24 JULY 2002

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Cartoon this week: Life’s a beach

Eroding trust

According to American political scientist Francis Fukuyama, the end of history was supposed to have been reached by the attainment of a capitalist society functioning in a liberal democracy.

When Fukuyama published his book soon after the fall of the Berlin Wall he trumpeted the end of ideologies arguing that capitalism had won the battle against communism.

Subsequently in his second book Fukuyama dwelt on the importance of trust. He maintained that trust was the basis on which liberal democracy and capitalism was built.

Fukuyama was long hailed as the ideologue of the western capitalist world, and for years after the collapse of Communism his ideas were proven right.

Today few people dispute the success of the free market. Even those, who were staunchly entrenched in the Socialist rank and file have come around.

But in a world that changes with every sunrise a declaration such as Fukuyama’s is risky. History has not ended. On the contrary capitalism has evolved into a global phenomenon that has both its vociferous critics and its converts.

The disparity between the rich countries and the poor is too wide a gulf. If the economic system that created prosperity in the western world is to continue being relevant it must adapt and be responsible. This is why governments, the world over should reassume economic responsibility and limit the powers of multi-national corporations.

It is not anti-business or anti-capitalist to make such a statement. The United States has witnessed two accounting scandals over the past few months, which saw the demise of two large corporations - Enron and Worldcom. These scandals sent ripples of concern throughout the world. Stock markets were rocked and over the past few days European stock exchanges have seen figures plummet below the levels experienced soon after the 11 September terrorist attacks.

What is worrying about these scandals is that they have eroded the very basis on which the free market is built: trust. Lessons must be learnt fast from Enron and Worldcom. Governments must step in to ensure that corporations function ethically and in full respect of their employees, customers, shareholders and the environment.

Only if a new culture of responsibility is created can confidence in the free market be rekindled.

Legitimate concerns

It would be naive to expect politically appointed chairpersons of government-owned corporations to divest themselves of all their private commercial interests. Any such clause would further restrict the human resources pool from which to draw the right people to lead these often debt-ridden and problem-laden corporations.

The Freeport Chairman Marin Hili should not be an exception. With all the criticism that has been levelled at him he has ably led the corporation to new heights. Even Alfred Sant, who poured vitriol on Marin Hili prior to 1996, left him in the post of chairman after getting elected to government.

Marin Hili’s private commercial affairs are not our concern as long as they do not impinge on his ability to lead the public corporation that has been entrusted to him.

It is in this context that Marin Hili’s most recent private investment in the Venice port creates some concern. It is only legitimate for the Opposition to point out that the chairman might have a conflict of interest. The Venice port, as outlined in our front-page story, is small and cannot be compared to the Malta Freeport in any way. But nevertheless it is still operating in the same line of business as the Freeport. Instead of closing its ears and blindly following the Freeport’s lead government should have conducted an independent monitoring of the Venice port to establish whether Marin Hili’s private investment is in conflict with the public post he occupies at the Freeport.



Copyright © Network Publications Malta.
Editor: Saviour Balzan
The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07, Malta
Tel: (356) 21382741-3, 21382745-6 | Fax: (356) 21385075 | e-mail: editorial@networkpublications.com.mt