Navigating a business through turbulent war-torn countries
9 min read
20 September 2016
Clearly, responsible businesses operating around the world face challenges. Yet, it is important for established businesses to continue operating even in countries torn apart by conflict and political instability, opening employment opportunities and offering hope of normality for people.
Indeed, there have been the Rolls Royce bribery allegations in Nigeria, the FIFA scandal, Transparency International condemnations of corruption levels in countries such as Libya or Sudan.
So what can businesses committed to both their presence in troubled countries and strong corporate governance practices across their global operations do to ensure the two do not come into conflict?
The question will be familiar to many managers, particularly with global businesses such as Rolls-Royce facing probes into their agents in other countries.
As the founder of, Nest Investments – a diversified international group engaged in financial services, property development and other activities – working across countries ranging from the UK and US to Iraq and Yemen, I’ve detailed the experience and offer some top tips for international firms.
(1) It starts from the top
Following a hysterical summer in UK politics, Theresa May emerged at the helm of Number 10 vowing to crack down on vested interests in the corporate world. The vow came along with the suggestion that workers should become a key part of the corporate governance framework.
As a group that values being ahead of the market, Nest Investments takes great satisfaction in bringing change from the top of the group and not just following the top leaders of the countries we operate in.
Putting employees on boards forms part of corporate governance, but why stop there? For every Nest Investments subsidiary board, there is a strong presence of independent individuals with diverse interests.
Employees’ and shareholders’ interests are undeniably crucial but there is also a real need for independent non-executive directors (NEDs), perhaps an academic working in a relevant field or a semi-retired business leader, who can provide real balance and a strong outside perspective.
It’s difficult to deny that large corporations have a significant effect on their local communities so, why not think about including the local community leader in crucial decisions.
(2) Make sure your directors are up to the job
Good governance is not something that can be achieved through process alone. Even the best tried and tested structures in the world do not guarantee strong corporate governance. Look into investing more into your current and potential directors.
At Nest we have actively invested into our directors with formal governance training. We currently have three Chartered Directors Employee Board members from the Institute of Directors (IoD) in London and another in the pipeline; a rare occurrence in the west, let alone the Middle East.
It is important to recognise that these initiatives should be for a purpose and not just for show. Having qualified and trusted directors at the top of our companies ensures these measures are followed throughout our organisations, improving the effectiveness and values of our entire workforce.
Continue on the next page for the final three tips including details on how the business operated when Gaddafi was still in power.
(3) Avoid nepotism and box-ticking in recruitment
Nepotism is an easy “DO NOT” point to make however, beware of misinterpreting meritocracy for mere “box-ticking”.
If your company has a specific set of values (and we hope it does), then these should run through the veins of each employee and potential employee. For each senior hire a board committee oversees the entire process ensuring technical qualifications and sharing of cultural values are given equal weighting. What good is the highest qualified candidate when they are walking in an opposite direction to your company?
Like all things corporate governance, putting this into practice is much harder than the intent. However, using “tip one” and incorporating the broad interests into the recruitment process will help ensure your cultural values are not overlooked when scouting the best talent.
(4) Balance local sensitivity with global considerations
This is an issue for any multinational in the world. Different countries have developed at vastly different rates over the past 150 years and the difference can be felt no more than when legal counsel attempt to adhere to different countries’ regulations.
A tough balancing act comes into play here. How best can you do business in local markets whilst keeping true to your corporate values?
Nest now operates across 23 jurisdictions and we know how important it is to ensure that cultural values never become detached from practical regional operations. This is particularly true in jurisdictions where their regulatory structures have not fully matured and are therefore more susceptible to changes.
Here, a healthy, collaborative relationship with the regulators is vital for both parties. Firstly, the regulator requires and normally seeks the views of those it is regulating. Likewise, the company being regulated needs to voice its concerns and needs before definitive frameworks are laid down.
On a number of occasions, we have been officially invited to contribute to the local discourse on how to implement effective and appropriate corporate governance, which we were always happy to participate in through intellectual contribution as well as on-the-ground action.
A perfect illustration of this in action was our compliance with Solvency II. Our strong focus on best practice at all times ensured one of Nest Investments insurance subsidiaries was amongst the first entities in Cyprus to comply with all new industry regulations, ahead of most of the competition – a win for the regulators and the group.
(5) Have the ability to act when things go wrong
Once the structures, processes and people are all in sync to ensure great corporate governance, the variety of obstacles that life throws at your business means that recovery will be required at some point. In these scenarios it is essential that internal controls are in place to ensure a rapid response. This is particularly true in the jurisdictions which are less than stable.
As a large group with many subsidiaries we have a system whereby all data from around the world is centrally analysed and easily accessible by the directors and managers on a frequent basis to ensure smooth operations and note any red flags early on.
With a large operation in place in Libya before the fall of Gaddafi, this mechanism led to the most efficient way out of what could have been a tricky situation.
We were able to assess the prevailing circumstances (business integrity, security and freedom to move in and out of the country) in Libya and take the decision to pull out until such time when it is possible to resume safe and legal operations, in an environment conducive to operating a successful business.
These internal controls ensure that the group can check and monitor all our subsidiaries’ values and behaviours – and act fast when things go awry.
In light of global and regional turbulence it is easy to be put off getting your business involved. But in our view if there is one thing that the business world can add in the pursuit of the antidote that we all seek then that is effective corporate governance.
Ghazi Abu Nahl is the founder and chairman of Nest Investments