The current financial crisis has shown that corporate governance failed to adhere to its objectives. Discuss the failures that were exposed in the prevailing corporate governance practices.

500 words for each question
• It will be submitted in turnitin
• Q refers to question
• No references need it
Director Liability Law/ Fiduciary Duty/ Breach Of Duty Care & Loyalty
Q1) Ethan, Joshua and Daniel are all directors of quality sofa & bed Ltd. The company desperately needed to purchase a warehouse. At a board meeting, Daniel successfully persuaded Ethan and Joshua that on particular warehouse was perfect for the company and that it was worth $140,000. Ethan and Joshua later discovered that Daniel was the owner of the warehouse and it was worth $145,000.
Daniel who is a chartered accountant, is in charge of insuring the company’s warehouse against burglary and fire. He signed an insurance form without checking the content of its policy. The warehouse was burgled and the company suffered a loss of $30,000. The insurance company claimed that the insurance policy did not cover burglary and therefore refused to pay.
Ethan and Joshua recently found out that Daniel offered a cheaper price to a company’s client, Paul Ltd, from which he obtained a personal benefit of $3,000.

Advise Ethan and Joshua as to whether Daniel breached any of his duties as a director of Quality Sofa & Bed. Discuss duty of care and duty of loyalty 350 words
Financial Crisis & Corporate Governance
Q2) The current financial crisis has shown that corporate governance failed to adhere to its objectives. Discuss the failures that were exposed in the prevailing corporate governance practices.

Q3) One of the attributes to the current financial crises is the failure of corporate governance principles and practices. Discuss

Rentier State Theory
Q4) Discuss how external rent influence the business behavior in a rentier state.
Q5) Discuss the impact of rentier economies on business environment.
Q6) Rentier State is an obstacle for business growth and development. ( Discuss )
Q7) The fact that Kuwait is a rentier state is impacting the business environment negatively.

Model of Professional Board
Q8)Legal systems and regulations can have a negative or positive influence on business. Discuss

Case Samples
Case 1
On October 25 2011, the Chairman and directors of Petrotin (a Trinidad based oil company) was called on by the lawyers of the Ministry of the Attorney General to pay damages totalling $1.2 billion (US$190 million) within 28 days. The lawyers are alleging breach of duty of care in the GTL project, which in September had a project cost of US$136 million and the costs have now escalated to US$240 million. The board are accused of making decisions to continue the project by approving 33 payments related to a guarantee of the project without due diligence to determine if the company could afford the payments or if the project can be finished on time. This decision was taken despite enough warnings of the cost escalation dangers. The case also claims that there was no “proper and detailed front end engineering design and clear development verification of the process” which clearly pointed to a breach of the board’s responsibility to apply due diligence in its handling of risk.
Q9) What is the lesson learned from the cases
Case 2
An article that appeared in the Washington Post on January 9 2005 reported that former directors of both Enron and World.com agreed to settle shareholders lawsuits out of their own pockets. WorldCom directors paid $18m and Enron’s paid $168m. These lawsuits claimed that the directors failed to “properly supervise executives” as an independent investigation concluded that even though the directors were unaware that the financial records were false, they “rarely challenged top executives or inquired seriously into the details of major transactions”. This case is significant because it set a strong precedent in relation to the minimum duty of care expected from directors to shareholders. The article stated that in the past, directors were protected from legal responsibility for bad decisions or frauds done by managers as long as the directors depended on the advice of gatekeepers. The settlement by these directors is regarded as legal exposure that will affect the ability of companies to attract and keep good directors.
Q10) What is the lesson learned from the cases