Author of corporate governance reforms dies in hospital after being taken illSir Derek Higgs, the man responsible for overhauling UK corporate governance in the wake of the Enron and WorldCom disasters has died suddenly at the age of 64.A statement from Alliance and Leicester, where he was company chairman, said: ‘It is with deep regret that Alliance & Leicester announces the unexpected death of its chairman, Sir Derek Higgs, at the age of 64. He was taken ill suddenly yesterday, 28 April, and died in a London hospital yesterday afternoon.’Sir Derek qualified as a chartered accountant with Price Waterhouse before moving to Barings and then to SG Warburg where he remained for almost 25 years. He became chairman of Alliance and Leicester in October 2005.See full...
Following is a letter sent to the Editor of the Financial Times:It is very good news when a senior manager of a financial institution who has presided over billion euro losses decides to take some responsibility! We have not seen enough of this in Europe (“Bouton to step down as SocGen chief” FT April 17 2008)Keeping the chairmanship is hardly stepping down and taking responsibility.The fact that the executive team heading up Société Générale could secure additional capital from shareholders after having let a junior executive run up billion euro losses continues to amaze and raises questions about shareholders who, not only don´t hold their managers to account, but reinvest their capital for these same managers to mismanage, raises questions about some fund managers as well.If...
Anybody with the slightest training or even interest in business strategy is probably familiar with Michael's Porter's famous 5 Forces Model. It would be no exaggeration to say that this model fundamentally re-defined the field when it was first published back in 1979. Here's a link to a short interview with him (12:57 minutes) on the relevance of the 5 Forces in today's world. Well worth watching. The page also has a link to an article by Michael Porter in the January 2008 Harvard Business Review, updating his model.See...
Sen. John McCain has caught St. Augustine’s bug: Give me higher energy taxes to dissuade consumption, but not this summer—not while I’m running for president.The Republican senator, who’s spent years fine-tuning big climate-change legislation that would curb greenhouse-gas emissions over the next fifty years, doesn’t want to start curbing just yet. Associated Press reports:To help people weather the downturn immediately, Sen. McCain urged Congress to institute a “gas-tax holiday” by suspending the 18.4 cent federal gas tax and 24.4 cent diesel tax from Memorial Day to Labor Day. He also renewed his call for the U.S. to stop adding to the Strategic Petroleum Reserve and thus lessen to some extent the world-wide demand for oil. Combined, he said, the two proposals would reduce...
If the Pope were really ashamed he wouldn´t have those running his church in the US still in their posts. Those are the ones that moved their criminals around from parish to parish in order to avoid taking responsibility, with the additional scandal that these continued in their criminal activities with new unsuspecting children.And the US is not the only country where the Pope´s priests are running wild.Less talk of shame and more action!Onésimo Alvarez-MoroSee article:Pope arrives for first U.S. visit, vows to keep pedophiles out of priesthood.Pope Benedict XVI arrived Tuesday in the United States to a presidential handshake and enthusiastic cheering, a warm welcome that followed the pontiff's candid admission hours earlier that he is "deeply ashamed" of the clergy sex abuse scandal...
The crisis of surging food prices could mean “seven lost years” in the fight against worldwide poverty, World Bank President Robert B. Zoellick said.“While many are worrying about filling their gas tanks, many others around the world are struggling to fill their stomachs, and it is getting more and more difficult every day,” Zoellick said at a press briefing on the eve of the IMF-World Bank Spring Meetings.To meet this crisis, Zoellick is calling for a “New Deal on Global Food Policy.”For the “immediate crisis,” he urged governments to fill the US$500 million food gap identified by the UN’s World Food Program.Under the New Deal, the World Bank will nearly double agricultural lending to Sub-Saharan Africa over the next year to US$800 million to substantially increase crop...
Big firms are joining the queue to follow in Muhammad Yunus's footsteps by developing businesses designed to fix social ills.Muhammad Yunus has for more than 30 years challenged business leaders to find radical ways of creating new markets in poor countries. The Nobel Peace Prize winner's latest book, “Creating a World Without Poverty: Social Business and the Future of Capitalism”, is no less ambitious. It explores how big companies can invest in external partners to develop products and services that will benefit the poor.Yunus outlines the concept of a “social business”, which he defines as a “no loss, no dividend” company with social objectives. Social business ventures are set up by a “social entrepreneur”, such as Yunus, who combines the risk-taking of enterprise with...
