There is no substitute for a culture of integrity in organizations. Compliance alone with the law is not enough. History shows that those who make a practice of skating close to the edge always wind up going over the line. A higher bar of ethics performance is necessary. That bar needs to be set and monitored in the boardroom.  ~J. Richard Finlay writing in The Globe and Mail.

Sound governance is not some abstract ideal or utopian pipe dream. Nor does it occur by accident or through sudden outbreaks of altruism. It happens when leaders lead with integrity, when directors actually direct and when stakeholders demand the highest level of ethics and accountability.  ~ J. Richard Finlay in testimony before the Standing Committee on Banking, Commerce and the Economy, Senate of Canada.

The Finlay Centre for Corporate & Public Governance is the longest continuously cited voice on modern governance standards. Our work over the course of four decades helped to build the new paradigm of ethics and accountability by which many corporations and public institutions are judged today.

The Finlay Centre was founded by J. Richard Finlay, one of the world’s most prescient voices for sound boardroom practices, sanity in CEO pay and the ethical responsibilities of trusted leaders. He coined the term stakeholder capitalism in the 1980s.

We pioneered the attributes of environmental responsibility, social purposefulness and successful governance decades before the arrival of ESG. Today we are trying to rebuild the trust that many dubious ESG practices have shattered. 

 

We were the first to predict seismic boardroom flashpoints and downfalls and played key roles in regulatory milestones and reforms.

We’re working to advance the agenda of the new boardroom and public institution of today: diversity at the table; ethics that shine through a culture of integrity; the next chapter in stakeholder capitalism; and leadership that stands as an unrelenting champion for all stakeholders.

Our landmark work in creating what we called a culture of integrity and the ethical practices of trusted organizations has been praised, recognized and replicated around the world.

 

Our rich institutional memory, combined with a record of innovative thinking for tomorrow’s challenges, provide umatached resources to corporate and public sector players.

Trust is the asset that is unseen until it is shattered.  When crisis hits, we know a thing or two about how to rebuild trust— especially in turbulent times.

We’re still one of the world’s most recognized voices on CEO pay and the role of boards as compensation credibility gatekeepers. Somebody has to be.

Boardroom of Felons

We have received a number of emails from readers who were shocked at the revelation, first brought to light on these pages, that, between them, the boards of Livent and Hollinger had seven directors who became convicted felons.  Here’s another gem:  three of them were trained as lawyers.  The number of felon directors on these boards sets a record for modern publicly traded corporations.  For those interested, here’s how the total was calculated:

Livent

A. Alfred Taubman, Director (convicted of price fixing, 2001)

Conrad M. Black, Director (convicted of mail fraud, etc., 2007)

Garth H. Drabinsky, Director (convicted of fraud, etc., 2009)

Myron I. Gottlieb, Director (convicted of fraud, etc., 2009)

Hollinger

A. Alfred Taubman, Director (convicted of price fixing, 2001)

Conrad M. Black, Director (convicted of mail fraud, etc., 2007)

F. David Radler, Director (convicted of mail fraud, 2007)

Peter Y. Atkinson, Director (convicted of mail fraud, 2007)

John A. Boultbee, Director (convicted of mail fraud, 2007)

 

Black, Drabinsky and Atkinson were trained as lawyers.

Gottlieb and Boultbee were trained as professional accountants.

Both Black and Drabinsky, during the time of the crimes for which they have been convicted, were members in good standing of the Order of Canada, the country’s highest civilian honor.  They remain so today. There is no indication if or when they will be stripped of that prized decoration, which, as we have long maintained, is a sad commentary on the distinction, on the men and women or who hold it and, especially, on those who are entrusted with maintaining the integrity of the award.

Outrage of the Week: The Day Canada’s Doors Closed to the Voice of the People

When Canada’s Parliament is reconvened on January 26th and gets down to any meaningful business, it will have met for a total of 13 days over the past half year. By that time, a new President and Congress will be in place in the United States along with the most comprehensive program to restart the economy since the 1930s.

Canada and the United States share a number of common attributes, which include family members, extensive trade, a similar culture -even David Frum- (more…)

Outrage of the Week: Ten Million Missing Canadians

Canada, too, needs to turn the political page.  That process is not assisted when citizens slumber while their political leaders tap dance silently across the stage in the dark, hoping that no one will notice how mediocre they really are.

Half-a-world away, in a country where hostile fire is heard on a regular basis, Canadians lined up to perform the sacred duty of every citizen: to vote.  In one advance poll, more than 75 percent of eligible citizens serving in the Canadian combat mission in Kandahar exercised their franchise.  Like their grandparents and great-grandparents, who, as members of the greatest generation fought to preserve democracy and defy madmen, they take voting seriously.  Many of their comrades in arms have died for that privilege even in this bleak far off land of discord.

