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'Known Unknowns' Are Back With A Vengeance

Posted on July 9, 2012 at 5:55 PM

It seems the world has gone mad.

As Paul Tucker, the frontrunner to succeed Sir Mervyn King as governor of the Bank of England appears before the Treasury select committee to talk about conversations with Bob Diamond, ex-CEO of Barclays, around the LIBOR rate-rigging scandal, I think that's a valid point. (The link is to the live coverage provided by the Financial Times of this event but it may not work if you do not have access to FT.com).

Who knew what when and how power was exercised.....and where we draw the line will be the backdrop of this drama. But there is another theme - does anyone really care if it hasn't cost them any money ? I for one have been singularly depressed at how many people give a damn. Or to be more accurate, don't. They are far more likely to get exercised about Bob's pay packet - or about the washout of this British summer - then they are about wider concerns about truth, rumour and accountability.

A recent spate of social events as companies try to get them all in before London collapses in the gridlock of the Olympics has been an entertaining place to take the pulse of the professional classes. Clearly it isn't a scientific exercise - nevertheless I offer it here.

Almost everyone I spoke to didn't believe that Bob Diamond divulged all he knew about LIBOR. It was a matter of a shrug and a brief comment - 'why would he ?' - 'he'll wait for his payoff and then make a fortune telling all in a biography' was the general theme. But - erm - what happened to the notion that some versions of what actually happened might amount to financial crime ?

I think it comes down to the disconnect between the powerful in this country - and everyone else. No one cares, because no one expects anything to change. I hope they're wrong. But the fact that the investigation into the LIBOR scandal has been used by the Chancellor of the Exchequer, George Osborne, as a chance to fling mud at the opposition by indicating former Prime MInister Gordon Brown may have been involved (when it seems his very own Jeremy Heywood has had very close contact with it) is depressing in itself. 

Mr Osborne could instead focus his attention on whether it is only the banking sector that is full of questionable practices.........as if one such scandal were not enough in a summer, we also have the GlaxoSmithKline debacle. In this case the US regulator has meted out the penalty, and yet David Stout, former head of US pharmaceuticals at GSK who pledged those "extra incentives" to successful sales staff, is still a non-executive director at Shire in the UK. Why ?

Presumably because Shire hopes it will all be forgotten soon - and Mr Stout's contacts from GSK days are worth too much to forego. He sits on both the Audit Compliance & Risk Committee and the Remuneration Committee.

I say one answer to all this attention around boardrooms recently is let's make sure we refresh them all.

Certainly one thing is changing - the EU is getting more involved in our boardrooms day by day. It's consultation on introducing a quota system to address gender imbalance in the boardrooms is now closed - and the response will be out soon.

And this is well worth looking at : a credible, global survey from Denmark-based consulting firm Innovisor shows that men and women are far more likely to cooperate with their own gender at work. It also suggests that companies must take gender into account in order to boost productivity and reap results from successful collaboration. Testosterone gets in the way of collaboration....you can see where this is going.

Innovisor credits research published in February in the prestigious journal Proceedings of the Royal Society in the UK which illustrated the role testosterone plays in our ability to work with others. The study showed that testosterone disrupts collaboration and makes people act less cooperatively and more egocentrically.

The findings, it says, are  are remarkable and the original article from Proceedings of the Royal Society can be found here. I have to said I haven't read it all but it looks intriguing.

I've never said having women on board is a panacea to all corporate ills, or even those 'discrepancies of attention' in the boardroom. But take a look around you - surely more diversity of thought cannot hurt the mess we seem to be in, the one no one really cares about, the big black hole of ethical behaviour.

We need to think differently about what we want from our boards, and the people who have the privilege of being there.

July 10 : And another thing. There has been talk in the press (since this was written) about Andrea Leadsom having 'jeopardised' her political career - when all she has done is to say that Mr Osborne should apologise to Ed Balls for his allegations on the LIBOR scandal - here's coverage in Northampton, her constituency of what she said. 

Ms Leadsom is, of course, a Tory MP - will the government listen to her or punish her for speaking common sense backed by an ethical grounding ? Let's wait and see. And about that 'push' for more women NEDs on boards - has it been around political point scoring or better boardrooms - or just not wanting to be seen as being dictated to by the European Union......

Categories: Behaviour, Corruption, Appointments