbekistan on April 15, 1995. Since its establishment the Academy has been functioning effectively to carry out the tasks raised by the President for the purpose of training reformative innovative and trustworthy administrative staff with leadership ability, to upgrade knowledge and to increase professional and cultural horizons of those talented students selected among the leaders of the state , public and economic organizations.  The affiliation of the Academy emphasizes the Good Governance question and organizes a number of seminars dedicated to this important topic, many of which were done in cooperation with the American Chamber of Commerce in Uzbekistan.

In 2002 American Chamber of Commerce was awarded by the U.S Department of Commerce with the first grant; and in the 2006 with the second one to implement and develop the Good Governance Program in Uzbekistan. Since that time AmCham have organized a number of conferences and seminars on this important issue on the way to global development in different regions of the country.

The current seminar has been opened with the greetings of Dr. M.A Rakhimova, Head of the department at the Academy of State and Social Construction under the President of the Republic of Uzbekistan and Dr. T.V. Okunskaya, Executive Director of the American Chamber of Commerce in Uzbekistan.

The representatives of leading companies and organizations participated in the international seminar and shared their experiences of effective corporate governance and its relevance to the global development of Uzbekistan.

The first presentation “Good Governance as the basis for private business development” was presented by Mr. Donald Nicholson, President of the American Chamber of Commerce, who was glad to share his experience of effective management of small and medium enterprises in Uzbekistan; to tell about the investors' vision and their attitude to the conscientious corporate governance.  Mr. Donald Nicholson welcomed the Uzbek Government's actions of contribution to the education and post qualification training of the representatives of governmental bodies and municipal governments as a “most efficient way to spend taxpayers' money, namely profit taxation of the private firms and organizations to the right and noble cause”. Mr. Nicholson also noticed that investors always glad to pay taxes that are directed to develop effective good governance programs.

The seminar was continued by Ms. Briana Olsen, Political and Economic Officer at the U.S Embassy, with the topic: “Experience of U.S. companies in Good Governance programs and Business ethics”. Ms. Olsen has noticed the major aspects that will develop the effective corporate governance, one of which is that the Government and Business Leaders need to work together, to contribute to the development of appropriate corporate governance in order to prevent so-called “facilitation fees” (also known as “bribes”). Another important factor for the global development and attraction of the investors is a prevention of “corruption” and “money-laundering” since such factors appear extra costs for investing and its development. One of the most important aspects that Ms. Briana Olsen has liked to stress was the fact that of citizens' will to prevent the “bribes”, “money-laundering”, etc. and also to motivate their compatriots in the development direction of an appropriate management that will lead to the global development of the county as a whole.

Corporate Governance is one of the most important factors in all spheres of life including banking. Mr. Igor Pakan,  of  ABN AMRO Bank,  presented to the audience his substantial report on “Corporate Governance in the ABN AMRO Bank worldwide and in Uzbekistan”. Mr. Pakan spoke about history, services, corporate governance principals and business principals of the ABN AMRO Bank. Mr. Pakan also noticed that ABN AMRO Bank always adjust its corporate governance to comply with any new laws and regulations in all countries in which it operates. It was very well illustrated by Charles Darwin's expression: “It is not the strongest or most intelligent that survives, but the ones that are most responsive to change”.

Next speaker, Mr. Charles Rudd, President of the “Interconcepts” and representative of “D&B” presented his report “Corporate Governance  Strategy” and acquainted audience with the major relevant issues, of the good governance and corporate strategy for business development.  Mr. Rudd also emphasized that according to McKinsey (a leading business publication): “Institutional investors are willing to pay up to a 20% premium to invest in companies with good corporate governance”.  


Large-scale companies and enterprises have established rather complicated structures in order to comply with financial transparency and competent keeping of the financial statements. They have to pass through audit controls that are one of the major flag points of effective and efficient management. Mr. Saidrasul Bakiev, Audit Director in the Assurance and Advisory Business Service Department of “Ernst and Young” spoke about the ““Ernst and Young” Code of Business Ethics and Conduct”,

and Ms. Vera Makarova, Head of “Audit-S” company, spoke about “The role of accounting disciplines and audit in the company's corporate governance”.




Then Mr. Oybek Khalilov, General Manager of “UzAIG”, presented the “AIG Code of Conduct, Building of personnel's awareness”. Mr. Khalilov also shared his experience in the conducting of effective management and major factors that influence on the development and building of responsible personnel.


And in the conclusion of the seminar Dr. Tatiana Okunskaya, AmCham Executive Director” spoke about a no less important topic: “Codes of Conduct, The Experience of International Companies”. Dr. Tatiana Okunskaya spoke about existing types of codes of governance and business ethics and their influence on the development of effective good corporate governance. She has also presented Codes different of international companies, and illustrated her presentation with the different examples how principals of Business Ethics sometimes have helped to prevent bankruptcy and collapse of large-scale companies.

In the international training seminar were covered many aspects which influence the building of Good Governance can not be overestimated, and  stimulate inflows of both external and internal investments.  Attraction of direct external investments allows the increase of the technical level of the enterprises, to renovate the industrial funds (more than half of which nowadays became morally and physically out of the date) and to introduce advanced technology. This also increases competitiveness of the domestic economy, which is an extremely relevant issue because of Uzbekistan's participation in the regional and international integration processes.  And no less important is the process of internal investments attraction particularly by the equity market.

All over the world investors consider investment's plans in accordance with the good governance conditions. Therefore, nowadays the role of the Good Governance is very important and relevant for the global economic development of the Uzbekistan.

Prepared by Natalya Ten

Business Connections #7/2007

Business Connections #7

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