“I trust me.” “I trust you not.”

“Don’t talk to me about trust. Who put this thing together?

Me, that’s who. Who do I trust? Me!”

Who would think that one of the most iconic lines from a movie made more than three decades ago, uttered by a really dark, crooked character, would be a source today of one of the most remarkable lessons in good corporate governance?

The actor was the young Al Pacino, and the movie was Scarface. When I heard those lines from my younger years, I definitely did not admire his values, but I admired the confidence. That was until I learned, working with the firm, that that kind of hubris is exactly the reverse of check and balance, and accountability. It is the opposite side of good corporate governance.

Earlier this week, the Good Governance Advocates and Practitioners of the Philippines (GGAPP) rolled out the results of the first-ever survey among publicly listed companies on the compliance or readiness to comply with the new SEC rules on Corporate Governance (with PwC as Knowledge Partner). The survey showed positive results on the overall, but some exceptions, although correctable, are very worthwhile to point out, as I also share them here.

For example, more than 30 percent of the respondents shared that their Chairman of the Board and Chief Executive Officer are one and the same person. To be fair, the idea does not seem bad. It is even understandable and to some, a plus, especially when he is the owner, who is also an astute businessman. Why indeed would that person want anything bad to happen to the company when he is the biggest owner anyway, the one to profit the most from it, and the one with the biggest stake to lose?

Pardon my analogy, but it is a Sunday and I hope you will take this lightly. That Scarface mentality is actually not abhorrent in privately owned family corporations, or even closely held ones. A small group can indeed trust each other, or place total trust in the owner. If there is betrayal, only a small group is affected – not so in a publicly owned and listed company where the board is entrusted with other people’s money. Trust is not sufficient. There must be accountability, and the public must be assured that there is accountability.

Just as important, the public must be assured that the company they invested in has a competent and diversified board, where the members are not only competent but are also independent thinkers. They should not be overpowered by one person as well – a situation which can more likely happen when the chair is the CEO, where the one that directs is also the one that runs the business.

The Code now requires a minimum number of three independent directors or 30 percent of the Board, whichever is higher. They are called independent because they do not represent any financial interests in particular, and they are in a position to objectively represent all stakeholders. To be fair, investors feel more secure if the original family owners are in the board along with other independents. A board consisting of all independents is not healthy too because nothing substitutes for the deep love of the original owners for the company.

Enron, our favorite whipping boy, is our case study as well because of the many lessons (and laws) derived from its collapse. It was a publicly listed company with about 15 directors, all independent, except for one, who was its founder and CEO at the same time at one point. We would find out later that the rest of the independent directors had lost their independence as well.

The published congressional committee reports showed that they got director’s fees that were higher than the norm, and they also had consulting contracts with Enron from which they earned hefty consulting fees, making their director’s fees look like a paltry sum – except that the Enron Board also received stock options as compensation. Because they did not pay for those shares, the report said there was no downside even if share prices dropped. They would have just a lost chance to amass greater riches.

That is also the reason why the Code requires the disclosure of remuneration that the directors earn from the corporation. The corporate governance survey shows that more are ready to share how director’s compensation is calculated but fewer are ready to disclose individual amounts.

Culturally, this is tough because compensation matters are too personal, not to mention that what is disclosed can be a magnet to tax authorities (or relatives, or prospective debtors for that matter, and I assume disclosure to spouse is no issue). Thus, being a director of a public company is no joke. A bit of privacy can be lost but a lot of public trust can be created.

What gives much promise and assurance to all about the survey is that 98 percent consider “integrity” as the most important trait when selecting directors. There is no way but up in the level of corporate governance with persons of high levels of self-governance within the board.

With governance in public companies in check, the other compelling issue is governance in private companies, especially SMEs that comprise almost all companies. They might say survival first before governance. But I have seen many as well who have learned that survival and growth are more sustainable with governance. It is a journey. One we are compelled to make. In today’s complex business and political environment, “I trust me” is a sales pitch whose time has passed.