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