TROUBLE AT THE TOP
The key to unlocking better governance in these markets could depend on the quality of a country’s government. Reform is on some government agendas but not others.
Nigeria, for example, once had a central banker called Lamido Sanusi. After reforming the banking sector, which saw several chief executives sacked, he started ruffling feathers in government by alleging that $20bn of revenue from the national oil company was missing. He was later handed Nigeria’s equivalent of a P45.
“We don’t always see a nice upward progression in corporate governance across emerging markets, just as we don’t in the UK or the US,” Marshall-Lee says.
The Petrobras scandal in Brazil has led to political change, which is welcome as the government was embedded in the scandal. But this has proved not to be a silver bullet as the new government do not appear to be free from allegations of corruption. So it is not the clean break those protesting on the streets of Brazil had hoped for.
“What the car wash scandal has shown us is just how deeply imbedded the corruption was in that society, which is a function of the weakness of the government over a prolonged period of time,” Marshall-Lee says.
He adds that he is seeing corruption resulting from weak government in other emerging markets, but points out that there are other emerging market countries where governments are rapidly improving.
India is an example. Prime Minister Narendra Modi was elected on an anti-corruption ticket. This has resulted in the introduction of innovations to improve transparency and fairness, such as the bidding for government contracts being staged online.