Wednesday, May 02, 2012

Imagine Rupert Rules

The majority of the UK Parliament Commons Culture Committee found deceit, dishonor and criminal behavior in News Corp. executives in and after the phone hacking affair. The report (conclusions beginning p. 84) ripped  the conglomerate's chair, Rupert Murdoch, in particular.

The punchline was best expressed by Labour MP Tom Watson, speaking for the majority. In addressing News Corp. and its request to acquire BSkyB broadcasting, he said (actually intoned may be better here), "We conclude, therefore, that Rupert Murdoch is not a fit person to exercise the stewardship of a major international company."

They roasted him and his son James for "willful blindness" and "ignorance" related to the affair.

So, suppose this leads to:
  • Rupert Murdoch stepping down as chair
  • New Corp. not getting BSkyB
Would that be any precedence there or here? Would immoral and scofflaw top execs be at risk of getting called out and maybe forced out? Would pressures by government committees or law enforcement force action in publicly held firms?

(Note that I have some observer interest here. I used to be number two editor at American Management Association's monthly Management Review magazine and the coordinating editor of the massive McGraw-Hill Handbook for Corporate Directors, among other business writing.)

I suspect that nearly everyone who does not get paid to sit on corporate boards views those bodies with a jaundiced eye. Again and again and again, board members live the fantasy. Their chosen execs are the best and brightest. They must provide fat base and bonus and other incentive to keep these brilliant leaders. Then when anyone, shareholder or otherwise, criticizes those execs or even levels charges of illegality or immorality, board members almost never act at all, much less toss the bums.

Such direct comments on corporations surely would be controversial at least. Likewise, in England, the Murdochs are hanging tough. Also, Conservative MPs are claiming raw politics and ignoring the many pages of documented charges.

I let my imagination run with this. If paid corporate boards, steeped in self-interest and behind a facade of high competence by themselves and their hireling refuse to self-police, we should ask who will — Quis custodiet ipsos custodes?

Surely one meaningful and necessary function of government would be to highlight illegal, unethical policies and actions of publicly held corporations. That should lead to crooks feeling forced out or alternately boards doing that watchdog part of their job.

As Martha is fond of saying, "It's a good thing.".


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