In towns and cities across Canada, democracy had a less familiar and imploring face.  The line-ups to vote were shorter this year than in previous elections –shorter by 10 million voters.  Unlike the United States, which appears to be on the way to producing a record voter turnout, Canada set its own record:  its lowest voter participation in history.  Only 59.1 percent of eligible voters went to the polls in the federal general election which elected  301 members of the House of Commons and, by extension, the country’s prime minister.

Nothing about this election really clicked with the Canadian citizenry.  That seems odd in itself, given that the nation is at war abroad and battling a mounting economic firestorm at home.  Canada’s currency was plunging during the course of the campaign.  If a dollar falls in a forest of other currencies, will anyone hear it?

I suspect the more likely reason for this bout of apathy had to do with the perceived lameness of Canada’s national leaders.  They are essentially dull and unaccomplished individuals of rather unheroic character whose life stories, curricula vitae and inspirational oratory seemed to fall short on the old impress-o-meter. 

In the United States today, a phenomenon involving what we termed “the improbably presidential name of Barack Obama” is taking the American political landscape by storm.   Voters in record numbers have been registered.  Young people in historic waves are set to cast their ballots with an enthusiasm most doubted was possible. 

There has been a yearning among Americans for a different kind of leadership that is capable of rising above pettiness and straightjacket-type stereotypes.   The country has discovered that elections do have consequences.  As both the folly in Iraq and the recent crisis in capitalism confirm, when leaders and policies become disjoined from the interests and values of ordinary people, when the privilege of elites becomes paramount over the primacy of stakeholders, society can find itself navigating a very perilous minefield.

 America, once more, is preparing itself to write a new chapter in its historic experiment with democracy, and to pass the torch to a new generation of leader.  It is a necessary task in restoring confidence in American leadership abroad as well as the confidence of Americans in themselves and their institutions at home.  The journey along this road is both inspiring and riveting, and rarely uneventful.  America, it appears, loves times when it is about to make history.  No such prospect seems in the offing for Canada.

These facts may well account for what happened in that country last week.  So dramatic was the contrast between the two national election campaigns that the excitement emanating from the United States made the Canadian political scene look even more like the embalmed creation of the local undertaker than it normally does.  I’ve spent a lot of time over the course of 30 years working for and advising some who have held or aspired to the highest offices in Canada.   My experience compels me to make this personal assessment.

Canada had a history of electing grey haired elder statesmen as its head of government for generations.  Then John F. Kennedy was elected the 35th president of the United States.  Eight years later, Canada discovered a man who was viewed as its own JFK, in the smart, youthful and sometimes irreverent, world-travelled Pierre Elliott Trudeau.  He animated elections in a way that had never been seen before.  Voter turnout set a record.  He became Canada’s 15th prime minister and the rest of the world took note.

Someday the Canadian landscape will change again and find a new figure to excite weary generations, raising the country to new heights of self-confidence and global accomplishment, as Trudeau did.  It may be a leader who is not even on the horizon right now.  It might even be Trudeau’s son, Justin, who was just elected for the fist time to the House of Commons.  But someone will appear on the scene to reinvigorate this somewhat somnolent democracy that has taught many nations important virtues about governance and has stood tall when the cause of freedom was in peril.

None of this excuses the millions who could not be bothered to show up last week, however.  At a time when the nation has asked its young people to put their lives on the line, every Canadian had an obligation to at least support their troops by exercising the right to vote.  This is how citizens remind the governors that they are accountable to the governed.

Canada, too, needs to turn the page.  That process is not assisted when citizens slumber while their political leaders tap dance silently across the stage in the dark, hoping that no one will notice how mediocre they really are.  Such political types are not terribly bothered by the lack of turnout; they thrive in a climate of uninvolved citizens who are loath to ask hard questions or demand higher standards from the people seeking office.   Growth in an already over abundant class of untalented and self-serving politicians is never to be lightly tolerated.  So it is the shortsighted actions of those 10 million Canadians who never showed up that are our choice for the Outrage of the Week.

Outrage of the Week: Canada’s Feeble House of Commons Ethics Committee

If it were a crime for legislators to bring discredit to parliament, the MPs investigating cash payments to a former prime minister would long ago have been carted off and locked up.

outrage 121.jpgA lot of people I have talked with over the years view Canada’s system of government as something akin to a relative without personality: they’re nice enough to invite to the party but nobody will be terribly disappointed if they don’t show up.

