Blog : BOARD TALK
|Posted on October 11, 2012 at 9:55 PM|
Oh dear. How time flies when you have to go all the way to Delhi and back in a rush. And are then ill - so this blog has been silent for awhile, too long. Thank you to those who check in anyway, and linger gratifyingly on my DIY website.
Delhi : increasingly I do not understand how UK plc does business in India without paying bribes, looking the other way, or generally ignoring the premises on which UK corporate governance is founded. My trip was only five nights, tiring for its brevity, far more exhausting in the many adjustments it required.
As for bribery - a survey by FTI Consulting recently found that 40% of UK businesses believe the economic climate is encouraging organisations to risk violating the Bribery Act to pursue business. The survey - of 571 board-level and management employees at UK plcs - found that more than one-fourth of respondents don't believe the UK government will encourage regulators to pursue cases due to the economic environment.
"While most leaders want ethical business practices, many organisations still face the challenge of managing a hard core of risk takers - and we see evidence of the disproportionate damage they cause in the news every week," said John Higgins, leader of the Europe, Middle East and Africa ethics and compliance advisory team at FTI. (Do I hear cheering on the outskirts of IGI International airport ?)
The thing is not to become desensitised - to things like bribery and corruption. One of the (many) reasons I keep my trips to Delhi short. But also because it really is true that the longer you live with something without questioning it, the more 'acceptable' it becomes. Just take a look at the glorious, 'honoured with a knighthood' career of Jimmy Savile and others like him.
There are two issues to be dealt with, and the ideal would be to deal with them at the same time - getting individual compliance with the law and the codes laid down, and the wider buy-in of business as a whole. But to get that the UK government would have to show something it has not yet shown - that no one is above the law. Dare I say it - our American cousins have won that round, mostly.
`So, here are some recent developments noted that may help the UK re-establish the compliance ethos it seeks.....shortly after I returned, the FT published 'City watchdog to tighten listing rules' on rules aimed at cracking down on dominant shareholders and reverse takeovers for London listings. "The proposals will strengthen corporate governance rules by preventing shareholders with more than 30 per cent of equity from running a company like it is their own “personal fiefdom”, said one senior fund manager" wrote the FT, citing both Eurasian Natural Resources Corporation (ENRC) and Bumi plc in the piece.
Frankly, it's dangerous in this game to go away at all, in case you miss something crucial. So I see from a backlog of FTs (they all need flicking through as you never know....easy to miss on iPad) that ENRC is now (at last) preparing to shake up its senior ranks, with Mehmet Dalman assuming the role of executive chairman in a confidence-boosting exercise. FT: "Mr Dalman...wants to work full-time addressing issues such as compliance, risk management and strategy, according to people familiar with the matter."
Familiarity there certainly used to be on the ENRC board, with bets being placed among the non-executive directors on how long they were going to last and who was going to be responsible in getting rid of CEO Felix Vulis......but .at the moment (you'll have to read the FT link above) it seems Sir Paul Judge has adopted the role of 'defender of the Vulis.' It's messy, all very messy indeed. At least Mr Dalman seems to be taking a step in the right direction, but then his reputation is probably now at stake. As it is over at.....
the other development I wanted to mention : Bumi plc, which is imploding fast. From the story on Sky News : " Nat Rothschild, the billionaire financier, is facing demands to relinquish shares potentially worth tens of millions of pounds in an Indonesian coal venture as its owners hurtle towards a messy divorce." Here's the link (complete with smug photo of our Nat) and a bit of detail on how, as the FT's Lex column puts it tomorrow morning "Bumi - full circle. Thanks for nothing."
Going back to the importance of remaining 'sensitised' to corruption and standing firm on attempts to swing the rules. It really hasn't been that long since the end of London 2012, that huge, huge success for Britain. Of course, it feels like forever, especially in the wake of the Lance Armstrong revelations.
But let's not lose heart. Amid all the talk around studies of how to capture that ethos, that energy and productive dynamism that was London2012 I hope we remember the fundamental importance of establishing values - and codes of behaviour - and sticking to them as we go along, applauding those who celebrate them and not being too shy about being rude about those who ignore them. (And, with any luck watching those who flout them with impunity get locked up).
It is exactly in difficult economic times that any government stands a real chance of establishing the most solid groundwork on what it wants in the name of its people as the standards on which a country runs.
Out of steam - and your reading patience I daresay - more to come very soon on stewardship and diversity.....watch this space.