The fact is, many good people -- too many -- fall into the trap of simply accepting that it is appropriate to use technicalities and loopholes to break the principles behind rules when they think they can get away with it or if someone else says they can get away with it. And that's how we lead to scandal upon scandal in the worlds of finance and politics.
Would you be surprised if I told you that Canadian corporations are contributing to a legal challenge against the U.S. government's foremost program to tackle climate change? That they are helping to fund an army of lawyers and lobbyists aggressively challenging climate regulations south of the border?
I suppose if Toronto weren't the only city in the world where -- at least freely and willingly -- the visible minority has become the visible majority, the picture of an all-white arts board, let alone an all-white anything board, wouldn't be so starkly offensive. But it is.
The essence of good risk management is asking appropriate questions and getting truthful answers. And so, if a CEO doesn't make it clear that he expects unethical behaviour to be outed by managers asking tough questions, then it probably won't be outed. This clearly didn't happen at Volkswagen.
Do you recognize any of these red flags? On a board or in a company of which you serve? Allegations of wrongdoing can put assets and reputation at risk. Regulators have enormous power, and are focusing their sights much more on the role a board plays, or does not play, in overseeing the affairs of the company.
Does Canada improperly have a false sense of governance superiority? Perhaps so. But in this rapidly changing field, if you rest, you are left behind. Nine years is sufficient rest.
In my teaching, research and consulting, I no longer use "NP-58201 Corporate Governance Guidelines," June 17, 2005 ("Guidelines"), that apply to publicly traded companies in Canada, as an example of exemplary corporate governance. Here are the ten deficiencies to the guidelines as I see them.
Over the past several years, Canada has seen an increasing number of high profile U.S. activist campaigns: Pershing Square's successful action against Canadian Pacific Rail; Jana Partners campaign against Agrium Inc.; Highfields Capital and Scout Capital's pressuring of Tim Hortons; and Orange Capital's campaign against InnVest REIT, among others.