John Griffith-Jones says a 'kitemark' would require individual auditors and firms to sign-up to an increased level of responsibilityJohn Griffith-Jones has called for 'kitemark' standard for audit reports, arguing that, with hindsight, accounts can turn out to be 'spectacularly wrong'.'No amount of words in the auditor’s opinion will change that fact,' the co-chairman of KPMG Europe said.Griffith-Jones asked the profession to consider re-thinking the role of public company audits and suggested the current 'expectation gap' could be closed with a 'new approach' and new contract.See full...
I wonder where the mea culpa is for having been at the helm when the highest inflation in 15 years appears.Does not Mr. Trichet realise that his inaction in not increasing rates since when he took his post was directly responsible for where we are today?An inconvenient fact so not to be mentioned!Onésimo Alvarez-MoroSee article:The global financial turmoil could last longer and have a broader impact on the eurozone economy than previously expected, the European Central Bank warned onThursday, even as it underlined its hard-line stance on inflation by leaving interest rates unchanged.Comments by Jean-Claude Trichet, ECB president, highlighted the risks and uncertainty the Frankfurt-based institution sees surrounding the eurozone economic outlook. But with inflation at 3.5 per cent, the...
Good idea......well done!Onésimo Alvarez-MoroSee article:UN Secretary General Ban Ki-moon will not attend the opening ceremony of the Beijing Olympics, an aide has said.The decision was due to "schedule issues" and had been made months ago, said UN spokeswoman, Marie Mukabe.Meanwhile, Buenos Aires is braced for Friday's Olympic torch relay after anti-China protests in other cities. See full...
Renowned economist Muhammad Yunus, who won the Nobel Peace Prize in 2006 for his leadership in the field of microcredit, visited UBC Friday to receive an honorary degree and participate in a colloquium on social corporate responsibility.Known as “the world’s banker to the poor,” Yunus has extended more than $6 million in small loans to more than 7 million of the world’s poor through Grameen Bank, which he founded in Bangladesh in 1983. These loans have helped thousands, many of them women, to achieve financial independence.Yunus had accepted UBC’s invitation in 2006 to receive an honorary degree; however, his visit was postponed when he and Grameen Bank were announced as co-winners of the Nobel Peace Prize. He now receives his degree as part of UBC’s Centenary celebrations.See...
The US Treasury Secretary launched this blueprint today for how to upgrade the financial regulatory system.Onésimo Alvarez-MoroGo to full Blueprint, in pdf...
Securities and Exchange Commission Chairman Christopher Cox today sent the following letter to the chairman of the Basel Committee on Banking Supervision expressing strong support for their planned updated guidance on liquidity management for banking organizations in light of the recent market turmoil.Re: Sound Practices for Managing Liquidity in Banking OrganizationsDear Dr. Wellink:I am writing in connection with the announcement by the Basel Committee on Banking Supervision that your Working Group on Liquidity intends to update the February 2000 guidance entitled "Sound Practices for Managing Liquidity in Banking Organizations" in light of the recent market turmoil. I strongly agree with you that the events earlier this month leading up to the acquisition of Bear Stearns by JP Morgan...
If you don’t think climate change produces winners as well as losers, consider this: In the 12th and 13th centuries England exported wine to France. Vineyards also flourished in improbable regions like southern Norway and eastern Prussia. A centuries-long spell of mild, predictable weather blessed Western Europe with abundant crops, healthy populations and budget surpluses sufficient to finance projects like Chartres Cathedral.This is the credit side of a global balance sheet carefully itemized by Brian Fagan in “The Great Warming,” his fascinating account of shifting climatic conditions and their consequences from about A.D. 800 to 1300, often referred to as the Medieval Warm Period. The debit side is appalling: widespread drought, catastrophic rainfall, toppled dynasties, ruined...
Perlis Mentri Besar-designate Datuk Dr Md Isa Sabu has promised more transparency in the state administration and pledged a "sincere and honest" way of governing.The Bintong assemblyman, who was part of a political impasse over the Menteri Besar post since Friday, also hinted a "total" change of the state leadership, administration and management.On getting more investments, Md Isa said the state government would seek expertise from Perlis' sons and daughters who work and live in Kuala Lumpur. Job opportunities among the youth and skilled was also a priority in his administration. All federal-level projects like the Northern Corridor Economic Region would continue under the new leadership and there was a need for equal distribution of opportunities, especially of state development...
In response to a series of corporate scandals, Congressman Michael Oxley and Senator Paul Sarbanes sponsored the Sarbanes-Oxley (SOX) Act of 2002. Conceived as an investor protection law, this wide-ranging legislation impacted U.S. public companies in many ways. Supporters of these reforms applaud SOX as necessary and useful, while critics have consistently voiced concerns over cost and resource requirements of compliance. It’s time to take another look.Highlights: * Has the impact of SOX been predictable? Or have there been surprises? (5:48) * Do Section 404 provisions focus too narrowly on short-term results? (16:23) * How would you assess the impact of SOX on the marketplace? (25:09) * Is there a measurable performance strategy available to companies that will enable them...
