Not just a few rogues

Those responsible for corporate governance have no incentive to question the successful creation of wealth, writes Roger Trapp

The preliminary report of the corporate governance committee headed by ICI chairman Sir Ronnie Hampel was hardly eagerly awaited. Its findings had been widely predicted some time ahead of its publication this month. Nor is it surprising that its approach has won a generally enthusiastic response from the business community - if not from corporate governance pressure groups and the media.

The advocacy by Sir Ronnie and his "great and good" colleagues of principles over a "tick-box" mentality is initially plausible. Sure, you find yourself thinking, it cannot be right that executives should find themselves bogged down in bureaucracy. Of course, the business of business is wealth creation.

It is just that past events have shown that business people cannot always be trusted to show the right judgment. In financial scandal after scandal we have seen how personnel have over-stepped the mark in the effort to sustain growth. Even in those cases where "rogues" have apparently been set on fraud from the outset, problems have sometimes gone on for longer than perhaps they should have because those supervising them have not had sufficient incentive to question the causes of all this good news. As one internal auditor said a while back, companies are very good at investigating failure but less inclined to delve too deeply into the roots of success.

It is precisely this sort of thing that the Cadbury Committee - coming in the wake of such episodes as Polly Peck, Coloroll and Maxwell - was designed to counter. In setting out the things that lawyers, accountants and the executives themselves should be paying attention to, it made some progress. Now, members of the Hampel Committee may insist that they are not seeking to put the clock back, but in recommending a move towards principles rather than codes they are bound to relax matters a little.

That might be fine in a business climate such as we are now enjoying. But the point about the affairs behind the setting up of the Cadbury Committee is that they occurred when the bull run came to an end.

Remarks like that from Martin Scicluna, chairman of accountants Deloitte & Touche, that the report recognises that "in corporate governance terms, UK plc is way ahead of major overseas competitor countries", could be seen as showing the sort of complacency that made such time-consuming exercises as corporate governance committees necessary in the first place. As the article above points out, it is always tempting to believe that problems are the result of a "rogue trader" or one "rotten apple".

No, what is needed is a challenge to the whole way of doing things - not, for example, as happened at the end of the 1980s, detailed explanations of why auditors cannot be held responsible for such difficulties.

And, incidentally, it is a little odd for David Paterson, head of the corporate governance unit at solicitors Herbert Smith, to welcome the adoption of some flexibility on the grounds that "pressure groups and the media interest had turned codes of best practice into holy writ". Could he possibly have forgotten that Sir Adrian Cadbury had, when introducing his code, appealed for help from exactly those sectors? Had other groups displayed their efforts more clearly, there would not have been nearly such a clamourn

News
Netherlands' goalkeeper Tim Krul fails to make a save from Costa Rica's midfielder Celso Borges during a penalty shoot-out in the quarter-final between Netherlands and Costa Rica during the 2014 FIFA World Cup
newsGoalkeepers suffer from 'gambler’s fallacy' during shoot-outs
News
people
Travel
travel
Arts and Entertainment
Sydney and Melbourne are locked in a row over giant milk crates
artCultural relations between Sydney and Melbourne soured by row over milk crate art instillation
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Life and Style
ebookA wonderful selection of salads, starters and mains featuring venison, grouse and other game
Arts and Entertainment
Adèle Exarchopoulos and Léa Seydoux play teeneage lovers in the French erotic drama 'Blue Is The Warmest Colour' - The survey found four times as many women admitting to same-sex experiences than 20 years ago
filmBlue Is The Warmest Colour, Bojack Horseman and Hobbit on the way
News
Two giraffes pictured on Garsfontein Road, Centurion, South Africa.
i100
Environment
View from the Llanberis Track to the mountain lake Llyn
Du’r Arddu
environmentA large chunk of Mount Snowdon, in north Wales, is up for sale
News
Kenny Ireland, pictured in 2010.
peopleBenidorm, actor was just 68
News
i100
Arts and Entertainment
arts + ents
News
Morrissey pictured in 2013
people
News
people
News
A scene from the video shows students mock rioting
newsEnd-of-year leaver's YouTube film features playground gun massacre
News
i100
Life and Style
The director of Wall-E Andrew Stanton with Angus MacLane's Lego model
gadgetsDesign made in Pixar animator’s spare time could get retail release
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Trainee Recruitment Consultant - Manchester - Huxley Associates

    £18000 - £23000 per annum + Commission: SThree: One of SThree's most successfu...

    Trainee Recruitment Consultant - Birmingham - Progressive Rec.

    £18000 - £23000 per annum + Commission: SThree: Progressive Recruitment are cu...

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

    Trainee Recruitment Consultant - Birmingham - Computer Futures

    £18000 - £23000 per annum + Commission: SThree: Computer Futures are currently...

    Day In a Page

    Dress the Gaza situation up all you like, but the truth hurts

    Robert Fisk on Gaza conflict

    Dress the situation up all you like, but the truth hurts
    Save the tiger: Tiger, tiger burning less brightly as numbers plummet

    Tiger, tiger burning less brightly

    When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
    5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

    In grandfather's footsteps

    5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
    Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

    Martha Stewart has flying robot

    The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
    Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

    Do women cyclists need 'pootling lanes'?

    Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
    A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

    A tale of two presidents

    George W Bush downs his paintbrush to pen father’s life story
    Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

    The dining car makes a comeback

    Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
    Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

    Gallery rage

    How are institutions tackling the discomfort of overcrowding this summer?
    Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

    Eye on the prize

    Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
    Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

    Women's rugby

    Tamara Taylor adds fuel to the ire in quest to land World Cup
    Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

    The day America’s love of backyard tigers led to a horrific bloodbath

    With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
    Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

    How Samuel Beckett became a French Resistance spy

    As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
    We will remember them: relatives still honour those who fought in the Great War

    We will remember them

    Relatives still honour those who fought in the Great War
    Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

    Kodak's last-ditch bid to keep celluloid alive

    Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
    Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

    Acting in video games gets a makeover

    David Crookes meets two of the genre's most popular voices