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Blog : BOARD TALK

The UK LoveFest w/China, #CorpGov And Pandas

Posted on October 17, 2013 at 7:15 PM

What exactly do we know about China's thinking on corporate governance?


It's a fair question, and one that was put to me this week by one of the world's most eminent thinkers in this field.


But it's a question that seems to have been overlooked by a UK government so eager to feed us a daily diet of good news that it is in danger of 'doing the deal' and forgetting the lessons of the all-too-recent past.


On Tuesday October 15  two headlines on the front page of the Financial Times leapt out at me. The one at the top said 'UK opens doors to Chinese banks'. The one at the bottom said 'London's libel reputation for rich and powerful dealt high court blow.' 


In order to ensure good corporate governance and prevent the creep of corruption, all countries - whatever their stage of development - need to hone a combination of legislative, executive and judicial powers. Ideally, they work together and in the same direction. I was at a meeting discussing such issues yesterday with the inspiring fraud and complex crime barrister Helen Garlick of Fulcrum Chambers and EY partners.


We were putting together a female panel on corruption - also sponsored by Transparency International - for the forthcoming Global Forum For Women In Parliaments (which I am delighted to say I have been asked to chair).


But I digress.  In the UK, as the FT story explains, a High Court judge has dismissed a libel lawsuit brought by a Russian arguing that it should have been brought in Russia as Pavel Karpov's connection with Britain was "exiguous."


Loving to use my Oxford English Dictionary, I reach for it only to find that 'exiguous' means 'very small.' So I shall use it in future as it seems to have been intended - with some considerable measure of disdain.


A series of such legal rulings ahead of new legislation by means of the 2013 Defamation Act will "make it harder for overseas litigants to bring tenuous libel claims in England" according to the story. It's a reaffirmation of governance. But it's also presumably a loss of money flowing into London in terms of legal fees.


Meanwhile, back to those Chinese banks. For a start, banking as a sector is a very big mess and we're not even sure how to clean it up yet. The reputation of the Square Mile is critical going forward.


London is 9th in the Reputation Institute's study on global cities released today, which says there is a clear link between reputation and economic gain.


Financial services firms in London are struggling with how to attract  the best of this new Why? generation that wants to know why it should even enter  - (discussed at an event I chaired for Next Generation Vision and Deloitte last week). 


And that's just for starters. Let's not forget ENRC - the Kazakh oligarch-controlled mining company that managed to get a London listing and proceeded to destroy a whole lot of reputation in its life as a FTSE100 plc. It has just delisted, but the fallout continues.


Britain's Serious Fraud Office (SFO) is investigating the goings on and papers are to be handed to it by Dechert, the law firm that was advising ENRC, by the end of this month. Hector Sants, who was at the then FSA when it was gave the nod for the ENRC London listing, has now had to take time off from his new role at Barclays due to stress and exhaustion.


Sir Paul Judge, the ex ENRC non-executive director being sued by ENRC, has meanwhile quietly taken office as Sheriff in the City of London. Where Fiona Woolf - a woman expected to fly the flag for corporate governance - is about to take over as Lord Mayor.


Are you riveted? There is more... - the ENRC NED who famously quit its board saying it was 'more Soviet than City' - Ken Olisa - is running for Alderman in next week's elections. Not only would his election be a reaffirmation of corporate governance which he champions,  but it would be a step towards diversity.  Mr Olisa is proud to be the first British-born black man to have served on the board of a large UK public company.


And it could make for interesting times in an institution where they still ask for 'donations of goodwill' for the Sheriff's accoutrements. 


In the midst of working too hard I slipped off to watch Mrs Gucci: the musical, by Peter Jukes - a tale of boardroom intrigue, love, hate and murder. @peterjukes I say: you have plenty of material right here in the Square Mile for the next one.


More seriously on the UK's lovefest with China. We know nothing really about what has been going on in that country around the many corruption charges and arrests. How much is about corporate governance and how much is window dressing to best place the country to take advantage of economic opportunity?


Until we know,we cannot afford to get the UK's financial services sector further embroiled. There is too much opacity around what China thinks and does when we need transparency - read what Transparency International has to say here.


The latest news just out is that George Osborne has announced the UK will allow Chinese companies to take a stake in British nuclear power plants- and even be allowed to own up to 100%.


I wonder if the FCO knows about the India-China rivalry.....wait for the Indian deals to fall through next in the face of all this China love.


And apparently China offers a panda with every deal.


When I tweeted 'A panda for George Awww' someone suggested a swap. Now there's a thought. Thank you for reading.





Categories: Transparency, Governance, Scrutiny