According to Watt & Schwartz (2018), the standards of good governance lie in acting according to high ethical standards, managing conflicts of interest and maintaining the independence of decision-making, ensuring open communication by responding to shareholder feedback, effectively handling complaints, and carrying out organizational responsibility towards society and the environment. In this paper, I will analyze the Bechtel organization. Does it have good governance or not? What actions can the organization take to improve governance?
Bechtel Governance Analysis
According to this year's Bechtel governance report, Bechtel prides itself on the quality and efficiency of its governance. It infers this by expanding its operations and spreading to most countries of the world. It's the most profitable construction company, and it focuses on being the best instead of just being the biggest.
According to (Bechtel, 2022), Bechtel has four drivers of governance:
Driver #1: Choosing leaders to be decision-makers; it is through the quality of people the company chooses to lead.
Driver #2: Individual accountability as leaders are responsible for the consequences of their decisions.
Driver #3: A deep understanding from senior management of the issues for which they are responsible.
Driver #4: Adopt company culture as a powerful driver for better decision-making.
An example of the implementation of governance in Bechtel- (True Story):
According to Justice News (2014), In 2014, Assem El-Gohary, the former Executive Vice President of Bechtel, admitted that he accepted $5.2 million in bribes from 1996 to 2011 in exchange for passing contracts to three energy companies to work on sub-projects in the name of the Bechtel Company in Egypt. Because of taking bribes and securing an unfair competitive advantage, he was sentenced to three and a half years in prison and refunded the said amount.
According to (Justice News, 2015), among the companies, the French company Alstom, which agreed to pay a fine of $ 772 million in exchange for dropping charges against her in the United States, is the largest bribery fine for a foreign company to date. Going back to (Asim El-Gohary) himself, we see that at that time, he was the general manager of (PGESCo) for power generation in Egypt; this company is a government company affiliated with the Ministry of Electricity in Egypt; this reflects a significant conflict of interest and a major loophole in Bechtel's governance.
According to ENR (2015), Charlene Willis, the current Vice President of Bechtel Corporation, said in a press release that the former Vice President's behavior was horrible and disheartening. She noted that Bechtel does not tolerate unethical behavior and has taken prompt action on this matter, launching a comprehensive investigation with the help of an external consultant and direct contact with the US Department of Justice.
Actions Bechtel Corporation can take to improve governance:
According to (Watt & Schwartz, 2018), good governance can be implemented by preventing conflicts of interest between board members and shareholders and the interests of the organization itself, establishing a control system for the executive management, the appointment of observers to send their reports to the Board of Directors is an absolute necessity, implement full transparency, as board members must be actively aware of abuses committed by CEOs and their deputies.
Conclusion
Implementing good governance improves the work of the company; it is prevented from happening because of scandals, which are the result of the individual actions of some individuals in the executive management or even the board of directors; a periodic audit determines whether the organization is implementing its strategies correctly or not, good corporate governance avoids risks arising from bad decisions and the ability to stop them before they cause irreparable damage.
References
Bechtel. (2022). Bechtel Four Drivers of Governance, https://www.bechtel.com/about-us/ethics-compliance/governance/
ENR. (2015). Ex-Bechtel VP Pleads Guilty to Federal Kickback Charges, https://www.enr.com/articles/6205-ex-bechtel-vp-pleads-guilty-to-federal-kickback-charges
Justice News. (2014). Former Bechtel Executive Pleads Guilty in Connection with a $5.2 Million Kickback Scheme, https://www.justice.gov/opa/pr/former-bechtel-executive-pleads-guilty-connection-52-million-kickback-scheme
Justice News. (2015). Alstom Sentenced to Pay $772 Million Criminal Fine to Resolve Foreign Bribery Charges, https://www.justice.gov/opa/pr/alstom-sentenced-pay-772-million-criminal-fine-resolve-foreign-bribery-charges
Watt, D., & Schwartz, B. (2018). Governance in view: Corporate governance audits can generate significant value for organizations. Internal Auditor, 75(1), 48-53.