Canada’s parliamentary-style democracy lacks the history and majesty of the British and misses out on the vigorous checks and balances that define the U.S. system. Its politicians, except for the few rare figures like Lester B. Pearson and Pierre Elliott Trudeau, seldom stand out on the world stage. And if you happened to be watching the action in Ottawa this week, the experience would have caused you to have an even lower opinion about how Canada is governed.

The House of Commons ethics committee investigating cash payments to former prime minister Brian Mulroney (he had always denied receiving any until recently, and those assurances formed part of the basis for the federal government paying out $2.1 million to settle his lawsuit with it in 1997) held more of what can only be charitably called hearings this week. It’s a committee that has demonstrated a chronic inability to engage in a straight line of inquiry with anything approaching discerning and well-researched questions. Even the fact that while he was prime minister, envelopes of cash were regularly being dispatched to the first minister’s official residence every month, seems to have gone over members’ heads. Can you imagine the scandal that would erupt in Washington if a former presidential chief of staff admitted that cash payments were being delivered like pizzas to the president and first lady at the White House? In Canada, it barely elicited a shrug.

Over the years, I have frequently been asked to testify before committees of both Canada’s House of Commons and Senate on ethics and governance issues. The experience generally leaves me astonished at the lack of preparation revealed in the questioning. But this House of Commons ethics committee really takes the prize.

Its members are often juvenile, unprepared and disgustingly partisan. Questions are disjointed and answers rarely followed up. The committee looked like a ship of fools when it was interrogating the former chef at 24 Sussex Drive, the prime minister’s official residence. Yes, I mean chef as in top cook. The committee seemed stunned that he had nothing of value to offer that would assist in its deliberations. A soupcon of arsenic might have been in the public interest.

One member of the committee has the unimpressive habit of curling his finger through his hair, which he wears with bangs, while questioning witnesses. The “questioning” part is generous; it’s really a whine delivered while mumbling.  Other members are so far over their heads that it is painful to watch. The committee chair lets the witnesses decide if they want to take an oath to tell the truth at the beginning of their testimony. His pedantic displays and facial contortions of impatience make all the lame vice principals I have known look like paragons of manliness and virtue. So lacking in backbone is this committee and its chair that when a witness refused to give evidence unless the chair recused himself, Liberal MP Paul Szabo obliged and turned the gavel over to another member. Try pulling that stunt on Chris Dodd, chairman of the U.S. Senate banking committee, or Barney Frank, head of the House financial services committee.

Yesterday, Canadians learned that Mr. Mulroney is refusing to re-attend the hearings to answer further questions. His lawyer claims he doesn’t need to and that he wants to move on. So now it’s the subjects of investigation and their lawyers who are running the show. The committee, which has the power to summons witnesses, apparently is not going to demand that the man who stands at the center of its inquiry, appear again. If it were a crime for legislators to bring discredit to parliament, the members of this committee would long ago have been carted off and locked up.

Canadians over generations have nobly opposed the onset of tyranny around the world and for that reason and others they are a people who deserve respect among the ranks of those who value freedom. It is a shame that they are so often underserved by the mediocrity of their elected representatives.

The ability of law makers to hold meaningful hearings on significant matters of public policy has been a central feature of American democracy. How many failures, cover ups and scandals would have gone undetected if it had not been for the fact that Congress can actually assert itself and demand answers? Testifying is generally not an option as a long line of figures from John Dean to Roger Clemens have discovered. It’s part of the checks and balances that make the American system, for the most part, the closest thing to a model of sound governance in the world today.

As this week’s antics in Ottawa revealed, the Canadian system is often so far removed from that model it’s hard to believe it inhabits the same planet, much less the same continent. The Ethics Committee of Canada’s House of Commons was given an important opportunity to strengthen public confidence in the political system. Instead, it did the opposite, which makes it our choice for the Outrage of the Week.


How Would You Like to be Remembered, Mr. Prime Minister?

Rt. Hon. Lester B. PearsonIn December 1957, a future prime minister of Canada received the Nobel prize for peace. In December 2007, a former prime minister is forced to explain to a skeptical country why he received envelopes stuffed with cash.

It is hard to imagine a more striking contrast in political character. Yesterday, Brian Mulroney, Canada’s 18th prime minister, appeared before a committee of parliament to explain why he took hundreds of thousands of dollars in cash from a businessman who wanted him to help sell armored vehicles when he left office. Rt. Hon. Brian Mulroney

Fifty years ago, almost to the day, the man who would become Canada’s 14th prime minister received the Nobel peace prize and the adulation of the world for his efforts to bring peace to the Middle East. (more…)