October 27, 2016
Ladies and gentlemen, honored guests, I am pleased to join you today to as you begin your course work for the Baltic Institute for Corporate Governance Executive Education Program.
The U.S. Embassy in Lithuania enjoys a strong relationship with the BICG, and it is a pleasure for me to witness the Institute’s continued contribution to the education of the next generation of corporate leaders. Your BICG training will equip you with the skills and knowledge necessary to make this region a leader in corporate governance. As corporate leaders committed to learning the tenets of sound governance, you are putting yourselves in the position to not only influence the businesses you will lead, but also to influence the future of your country.
As we have seen with recent economic downturns, effective corporate governance plays an essential role in attracting and retaining the domestic and international capital needed for economic growth and stability. Good corporate governance is crucial to the efficient functioning of the global economy and to business success. Strong governance increases transparency, accountability, and ethics, creating the foundation for market stability and sustainable economic growth.
When you look at governance indicators, whether they are Transparency International’s Corruption Perceptions Index, the many Freedom House reports, or the World Bank’s Doing Business indicators, one thing becomes apparent: countries that pursue sound governance – where transparency, respect for human rights, and intolerance for corruption are the norm – are more stable and economically successful. Similarly, companies that pursue the highest standards of excellence in corporate governance are also the most successful.
As I am sure you know, Lithuania is in the process of joining the OECD, with strong U.S. support. Lithuania will join an organization comprised not just of European countries, but also of such large economies as Mexico, Turkey, Japan, Australia, and Israel, among others. The OECD Principles represent the first initiative by an intergovernmental organization to develop core elements of a good corporate governance regime. As the OECD principles are non-binding, the U.S. strongly supports international and regional efforts to apply the principles.
It is important for you to take stock of what this means to your companies. It means three things: first, your country will be assessed by peers on a broad array of criteria for economic performance its broadest sense, including education, bribery, tax structures, and environmental protection. Second, it means that you have access to an enormous wealth of information in order to compare performance and learn best practices. Third, it means the G-20/OECD Principles of Corporate Governance will apply to you. They have recently been revised to take account of new issues, including risk management, related party transactions, and the growth in financial intermediation. I encourage you to review them.
Also of relevance to the continuing work of the BICG is the OECD Corporate Governance Review of State Owned Enterprises, or SOEs. The BICG was active in this review, an idea my Embassy suggested about three years ago. Simply put, the review is setting the standards for the behavior of large SOEs, to counter some of the predatory practices of SOEs from larger economies such as China and Russia. Even for countries that are not members of the OECD, these standards and principles have come to be seen globally as the gold standard.
All of this highlights why the training you will receive from the BICG is so important. BICG is a standard-setting organization that is making a difference in creating a positive corporate culture in the Baltics. Through this training, you will be preparing yourselves, and the businesses you will serve, to meet the highest standards in corporate governance. This can only serve you, your company, and your country well in the coming years as you compete in the global economy.
The U.S. strongly supports your efforts and applauds your leadership on establishing sound corporate governance in the Baltic region, and I wish you much success in your careers. Thank you.