While North American companies struggle to redeem their images in the wake of business accounting scandals, emerging economies in Eastern Europe are aiming to lay the best corporate governance practices from the ground up.
And many see Canada as a well-suited teacher and ambassador.
"Russians are hugely welcoming to Canadian ideas," said Alina Pekarsky, project director of the Canada-Russia Program in Corporate Governance, a training curriculum initiated by the Schulich School of Business at York University in Toronto and its partner institution, the State University-Higher School of Economics in Moscow.
"Canadians are seen as not so pushy and aggressive as Americans (who are also involved in governance programs in Russia). [They] are thought of as more careful and less likely to take the big risk."
The three-year-old program of seminars and courses on governance issues was designed to help Russian higher education institutions boost their corporate governance training abilities. With 42 months of financing of about $3-million from the Canadian International Development Agency, the program has included top Russian government officials, managers and professors among its students. Classes are held at Schulich and at the new Canada-Russia Corporate Governance Centre in Moscow.
Lack of risk-taking could be a detriment in the entrepreneurial culture that has taken hold in Russia. But Ms. Pekarsky said Russian business leaders -- evolving from robber barons to free-market capitalists -- now see the adoption of cautious, Canadian-style governance as key to obtaining new international investment, boosting competitiveness and retaining the wealth accumulated in the 14 years since the fall of the Soviet regime.
"From their point of view, it is very important that Canadians and others feel more secure about investing in Russia, to know that the due diligence has been done," Ms Pekarsky said. "Russians see our program as creating a better investment climate in that country. Governance education can make a major contribution to this."
In the early 1990s, Schulich created Canada's first international master of business administration degree and started the East/West Enterprise Exchange Program for the countries of the former Soviet Union and the Eastern bloc. Its offshoot, the Canada-Russia governance program, now provides instructional courses, information exchanges and research opportunities for Russian educators, financial analysts, regulators, corporate directors and journalists.
The program has also offered expense-paid scholarships to 20 Russian academics in each of the past three years, selected on a competitive basis for a month-long summer certificate course in corporate governance in Toronto at a postgraduate level. As well, Schulich provides seminars for senior Russian business leaders and regulatory officials in Moscow and abroad.
Alex Filatov, director of the Moscow-based Independent Directors Association, a self-regulated organization of independent directors whose aim is to help publicly traded Russian companies improve their performance, said Russia has looked to Canada for help in corporate governance training in part because its market and regulatory systems are something of a hybrid of the Anglo-American corporate governance model and European and Japanese forms.
At a conference in January sponsored by the Wharton School's Zicklin Center for Business Ethics Research and the World Bank Institute, Sheila Puffer, professor of international business at Northeastern University, explained that the Anglo-American model puts shareholders' interests first, while the continental European approach recognizes the interests of additional stakeholders, including workers and lenders. She predicted that although Russia will continue to absorb international influences, it will evolve into a uniquely Russian form, reflecting the country's traditions, values and culture.
Canada is involved in three corporate governance projects in former Soviet states, including a small business and economic development program in the Ukraine. CIDA contributed nearly $5-million to the four-year program that concludes this year.
Roman Petryshyn, director of the Ukraine Research and Development Centre at Grant MacEwan Community College in Edmonton, one of a consortium of involved institutions, said five Canadian business colleges were established across the former USSR as a result of the initiative. Surveys, he said, indicated that virtually no Russian management schools or training centres provided courses in corporate governance because of a lack of qualified instructors. He said the schools could help fill a need to train the trainers. "Business needs a new model for treating employees to replace the Soviet one."
Still, Mr. Petryshyn said instructors at the schools come up against resistance to market-economy concepts.
Ms. Pekarsky said the Schulich Canada-Russia program has shown results that may lead to the expansion of existing management training courses in China and other Asian countries to include Western corporate governance modules. Variations of the Canada-Russia program could also soon emerge in parts of the Arab world, South Africa, and more of Western Europe.
Negotiations for an extension of funding from CIDA for the Canada-Russia program are under way, she added. Already, CIDA and other Canadian agencies have provided financial support for corporate governance assistance in countries as culturally and economically diverse as Vietnam and Tanzania.
"We are thinking about these things because the need is so great," she said.
In an interview from Moscow, Mr. Filatov said the push to improved governance has become a global phenomenon, adding that he sees a need for a global governance code, with local and professionals standards laid beneath.
But Mr. Petryshyn warned against the dangers of attempting to impose Western niceties of governance on cultures that are not yet ready.
"In some places it is really a matter of enforcement right now. First you have to stop the people from stealing before you can teach them about the importance of independent boards."
Speakers at the Wharton School conference, meanwhile, pointed out that Russia as recently as two years ago ranked last of 25 emerging countries on responsible corporate governance criteria. But they said Russia has made significant progress through, for example, introduction of a code of corporate conduct, which was issued by Russia's Federal Securities Commission in early 2002 to create a framework for corporate governance with an emphasis on transparency.
Ms. Pekarsky said the more than 100 graduates of the Canada-Russia program have been instrumental in promoting reform through such measures as the appointment of independent foreign directors on Russian boards
Henryk Sterniczuk, professor of management and international business at the University of New Brunswick in Saint John, said it is in the interests of Canada and all developed nations to promote good governance across the globe to protect investments and ensure order, civility and predictability in world affairs.
"Governance is a delicate issue because it goes beyond what is legal or illegal to include a moral element," he said. "As such, it is in many ways unenforceable, but good governance is really necessary. Because if the trust is lost, it is hard to carry on business."
© The Globe and Mail
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