Last week the observation was made that, despite its occurrence in the United States, there are several salient lessons to be learnt in the Region from the on going Enron scandal. These lessons will of course reflect the very different contexts of the USA and the Caribbean. As we also noted, the first and perhaps the most important lesson is the need to constantly scrutinise and evaluate the wider environment in which commercial activity occurs. This environment, in its broadest socio political, cultural, and economic sense, gives sustenance to, as well as conditions the behaviour of individuals, enterprises, and groups, which operate in the marketplace. In truth we may say that it defines the particular character of each marketplace. This week I begin with a further elaboration of this point.

Systemic weaknesses

Close observers would recognise that the Region's business environment contains several systemic weaknesses. Unfortunately, only a few can be identified in this article, but it is intended to continue the discussion next week. A prominent weakness is that locally owned firms of all sizes and types are riddled with cliquism and cronyism. Their management and ownership are also very closely interlocked. Indeed most firms are private family owned businesses, a circumstance which has in fact encouraged the development of these characteristics. However, it is also true that among some large public companies these characteristics are noticeable. An important contributory factor to this

outcome might well be the small size of the regional economies and the limited opportunity it offers for modern corporate structures.

As a rule, the failure of many large private family owned businesses to go public has lowered the overall level of professional management in local enterprises, since family members are normally expected to fill senior management positions by right. It is of course true that in some businesses family members are professionally trained, but since their appointment does not go through a public competitive process, for large sections of businesses in the Caribbean the right to manage remains, in a fundamental sense, a prescriptive, and not a performance based one.

A second prominent weakness of the regional business environment is the symbiotic relationship local firms have with the political directorates. Because these directorates can, through the machinery of state, exercise considerable sway over the fortunes of these enterprises, management feels dependent and beholden to the ruling political establishment. It therefore seeks to avoid at all costs any semblance of "rocking the political boat." This pattern of behaviour has been known to occur even when business interests are being adversely affected by public policy. At the same time, the general shift away from the state control and commandist economic relations that prevailed up to the 1990s, have made the political directorates dependent on the public support of local firms, in order to prove the "success" of their private sector led development policies. In this situation, manipulation by both sides, rather than genuine partnership, becomes the object of business political relations.

Criminality and questionable ethics

It is also the case that in the Region far too many firms are linked either by design or default to systematic criminality and/or the display of highly questionable ethics in their commercial relations. There are three popular examples of this. One is the widespread practice of tax evasion, as distinct

from tax avoidance, which characterises the business behaviour of many firms. The criminal nature of this endeavour is often lost in the loud complaints business makes against the high/punitive levels of taxation. Indeed, when read between the lines, this seems to be offered as a rationalisation for this criminal and unethical behaviour!

Another example is the frequent discovery of drugs or other prohibited substances in cargo consignments from some regional firms in overseas destinations. While the management of these

firms are usually not directly responsible for these drug "finds," the frequency of their occurrence is a matter of grave concern, as it has affected the perception of all regional firms in overseas markets. irrespective of their probity. All are tarred with the same brush and, in a period of heightened

security, this has adverse consequences for exporting firms.

The third example is the systematic exploitation of weak product/service liability laws and the inadequate enforcement of existing laws in the Region. Thus, while in some instances it may even be the case that defective products sold have caused deaths, routinely there is little or no follow up investigations of this, let alone criminal charges being brought against those responsible. The most notorious cases are those where long expired drugs are passed off to poor unsuspecting customers as acceptable medication, or where foodstuffs for children are sold to parents with tampered expiry dates or altered nutrient contents.

These abuses thrive because of the environment of weak laws, inadequate enforcement capacity, weak public scrutiny, and official tokenism, if not indifference in combating these abuses.

Consumer associations and other non governmental bodies make a brave effort to challenge these abuses, but they are under resourced and under staffed, so that the sheer volume of abuses overwhelm them.