Public opinion formers as represented by  newspapers editorial writers (especially most of the editorial writers for the Guardian) and metropolitan chatterati  don't seem to get it yet.

 

 

Managers are greedy without doubt... but who let them behave that way?

 

Why be an entrepreneur?

 

The Pensions Regulator has struck down a deal between a company in distress, the pensions fund trustees and the Pensions Protection Fund, affecting 1600 pensioners. Why? Lack of transparency at the Pensions regulator serves no purpose whatsoever..... The UK arm of Readers Digest has been forced into administration after a deal struck with the American parent company, (in voluntary bankruptcy procedures) trustees of the pension fund and the Pension Protection Fund -- the "Pensions Lifeboat" -- was refused clearance by the Pension Regulator. The deal involved a £10.9m payment to the fund and the transfer of assets to the Readers Digest UK pension fund. There are about 1600 members of the Readers Digest UK pension fund who will be affected by this move and who could now see their pensions reduced since the Lifeboat will only cover 70% of proposed benefits. The details on which the refusal to clear the proposal were made have not ben made public. They may be very sound. Equally they should be made public so that pensioners, trustees, fund managers and companies all know the rules under which they are supposed to be playing.

Could there be a deeper agenda to the FSA s166 reviews of the banks.....?

THE WALKER REPORT --  a failure of nerve or a failure of understanding?

This last week has seen the publication of the Walker Report – the report commissioned by the Prime Minister in February to act as the pathfinder for changes in corporate governance in the financial sector.

Much had been anticipated of it as a guide to how things might change. In publication it bitterly disappoints.

The Press – tabloid and broadsheet – concentrated on the headline issue of the decision of the report’s author not to require banks name individual employees receiving large bonuses. Criticism of bonuses has generated much heat and little light -- it is a side issue, even though it may be an inflammatory and offensive one. Since the report refused the bait on that one the Press rapidly lost interest – and rightly so, since the Walker Report is a damp squib; eminently forgettable as to its main thrust.

Walker has muffed an opportunity to make real change in matters which do mean something – the mechanics of corporate governance. Either because he fails to understand what corporate governance is or, more likely, because he can see no reason for change since he has been too long on the inside looking out, Sir David Walker has produced an anodyne that will have no real effect. A report has been commissioned from one of the Establishment; he has reported. The conclusion is that no one is fundamentally to blame. The system is all right really -- it just needs some tinkering. Something has been done (but not anything worth while); the masses can go back to sleep while their grandchildren pay for the mess.

Recommendation after recommendation is nothing more than a description of what the current system already requires of actors in the corporate governance dance, with an occasional exhortation to take things more seriously. It is evident that most of them will not be: on the draft published on the Treasury website there is even the cryptic inclusion of a recommendation heading (No. 15) for which the text has been deleted; the authors evidently could not be bothered to re-number the recommendations or the thing was brought out by the Treasury with such disregard for its intended effect that they couldn’t be bothered to make it look workmanlike.

This sloppiness typifies the report. Either Walker’s took his remit lightly (which might be thought unlikely in a man who has a first class degree in economics from Cambridge; was deeply involved in sorting out Johnson Matthey Bank and sits on the boards of several prestigious international financial businesses) or his nerve failed him when he contemplated what he ought to recommend. Badly written, with poor punctuation and grammar, the work resembles in its clotted syntax a report written by someone who grapples with the concepts of governance.

In the first issue of the newsletter “Governance and Disclosure”, to be published from this website later in December, the report will be analysed recommendation by recommendation.

29/11/09

Posted 16/07/09

Throughout all the financial crisis, attention has been centred on one aspect --

Think of the chiefs of the large banks like a character from Mickey Mouse. Yes, i know it's hard  -- but try.

Think particularly of Fantasia -- and the Sorcerer's Apprentice sequence,  where Mickey dresses up in the magician's cloak (much too big for him), consults the book of spells and proceeds to get the brooms to carry water backwards and forwards to clean the floor of the magicians house. Hold that image in your mind while you read the rest of this note.