View from City Road: Why Germans are offered British role model

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Settlement of a last-minute blocking action in New York brought by Standard Chartered paved the way last night for a formal go-ahead for the rescue of Metallgesellschaft, the German engineering and trading conglomerate. But the repercussions rumble on, not least with a debate in Germany in which Britain is being held up as a model of good corporate governance.

This shift of cultural ground takes some getting used to, since it is Germany's corporate structures and long-term banking relationships that are often touted as examples for the UK.

Deutsche Bank, which led the rescue, is the target of much abuse in Germany because one of its directors was chairman of MG's supervisory board and did not know until too late what was going on.

In its own defence Deutsche claims that the top-level board is blameless and is dropping heavy hints that the fault lay with the executive board, saying all will be clear in two weeks' time when the true story is revealed to shareholders. This might be called the Queens Moat defence, or 'Nobody told us what was going on'.

Despite Deutsche's robust attitude, Ellen Schneider-Lenne, a member of its management board, said this week that German companies could learn from the best practices of Anglo-Saxon boards. She is on the board of ICI and Morgan Grenfell, so she should know. German supervisory boards, the top- tier bodies that have no equivalent in the UK, meet four times a year. British boards, including non-executives, meet most months, a better practice. She also suggested that German boards could adopt audit committees, members could take on fewer directorships and they should be tougher with executives.

Deutsche, of course, denies this weakens its defence in the MG case. After all, the Cadbury report acknowledged that no system of governance can prevent deception.

But in Germany, as in the UK, there must always be a nagging doubt that a little more aggression by supervisory boards or non-executives might have nipped in the bud some of the recent corporate disasters. The problem is not structures but directors' attitudes.