OECD must now tackle corporate governance issue
Letter to the Financial Times
10 October 2008
The global financial crisis heightens the importance of addressing what needs to be done to remedy defects in the arrangements of corporate governance and accountability. Moves in the US and the UK to effectively nationalise banking entities previously in private ownership provide abundant evidence of the failure of Anglo-American corporate governance model to protect shareholder value, and the economic welfare of citizens at large.
A short while ago Gordon Brown, in an address to the Labour party conference, spoke, non-specifically, about the need for “a new settlement”. Any new settlement must surely include a fundamental review of the Organisation for Economic Co-operation and Development corporate governance arrangements.
The justification for independent supervisory board structures in promoting effective accountability of managers and company directors is overwhelming. In launching such an initiative the OECD and its advisers need to show courage in opposing the ideological resistance of the US to moves to improve and strengthen wider stakeholder interests through independent supervision. European Union nations, which generally support independent supervision, need to stand their ground if the opportunity to debate these issues afresh is not lost until the next crisis!
The Centre for International Economics