The investment community needs to take a good look at itself over Tesco.
I know the focus is on whether the company will face a heavy fine from the Financial Conduct Authority, or a full-blown fraud probe. But we should look at why it has found itself in this state.
Only six years ago the financial crisis exposed a series of appalling governance failings in banking. Supine and under-qualified non-executives acted as rubber stamps for executives who presided over deficient corporate cultures. We know the result of that. As taxpayers we’re still feeling it.
Tesco is not a bank (although it owns one), but what appears to have been happening is still jarringly familiar: a chief executive (Philip Clarke) spending too much time on the executive floor and not enough on the shop floor; a complacent, deficient and hubristic culture in which his team couldn’t or wouldn’t alert him to the problems the company was facing; a board that sat back and let it happen; an investor base that did the same.
When the governance lobby kicks up a stink, it all too often gets accused of box ticking – of being populated by wonks who get in the way of businessmen chasing profits.
If we want to avoid another Tesco, perhaps it’s time to start giving the wonks their head.Reuse content