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Blog : BOARD TALK

Governance, Appointments & 2 Weeks To Go

Posted on June 16, 2011 at 1:35 PM

Corporate Governance is important.


The rating agency Standard & Poor's thinks so, as it has placed the 'BB+' long-term corporate credit rating on Kazakhstan-based miner Eurasian Natural Resources Corporation (ENRC) on "Creditwatch with negative implications"..........or in other words a threat to move its rating further towards "junk."


S&P cites the recent corporate governance issues at ENRC and you can read its concerns here.


At Cairn Energy, the Edinburgh-based FTSE-100 oil and gas company, they have decided to ignore the thinking that suggests a CEO should not move up to chairman of the same company. Sir Bill Gammell does just that on July 1st, alongside a host of other board changes.  Simon Thomson moves from being legal and commercial director to CEO.


Sir Bill is also continuing as chairman on Cairn India and retains responsibility for the current  transaction with the FTSE-100's Vedanta plc.  Cairn is trying to sell a stake upto 51% in its Indian subsidiary to Vedanta, India's largest non-ferrous metals and mining company based on revenues.


At least it's good to see a woman on the senior team at Cairn. But Jann Brown appears to be taking multi-tasking to a new level. Alongside being Finance Director and Company Secretary and covering HR and corporate affairs, she is now also to be managing director reporting to the CEO.


And at Aviva plc in London, the very international appointment of a Scotsman currently in Australia - John McFarlane is to be non-executive chairman, taking over from Lord Sharman. For 10 years Mr McFarlane was CEO of Australia And New Zealand Banking Group Ltd (ANZ), one of Australia's top companies, and one of the world's major banks.


Aviva has also just appointed Philippe Maso y Guell Rivet as CEO Aviva France. The company has an impressively diverse board, with Mary Francis, Euleen Goh and Carole Piwnica on it as NEDs.


You would think that all plcs must by now be well aware that the UK's Bribery Act becomes law in two weeks on July 1st.


But according to a survey by Thomson Reuters, though the majority of UK firms are on track to meet the implementation deadline many feel that they have not adequately prepared their most senior executives and board members for the challenges they face from the new legislation.


Most worrying is this : the survey showed one in six companies questioned said they had had no discussions with the board about the new anti-corruption legislation and 25% had only discussed it once. Of companies with an overseas parent board, one in three had thought it necessary to discuss the new rules with board members.


What has happpened to the message to 'tone from the top' ?


Apparently 39% of responding businesses felt they needed more preparation before the Act comes into force on July 1. Time to get on with it.





Categories: Governance, Appointments, Chairmen