Posted By: Admin, 29 May, 2011 - 05:09 am
The furore surrounding the conduct of the former head of the International Monetary Fund (IMF) Dominique Strauss-Kahn and ex-Royal Bank of Scotland (RBS) chief executive Sir Fred Goodwin suggests issues such as transparency and disclosure are becoming increasingly important.
Earlier this month, Strauss-Kahn (pictured) faced two seemingly unrelated accusations of sexual assault, and a few days later, Goodwin was revealed to have obtained a ‘super injunction’, allegedly to prevent details of an extra-marital affair with a senior colleague being made public.
Following Strauss-Kahn’s arrest, he lost his IMF post and media chiefs in France began debating the wisdom of their decision to largely ignore previous allegations of sexual misconduct levied at one of their country’s most high-profile politicians.
Similarly, Sir Fred's critics believe he acted outside the remit of the UK's corporate governance framework by seeking to stop the British public scrutinizing his behaviour in the lead up to the financial crisis in 2008, particularly in light of the fact RBS owes its survival to a £20bn taxpayer bailout.
Both cases highlight how the private actions of an individual can have far-reaching implications for their professional career.
In Britain, an executive's personal life remains confidential in as far as it affects the company, but it’s a different ball game if the individual fails to uphold basic ethical procedures.
There's a thin line between encroaching on an executive's private affairs and ensuring the right procedures are in place to maintain the credibility and integrity of the company.
Sometimes, non-executive directors can be far-removed from the personal affairs of executive directors and this can be dangerous when their behaviour has detrimental implications for the company.
Nevertheless, a senior executive should never abuse their position, and those who do must be exposed.
Corporate governance practitioners are also concerned with reputation and brand management so when executives make decisions in high-profile cases, transparency and disclosure is always essential.
Although at the time it may seem like a good idea to cover up indiscretions, mistakes and or misconduct, the best way to really protect a business and its shareholders is to be as open and transparent as possible, and always operate in accordance with the code's procedures and policies.