Do politics have a place in the boardroom? Of course a lot of board decisions are political with a small p, with alliances formed at the country club and just reaffirmed in the boardroom. Or look at Jean-Marie Messier, former CEO of Vivendi Universal. His board was divided geographically – North America versus France – with French board members backing him and North American directors plotting his downfall, according to Vanity Fair magazine. North America won over France and now Messier is out.
What about big P politics? For example, does election politicking have a place inside the boardroom? It shouldn’t, but look at what’s happening in the US, with the boardroom as center stage for Republican and Democrat pre-election campaigns.
Vying for the votes of individual investors who lost their pensions to the hands of greedy executives, Republicans and Democrats are trying to prove who’s better at punishing naughty directors, CEOs, CFOs and auditors. The situation is awkward because it runs the risk of losing the needle (restoring investor confidence) in a haystack of legislation and SEC rule-making.
The whopping Sarbanes-Oxley Act was barely passed when Sarbanes, a Democrat, and Oxley, a Republican, were already publicly divided over what should have been left in or out. President Bush was already walking tall on Wall Street, hailing his ‘corporate responsibility act’ and dodging doubts about his and vice president Cheney’s own business dealings. Indeed, last month’s Democrat attack on SEC chairman Harvey Pitt looks like they’re searching for a scapegoat; Bush’s Republicans have already claimed Saddam.
The scale of the US market’s scandals, and their enormous effect on the lives of ordinary people, were bound to make them a campaign issue. Problem is that political campaigning is not the best way to bring about corporate reform. It’s costing companies lots of money to implement changes under the Sarbanes-Oxley Act and its follow-up SEC rules, and now is not the time to add expenses to damaged balance sheets.
Still, like debates on war against Iraq, there needs to be discussion and bilateral agreement about the path to reform. Indeed the unilateral US approach has met with complaints from foreign issuers listed in the US.
So where’s the corporate United Nations when we need it? Where are the leaders to launch a democratic, international agreement on corporate conduct? They’re still in boardrooms and corporate offices, silently plotting new ways to rebuild trust by example. Come out! Unlike what politicians would have you believe, it’s directors, CEOs, CFOs, accountants, auditors and IROs who hold the key to investor trust. It’s companies, you see, that need to be on the pre-campaign trail right now, winning back the hearts and minds (and dollars) of the public.
