Striving for continuity and balance in reading
See “Banks urged to adopt more social conscience” (front page, business)By Jon Fernquest
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Continuity
Continuity in your reading will help you master both vocabulary and ideas. Think about the continuities in the articles we have looked at:
1. The Asian Banker’s Summit is taking place over several days.
2. The governor of the Bank of Thailand had made several speeches.
3. In this period of political change in Thailand, many are talking about the idea of socially responsible corporate governance.
If you look for continuities in the articles you read, you will get: 1. Vocabulary repetition and review, the same kind of vocabulary used in slightly different ways, and 2. A changing perspective on the issues, different people will look at the issues from different viewpoints. You will master the issues as well as the English language used to express the issues. While you read, try to note key statements in the address and also keywords you can use in a Google search for further research (see the answer key at the end). If you have enough time let's look at another strategy.
Balance
Balance in reading, looking at both sides of issues, is also important. One way to read an article is to play the devil's advocate, questioning and disagreeing with everything that is said in the article, even if you actually agree with it. Ask the question “Why? Why? Why?” over and over again. You could also say something like “I actually agree with you, but let’s look at the other side of the argument just to make sure we have a strong argument.” Brainstorm and try to come up with some counter-arguments to the ideas in the keynote address:
1. If we allow social issues to distract us from our main goal of economic growth and making money, our country will never be rich.
2. Wealthy countries like Germany can afford this strategy, but Thailand is still developing and needs to focus more on profitable businesses.
3. Singapore or South Korea didn’t focus on these issues in their development and they are the development success stories in Asia that every country has to follow, so we shouldn’t focus on these issues.
When you’ve thoroughly this negative aspect of things, turn to the positive aspects. Think of ideas to counter the counter-arguments:
1. Important parts of society like teachers work for long-term goals by preparing students with useful skills to support themselves in their future life. The Thai words “achib” and “liang-chi-wid” capture this idea perfectly. Teachers may not be business people or receive the highest salaries, but the long-term nature of their employment relation makes them a good credit risk and their contribution to society makes them worth investing in.
2. Short run decisions based on profits are not always the best as the examples of Enron and Worldcom show. Sometimes long run decisions focused on long-run issues are better, if you can avoid the people who will exploit them for short-run profit.
3. "Independent directors and audit committees" focusing on long-run issues could help avoid the situation in bank corporate governance that led to the 1997 Asian Economic Crisis: “Back then banks typically lent to related parties, while boards of directors lacked access to information.” Banks had “conflicts of interest”.
Vocabulary (in the article)
conscience – part of the mind that tells you whether what you are doing is right or wrongimpact – effect
keynote address – the speech or address at the beginning of a conference that presents the main theme or idea of the conference
boards – boards of directors, the groups of people elected by the shareholders of companies to manage these companies
corporate governance – the policies used to run a corporation
undermined – behaved in a way to make something less likely to succeed
a grace period – period before a rule comes into effect, given to prepare for the rule
board chairman– the head or leader of the board of directors
stock options– “The right to purchase stock in the future at a fixed price.” From: www.networthstrategies.com/Resources/Docs/glossary.html, See Google: “stock option definition” for more definitions. This definition was the shortest. Also see Wikipedia)
overseeing – to make sure work is done properly
conflict of interest – “A situation occuring when an official's private interests may benefit from his or her public actions.” From: www.njleg.state.nj.us/legislativepub/glossary.asp, also from Google: “conflict of interest definition”)
Vocabulary (in the discussion above)
revisit – to deal again with a topic that was dealt with in the pastaddress – public speech
glossary – a small dictionary with words and phrases used for a special topic
play the devil's advocate – argue from the opposite side of the argument to find flaws in your argument (For the history of this phrase see Wikipedia)
counter-arguments – arguments against something
to counter something – to go against it
credit risk - the risk that a borrower will not pay back a bank's loan
independent directors – directors without a conflict of interest in the company
Answer Key: (Your answers could be different)
Key Statements:
1. “More awareness of social and environmental issues could help financial institutions sustain their businesses for the future.”
2. “The collapse of companies such as Enron and WorldCom represent failures of the western concept of governance”
3. There is a trend in Asia to separate “the titles of chief executive and board chairman to promote governance as well as efficiency.”
4. “awarding stock options to directors could weaken their role in overseeing management.”
Key words:
social conscience
social impact
social issues
environmental issues
consumer protection
social responsibility
protect consumers
protect environment
Article
Banks urged to adopt more social conscience
PARISTA YUTHAMANOPLocal banks should take into account the social impact of their lending, rather than focus only on shareholder gains, according to M.R. Pridiyathorn Devakula, the governor of the Bank of Thailand.
In a keynote address to the Asian Bankers Forum yesterday, M.R. Pridiyathorn stressed that more awareness of social and environmental issues could help financial institutions sustain their businesses for the future.
"Organisations should ensure that they make themselves acceptable to the society, and that benefits fall evenly to all concerned parties. It is for the sake of their own survival,'' he said.
"We want [banks] to be well accepted by the customers and to be able to continue their operations in society. Banks should not lend to projects that produce a negative impact on environment and society.''
M.R. Pridiyathorn said bank boards played a significant role in encouraging good corporate governance and managing risks. Corporate governance could be undermined if a board chairman and a chief executive officer were one and the same.
A number of Asian countries have been pushing for the separation of the titles of chief executive and board chairman to promote governance as well as efficiency.
M.R. Pridiyathorn said the Reserve Bank of Australia had already enacted a rule to force the separation of the two positions, as had the Monetary Authority of Singapore, with a grace period of one to two years given to Singaporean banks.
He also said the practice of awarding stock options to directors could weaken their role in overseeing management.
Stock options could result in a conflict of interest and less questioning by directors over risky behaviour by management if those policies led to an assumed increase in profits and stock price.
M.R. Pridiyathorn said Thai companies had mostly followed the western concept of corporate governance that focused on installing independent directors and audit committees. But the collapse of companies such as Enron and WorldCom represent failures of the Western concept of governance, he said, and added that Thai companies should also incorporate concepts of consumer protection and social responsibility to their governance principles.
Western countries on the other hand typically have separate laws to help protect consumers and the environment.
M.R. Pridiyathorn, a career commercial banker before joining the central bank, said poor corporate governance in the banking sector was a key factor leading to the 1997 Asian economic crisis.
"Back then, banks typically lent to related parties, while boards of directors lacked access to information,'' he said.
