Running Head: CORPORATE GOVERNANCE

Corporate Governance
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Corporate Governance

1. What governance practices could have prevented the demise of Barings Bank?
Barings Bank was founded in 1962 and previously known as Baring Brothers & Co. It was the
oldest merchant bank in England and collapsed on February 26, 1995. For this reason, the bank
had been faced bankruptcy for the second time. There were several issues that it had been
processed. It changed the regulatory of the development of worldwide financial transactions,
indoor trading, executive remuneration and misuse of pensions fund and made it strengthen
through those changes. As per (Hurst and Wood, 1993) report, there were many countries which
were located in Europe, America as well as Asia adopted an international code for different
multinational firms in that location. Those principles were as follow:
1.
2.
3.
4.
5.

Stakeholder & Shareholders accountability

Community fairness
Reciprocal shore up
Environmental apprehension
Prevention of illegal operations and fraudulent practices

2. Could the same practices have helped in the Societe Generale scandal?
Supposedly the minority schooling learned from the Barings Bank contrivance scandal later 15
years Societe Generale scandal which was related with irregular trading aspersion. They also
focused on internal control procedures they are as follow:
1. Biometric authentication systems should be developed to prevent merchants from taking
possession of one anothers account
2. Development of vigilant dealings
3. Improvement the trading reins
4. To measures the improvements of its operational controls it is required to make
tightening the IT security & create restriction on access to its information systems
3. What kind of technical, formal and informal controls would have helped Barings Bank
develop a secure organization?

Corporate Governance

The following technical, formal and informal controls were taken by it that would have helped
Barings Banks to develop a secure organization.
1. The development of buyer security regulations
2. Advancement of the total clearing system and take action to integrate real-time
arrangement and significant risk management
3. The encouragement of information ration between exchanges
4. There were some restriction requirements which were imposition to the register senior
officers (clearing firm)with SIMEX
5. The amplification of SIMEX's Market scrutiny Department
6. Enlargement of the outsized trade coverage structure
7. Need to monitor high-risk accounts and the members require close monitoring through
compressive internal risk analysis procedures
According to (Lall & Liu, 1997, Page 647) the internal controls and the collapse of it included
the taxing of the situation, investigation of daily completion, outskirts calls, as well as market
deliberation. Pleasing to the eye SIMEX monitoring capability.

4. Were those controls in place at Societe Generale?

In some cases, Society General placed those controls. They developed the internal controls. They
also implemented to prevent unauthorized trading activities. They materialized their IT systems
as well as their operational controls. They got an experience from the Barings Banks. It was a
similar scandal which occurred before them. So their management utilized their previous practice
to overcome these types of fraudulent activities. They also established corporate governance in
their organization and created ethical value. This would help them to accomplish their

Corporate Governance

organizational activities. Societe Generale also took several initiatives to protect the IT systems
activities.

References
Broadhurst, Arlene Idol and Grant Ledgerwood. 2000. Environment Ethics and the
Corporation. Houndsmills: Macmillan.
Lall, Ashish and Ming-Hua Liu. 1997. Liberalization of Financial and Capital Markets Singapore Is Almost There. Law and Policy in International Business, 28(3), 619-647.