Cap­i­tal­ism still re­fuses to use a safety belt

The Week Middle East - - News | Best Articles: British - Chris Black­hurst

How many more cor­po­rate dis­as­ters do we have to en­dure, asks Chris Black­hurst, be­fore reg­u­la­tors put a stop to reck­less prac­tices? Have we not learnt our les­son from the near-melt­down of the mar­kets ten years ago? The col­lapse of Car­il­lion shows we have not. A key safe­guard against such calami­ties is meant to be the over­sight ex­er­cised by non-ex­ec­u­tive di­rec­tors: un­der the 2006 Com­pa­nies Act, they’re re­quired to be mind­ful of the long-term in­ter­ests of a firm and its em­ploy­ees. Yet did the three non-ex­ecs on Car­il­lion’s board think it in the firm’s long-term in­ter­ests to run up a pen­sion-scheme deficit of more than £900m? Weren’t they both­ered that, in four years, Car­il­lion paid out £217m more in div­i­dends than it took in from its op­er­a­tions? Seems not. And don’t ex­pect the courts to en­force their “duty of care”. The law says it’s up to the com­pany to take le­gal ac­tion against a neg­li­gent di­rec­tor, even though the chance of a board bring­ing pro­ceed­ings against one of its own is mi­nus­cule. It’s not good enough: the law must change. “This con­spir­acy of pas­siv­ity has to stop.”

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