A feature of this recession has been the ongoing debate over who’s to blame. In this context, a variety of culprits have been cited. The regulator blames institutional investors. Sections of the media blame the regulator. The Daily Mail blames Gordon Brown. Some, it seems, are even blaming the PR industry.
In view of all this, it’s interesting to note the results of a Newsweek poll which reveals 85% of respondents place some blame at the door of the banks, while 73% allocate some blame to the Fed. Perhaps the most interesting thing about this poll, however, is the date – January 1991.
One group who seem to have emerged relatively unscathed from the blame game so far are non-executive directors. It’s only seven years since former Tory Trade and Industry Secretary, Lord Young of Graffham, raised eyebrows by calling for the scrapping of non-executive directors. As a parting shot from his then role as president of the Institute of Directors, Lord Young argued that unless directors could get to know a business as well as executive directors, “why bother?”
Derek Higgs, who was subsequently charged with producing a report on the role and effectiveness of non-executive directors, offered a rather more positive vision, and proposed a more important role for them in ensuring the interests of investors were properly represented at board level.
Perhaps it’s telling, then, that six years on from the Higgs review, this week’s FTfm features a piece from ICSA policy director David Wilson, which identifies the banking crisis with “a colossal failure of corporate governance”, and, in an echo of Sir Derek’s original report, calls for greater courage and understanding from non-execs.