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EDITOR’S LETTER – No, Margaret, no, no, no.

Trade and industry secretary Margaret Beckett will give her formal reaction to the Hampel committee’s final report on corporate governance on 4 March. The initial soundings from the DTI are very worrying. “Good corporate governance alone does not lead to competitiveness and growth,” she said on publication of the report. “There is also a need to ensure the framework of self-regulation and company law works consistently to promote these ends.” We can hear the sound of a traditional Labour knee-jerk. Margaret Beckett’s ill-chosen words sound disturbingly like a threat to legislate “for” growth, “for” competitiveness. What next? Legislate “for” entrepreneurialism and innovation? Mrs Beckett is clearly underwhelmed by the Hampel committee’s final report. So are many others. But many of them have missed the point. The point of corporate governance simply cannot be to expose liars and crooks. “No system of control can eliminate the risk of fraud without so shackling companies as to impede their ability to compete in the marketplace.” This quote comes not from the wrongly-maligned Hampel, but from the much-praised Cadbury report, published six years ago. Quite simply, if company directors spend all their time ensuring that no wrong-doing is being committed, then their companies will spend all their time doing nothing. Both Cadbury and Hampel make it absolutely clear that boards must be free “to drive their companies forward”. Mrs Beckett, take note. Good corporate governance should mean that information disclosure is paramount, that deviation from best-practice is to be allowed, but explained. If investors find such explanations wanting, then they can assess the risks involved and, if they so choose, vote with their feet or their proxies. The investor – and boardroom – complacency that comes from having a list of satisfactorily ticked boxes is no longer acceptable in corporate Britain. The alternative – the Hampel alternative – is one which will drive best practice forward – and devil take the hindmost.

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