Friday Nov 15, 2024
Friday Nov 15, 2024
Monday, 17 April 2017 00:00 - - {{hitsCtrl.values.hits}}
In the USA the term corporate ethics came into use in the 1970s. The Enron Corporation scandal in 2001, which was considered as the biggest audit failure as well, has given much emphasis to corporate ethics in addition to various other measures.
In Sri Lanka, the Institute of Chartered Accountants published the Code of Best Practice on matters related to financial aspect of corporate governance in December 1997. The latest edition, Code of Best Practice on Corporate Governance, was issued jointly with the Securities and Exchange Commission in 2013. This publication, under Code of Business Conduct and Ethics, cites 10 aspects including Conflict of Interest, Bribery and Corruption, and Entertainment and Gifts.
“A Conflict of Interest occurs when an individual’s private interest interferes (or even appears to interfere) in any way with the interests of the company as a whole. A conflict situation can arise when a Director or a Key Management Personnel performs or has such interest that may make it difficult to perform his company work objectively and effectively.”
Under Bribery and Corruption, it stated that the company or employees should not directly or indirectly offer, promise, solicit or accept any gift payment or other benefit as a reward or inducement of any improper conduct.
In Buddhism, Right Livelihood – Samma Ajiva – is one of the eightfold path to liberation.
“To lay disciple the Buddha teaches that wealth should be gained in accordance with certain standards. One should acquire it only 
by legal means, not illegally; one should acquire it peacefully, without coercion or violence; one should acquire it honestly, not by trickery or deceit; and one should acquire it in ways which do not entail harm and suffering for others.” (Anguttara Nikaya)
“The Buddha mentions five specific kinds of livelihood which bring harm to others and are therefore to be avoided:
“He further names several dishonest means of gaining wealth which fall under wrong livelihood: practising deceit, treachery, soothsaying, trickery, and usury (Majjima Nikaya 117). Obviously any occupation that requires violation of right speech and right action is a wrong form of livelihood, but other occupations, such as selling weapons or intoxicants, may not violate those factors and yet be wrong because of their consequences for others.” (www.vipassana.com)
Origin of Hayleys was in 1878 in Galle, which was then the main port of the country. Hayleys was the first company in Sri Lanka where there was a management buyout.
In 1952 George G. Hayley with senior executives also subscribing to equity formed Hayleys Ltd. with a paid up share capital of Rs. 200,000 to acquire from the heirs of the late Chas P. Hayley and W.W. Kenny the entire undertaking of Hayley & Kenny. (www.hayleys.com)
Legendary Chairman of Hayleys D.S. Jayasundara was appointed to the Board in 1964 and he took over as Chairman in 1977. Prior to that the Chairman of Hayleys was George Bobbiese, who promoted exports with a vision.
Jayasundara once said Hayleys lost its import businesses overnight due to the restrictions imposed by the Sirima Bandaranaike Government (1970-1977). In the subsequent budget speech of Dr. N.M. Perera, the word export was mentioned so many times (he mentioned the exact number of times) and the Board decided to promote export businesses in which they were already engaged in the form of exporting of coir fibre and related products.
The pioneering export companies, Haycarb (1973) and Dipped Products (1976) came into operation under the leadership of Bobbiese. These two export companies, led from the beginning by Rajan Yatawara and N.G. Wickremeratne respectively (both of them became Chairmen of Hayleys subsequently), were grown extending the manufacturing facilities to overseas as well and gaining global leadership in the respective manufacturing sectors they were in.
In the agricultural sector Hayleys was able to link the rural farmers in Sri Lanka to global companies like McDonalds, raising their living standards and at the same time introducing them to the banking system of the country.
Sri Lanka today has lost the focus on exports and the export earnings of the country has dropped from 40% of GDP to 20% of GDP over a period of two decades. When the top 25 companies of Sri Lanka are considered, about 50% of those companies are in the banking and financial industry, which is not a healthy sign. Only Hayleys and another company are engaged in exports.
If the country, the Government and the business community are concerned about exports and the industry is properly incentivised, the balance of payment problem faced by the country would have been eased to a great extent.
Hayleys accounts for over 3% of export earnings of the country.
During the time of Jayasundara, Hayleys was grown tremendously. He also appeared to apply the Buddhist principles of right livelihood. Hayleys was never engaged in any business where slaughtering of animals was involved. In fact, offers to take over such companies were turned down. Dealing in weapons or selling intoxicants were not among the businesses of Hayleys.
Moreover when there was an offer to take over a hospital, it was turned down. There was a question of why hospitals. The answer was this. When a person is sick, guardians are prepared to pay any amount to save the life of the patient. As a business entity, the company should focus on profits. It was the view that it was not appropriate to make profit out of a person who was so desperate. It was perfect adaptation of Buddha’s saying as given above, “and one should acquire it in ways which do not entail harm and suffering for others”.
In Sri Lankan culture, traditional physicians even today do not charge from the patients and rather patients are allowed to pay whatever the amount based on what they can afford.
Jayasundara was invited to the boards of various companies and he encouraged his assistants of taking directorships of various corporates. Mahendra Amarasuriya who was a Board member at that time and who became the Deputy Chairman after the demise of Jayasundara in 1993, was once offered the directorship of Distilleries and he refused because it was Distilleries. Similarly Sunil Mendis who became the Chairman after Jayasundara was offered the directorship of Ceylon Tobacco and he refused because it was tobacco. They did not have any disrespect for those companies but those were their personal views probably shaped by Buddhist culture.
Mendis had a policy that since he was paid by Hayleys he should not give his time to private sector companies where there was a payment as director’s fee. However he was a director of Bank of Ceylon for about a decade during which period Hayleys Group did not have any major facility with Bank of Ceylon.
Hayleys did not give any bribes in getting its jobs done. In the case of certain approvals of import and export activities when there were questionable transactions, particular operations were outsourced so that the company would not get involved in such activities.
When employee share ownership trust was created during the time of Sunil Mendis, the main Board members who worked in executive capacities did not take any benefits whereas the norm was that the top employees would get more benefits in such schemes. The gratuity system of Hayleys, once again introduced at the time of Sunil Mendis, gave more benefits to the employees who had long services which went very much beyond the requirements of the Gratuities Act.
Maximising profit is not everything. This legacy contributed to Hayleys getting the Best Corporate Citizen award five times and the Grand Slam award.
I met Sunil Mendis recently at a wedding and told him that I would write an article about Hayleys. He told me that it was good and to write about other companies as well which helped the economy of Sri Lanka. He also wanted me to not highlight his name and those of his colleagues. That shows the simplicity of the man and of the Hayleys culture.
