Seeing corporate governance at work

The first meeting the Alliance Financial Group (AFG) board had with the press early this week was crucial as not only did the board deal with the rumours surrounding its banking arm, it also somewhat stabilised the situation.

As the events unfold, what is meant to be clear in the episode is becoming clearer.

It would be too much to expect the AFG board to divulge details of the probe currently being conducted on its chief executive officer (CEO), Datuk Bridget Lai. After all, since as recent as yesterday, the probe remained an internal matter.

But insofar as public interest is concerned, Alliance Bank is operating as usual. Its fundamentals were never threatened amid the rumours circulating in recent weeks.

It is understood that the bank's senior officials are being provided up-to-date briefings on the goings-on and they in turn brief their subordinates.

In Lai's absence, several select committees now run the bank's operations, with the AFG board as an oversight body. The board itself comprises some experienced bankers and a veteran accountant.

Its employees remain bullish about the bank turning in another set of good numbers when its latest financial results are announced very soon.

It is also understood that the bank's customers are taking the recent events in their stride. No sudden withdrawals have been recorded.

On hindsight, perhaps it was not an easy decision for the board to make in going public with the internal probe, what more when it involves its CEO.

But after looking at the episode from every perspective, at least up to the point when the board held the press conference this week, its acknowledgement of the probe may be beneficial to the bank in the longer term.

It speaks a lot about corporate governance, demanded not only from Alliance Bank but also the entire banking sector in which no one should be exempted from exercising, and seen as exercising, the highest degree of integrity.

Lai is innocent until proven otherwise. She has in her possession now a set of questionnaires the board wants answered, and has told the press that those questions will be answered.

That is as far as the issue should be pushed in the public domain. Anything beyond that would solely be for Lai and the bank to iron out.