Abstract
This chapter has a very central role as it offers a novel set of seven Multilateral Development Bank (MDB) governance principles, developed by the authors. They cover all governance aspects, ranging from the multiple roles of boards and rating agencies to the overshadowed importance of attracting, motivating, and nurturing the right mix of human capital, genuinely dedicated to the global development agenda. These seven MDB-specific governance principles are developed beyond the Basel governance principles, to reflect the complexity of MDBs. The conclusion includes a summary on recent developments as well as an assessment of the level of adherence to the proposed principles—outlining specific areas of improving MDB governance, elaborated in the concluding Chap. 7 (The Future).
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Notes
- 1.
The Organization for Economic Cooperation and Development (OECD) is a forum of 33 high-income countries committed to democracy and the market economy, providing a platform to compare policy experiences, seek answers to common problems, identify good practices, and coordinate domestic and international policies of its members.
- 2.
The original 13 Basel Principles on CG of banks are: (1) Board’s overall responsibilities; (2) Board qualifications and composition; (3) Board’s own structure and practices; (4) Senior management; (5) Governance of group structures; (6) Risk management function; (7) Risk identification, monitoring, and controlling; (8) Risk communication; (9) Compliance; (10) Internal audit; (11) Compensation; (12) Disclosure and transparency; (13) The role of supervisors.
- 3.
Also referred as Political Counterweight and Democratic Forum roles; see Governance of the IMF , Independent Evaluation Office of the IMF, Washington, DC (2008).
- 4.
At S&P 500 companies, average Board size is 10.7; at the United Kingdom’s top 150 companies, it is 10.8; and among Italian blue-chip companies, the average is 10.7 directors (Spencer Stuart 2006a: 10, 2006b, c). Among the top 50 Japanese companies, average Board size is 13. The median Board size among the nearly 400 US non-profits participating in a recent survey declined from 17 in 1994 to 15 in 2004 (BoardSource 2004).
- 5.
In private sector Boards (S&P 500) the average age of Board member was 50–61 years (S&P 500; top UK firms), implying experience of 25–30 years. In top UK firms, the average term for non-executive directors as of 2006 was 3.8 years (Spencer Stuart 2006b: 6). Independent directors should not have been former employees of the company in the previous five years, should not have a material business relationship with the company, should not be or represent a significant shareholder, should not have close family ties with any of the company’s directors or senior staff, and should not have significant links with other directors through involvement in other companies. In S&P 500 firms, independent Board directors increased from 27% in 2001 to 81% in 2006. In the United Kingdom, 62% of Boards are composed by non-executive directors, nearly all of whom are independent (Spencer Stuart 2006b: 5).
- 6.
- 7.
The Geocentric Approach is a method of international recruitment where the MDBs hire the most suitable person for the job irrespective of their nationality.
- 8.
Tenure is the duration and circumstances of employment in civil, judicial, academic, and similar public sectors for international civil servants. After a probationary period, it offers job security to these professions as a means of protecting those services and institutions from political influence, as well as ensuring long-term loyalty to a specific public mandate. It typically implies restrictions to firing—for example requiring strong evidence of material misconduct—and/or substantial compensation for losing a job.
- 9.
Privileges are exemptions from substantive law of a state, while immunities are mostly exemptions from the administrative, adjudicatory, or executive powers of a state. Typical MDB privileges are partial exemptions from some areas of domestic law (e.g. taxation, customs, foreign exchange controls, immigration). An example of a key MDB privilege is the exemption from any direct taxation for the MDB itself and its employees (indirect taxes are often subject to reimbursement).
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Delikanli, I.U., Dimitrov, T., Agolli, R. (2018). Principles of Sound Governance. In: Multilateral Development Banks. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-91524-1_5
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