Ladies and Gentlemen

Thank you so much for being with us today. It is an honor and a pleasure for me to be able to speak to such a distinguished gathering.
Please join me in welcoming our chief guest, Mr. Salman Ali Shaikh, Commissioner, Securities and Exchange Commission of Pakistan.

On behalf of Escorts Investment Bank and The Investment Banks Association of Pakistan, I would like to express my gratitude to, Mr. Zahid Zaheer, CEO, Pakistan Institute of Corporate Governance, and Mr. Sebastian-A Monlineus and Mr. Kaiser
H. Naseem, from IFC, for joining us today, to share their expertise on Good Corporate Governance.

Ladies and Gentlemen:
In the interest of good governance of this event, I am going to be brief. That will leave time for the experts, to make their case, and for you, Ladies and Gentlemen, to do justice to both - the Presentations and the Lunch.

	The International Corporate Perspective with regard to Governance,
	The Pakistani Scenario,
	The viewpoint of the Investment Banks Association of Pakistan, and finally,
	The Governance Initiative of Escorts Investment Bank.

Internationally, and typically, in the US and Europe, Corporate Governance has evolved over the past century to effectively promote the allocation of resources
to most productive uses. Generally speaking, the resulting structure of business incentives, reporting, and accountability has worked well. Yet, events like the bankruptcy of Enron, preceded and followed by, several lesser such incidents, suggest that the governance of corporations may have strayed from the generally held perceptions of how it is supposed to work.

With the growth of business units, de facto shareholder control has diminished, resulting in the emergence of super powerful CEO’s.

This situation is well reflected in a passage I have borrowed from Alan Greenspan and
I quote:
“…The Board of Directors appointed by the shareholders are, in the overwhelming majority of cases, chosen from the slate proposed by the CEO. The CEO sets the business strategy... and strongly influences the choice of the accounting practices that measure the ongoing degree of success or failure of that strategy. Outside auditors
are generally chosen by the CEO or by an Audit Committee of CEO chosen directors. Shareholders usually instinctively affirm such choices.”  

 He goes on to say:
“…the current CEO-dominant paradigm, with all its faults will likely to be viewed as the most viable form of corporate governance.” 

In Pakistan, as we all know, the CEO-dominant Paradigm is neither present nor
evident. The corporate scene in Pakistan may differ from that of the US or Europe,
in more than one way but I have only taken up this particular difference, to make
the point that prescriptions for Good Corporate Governance may not be universally applicable.

The recent regulations introduced by the SECP toward strengthening the position
of the CEO’s at the Stock Exchanges of Pakistan, amply prove my point.

In Pakistan, there is a dire need for demarcating the roles of the Board of Directors
and the Executive Management. Framing of the Broad Policy and Strategy, along with general stewardship of the company, falls in the domain of the Board while the day-to-day operations rest with the executive management. In reality we may find that in
many companies including financial institutions, the roles seem to have been reversed.  

At The Investment Banks Association of Pakistan, we believe that there is no substitute to responsible Management.

Institutions are built on Values; their Viability on know-how!

In today’s dynamic financial sector, sustainable success is most likely to be achieved,
by those institutions that take the broadest view of their responsibilities.
Investor confidence rests on three factors, which are:

	Corporate Governance,
	Transparent, accurate and timely Financial Information, and
	A System of checks and balances.

Capital Formation is encouraged only by maintaining trust in each of these.

Our Association has therefore, in addition to Quantitative measures also identified, specific Qualitative Performance Measures for our Member Institutions.

Ladies and Gentlemen
In the light of my foregoing remarks, Escorts Investment Bank is a good case study.

The current Five-Year Business Plan Escorts Beyond 2001 restated the Banks Mission, Vision and Statement of Broad Policy Objectives. Good Corporate Governance was identified as one of the five pillars of the Bank’s Strategy.

A combination of customer focus, innovative products and quality service, supported
by a committed team, and operating within an accountable framework of social, ethical and corporate responsibility has proved to be a powerful formula. It has also proved to be a highly successful one.
We strongly believe that:

What we do is important… but not as important as, how we do it!
Practicing Good Governance means ensuring that we have a comprehensive set of ethical principles plus a team that is committed to ensure that all our business activities are conducted according to these principles. In other words, we have to live up to high standards that are independently verifiable. Although designing Strategy has, at times been a two-way stream between the Board and Executive Management, we have a
very capable Board of Directors that finally approves all our Strategic Plans and Polices. Once that is done, complete Operational Autonomy is granted to the Executive Management to ensure that all transactions are at arms length, in the best interest of the company and its shareholders at large.

Ladies and Gentlemen:
I would like to conclude my remarks with a passage, again from Alan Greenspan,
Quote:
“…a market economy requires a structure of formal rules – a law of contract, bankruptcy statutes, a code of shareholders rights – to name but a few. But rules cannot substitute for character. In virtually all transactions, whether with customers or with colleagues, we rely on the word of those with whom we do business. If we could not do so, goods and services could not be exchanged efficiently.

Companies run by people with high ethical standards arguably do not need detailed rules to act in the long-run interests of shareholders and, presumably, themselves.
But, regrettably, human beings come as we are – some with enviable standards, but others who continually seek to cut corners. Yet there can be only one set of rules for corporate governance, and it must apply to all. Crafting the rules to provide the proper mix of regulatory and market-based incentives and penalties has never been easy.”

Ladies and Gentlemen:
This is the dilemma of Governance. This is exactly what makes today’s Presentations,
so interesting, stimulating and thought provoking for all of us.
Thank you once again.

May 31 , 2006
Lahore.