Corporate Governance Failures 'A Harsh Lesson'

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Corporate governance failures are the chief reason for the current economic trouble the world finds itself in, the head of the accountancy body deaing with the subject has said.

Andrew Chambers, the chair of the corporate governance committee at the Association of Chartered Certified Accountants, told the Financial Reporting Council that corporate governance in general, and not just within financial institutions, had "let us down".

He added that while various failures have been blamed for the current economic crisis, corporate governance failures are chief among them.

"Learning lessons from the past is crucial to making strides forward," said Professor Chambers in ACCA's submission to an FRC review of the FSA Combined Code on governance.

"Fine tuning of the current system will not resolve the problems, since it has not done so in the past.

"For instance, concerns about executive remuneration have continued to grow despite the succession of measures adopted on that matter since Greenbury in 1985." ACCA said it was also concerned about the role of non-executive directors.

Professor Chambers added: "A common feature of corporate governance debacles has been that boards, especially their non-executive directors, have been taken by surprise by events.

"ACCA believes that this is not unconnected to the ability of, and tendency for, top executives to control the flow of information to the board. …