It is good that someone is mentioning the unpleasant facts.Onésimo Alvarez-MoroSee article:Haile Gebrselassie says he could go back on his decision to withdraw from the marathon at this year's Olympics.The 34-year-old, who suffers from asthma, had announced that he would not race in the showpiece event because of the high pollution levels in Beijing. See full...
Mr. Spitzer in his resignation speech stated that he has always believed that, in all matters, a person needs to take personal responsibility for his actions, regardless of power and position, and that he was not going to be an exception. Sounds very nice!What he really means is that a person takes responsibility for his actions, but only when he is caught and then only after waiting a couple of days to test the political fallout, before taking responsibility.Not exactly the same thing!Onésimo Alvarez-MoroSee article:Gov. Eliot Spitzer, whose rise to political power as a fierce enforcer of ethics in public life was undone by revelations of his own involvement with prostitutes, resigned on Wednesday, becoming the first New York governor to leave office amid scandal in nearly a century.The...
Given all the failures that this company has demonstrated with its lack of adecuate corporate responsibility and ethics, it sounds good.Let us wait for the action rather than just the words!Onésimo Alvarez-MoroSee article:It would be hard enough under any circumstances to become the first outsider named to lead a 161-year-old global conglomerate, but Peter Löscher faced a unique challenge last summer when he assumed the reins at Siemens AG -- the German-based engineering and healthcare giant.The 49-year-old president and CEO of Siemens -- who spoke recently at the Wharton Leadership Lecture series -- openly acknowledged that his first and most difficult task after taking the job last July was dealing with the aftermath of a scandal that included allegations of bribes to foreign...
Outgoing Axa chairman Claude Bébéar says accounting rules cause market volatilityClaude Bébéar, the outgoing Axa chairman and one of France's most influential capitalists, has said accounting rules requiring companies to value assets at market prices has contributed financial volatility.The Financial Times reports that Axa chief executive Henri de Castries also criticised the rules and branded the mark-to-market method as a 'conceptual mistake'.The accounting treatments had created accounting losses that were not economic losses, de Castries claimed, resulting in many current write-downs being reversed in a few years.See full...
A roomful of Oklahoma City accountants heard former Congressman Michael Oxley defend the sweeping corporate governance act that he helped to create in 2002, a measure considered onerous by many in the accounting field.The Sarbanes-Oxley Act, adopted in 2002, restored investor confidence in public markets shaken by scandals involving Enron, WorldCom, Adelphia, Tyco and Global Crossing, Oxley said. That confidence has helped boost the value of the vast majority of the public companies affected by the measure."The whole goal of the act was transparency and accountability and better corporate governance, therefore restoring investor confidence,” Oxley said.But implementing the new rules was an expensive proposition for public companies. In Oklahoma, several small public companies chose to...
A senior Democratic lawmaker on Tuesday asked the heads of the U.S. and international accounting rule-making bodies how they can improve transparency of securitized and off-balance sheet assets, such as those linked to subprime mortgages.In letters sent to Financial Accounting Standards Board (FASB) Chairman Robert Herz and International Accounting Standards Board (IASB) Chairman Sir David Tweedie, U.S. Senator Jack Reed asked what the rule makers are doing to offer investors more advance warning on the types of losses companies that sponsor those assets could face."Recent events arising from subprime lending, in which estimates of losses now range from $300 to $400 billion, have only served to highlight the need of investors for timely and complete financial information regarding off...
Securities and Exchange Commission Chairman Christopher Cox today issued the following statement regarding the progress report presented by the Advisory Committee on Improvements to Financial Reporting: "The Advisory Committee on Improvements to Financial Reporting today presented to the Commission a progress report on the Committee's work to date. This is an important step toward making financial information more useful for investors and reducing unnecessary complexity. I have asked the SEC's professional staff to analyze the report and its proposals, and to provide recommendations to the Commission for possible consideration later this year. I thank the Committee members for their diligent work to date and look forward to additional proposals and recommendations as the Committee...
If Sarbanes-Oxley taught CFOs anything, says Cynthia Jamison, national director of CFO services at Tatum LLC, it was to admit they didn't know everything. Now, she says, it is time for those who still want careers in finance to rethink how they do their jobs.See...
Across the pond, one of the most influential voices these days in corporate governance is L&G Investment Management's Mark Burgess. He heads corporate governance for the insurer which this month transferred some $39.4 billion in assets from Hermes to its index-tracking fund division, making it the largest investor in U.K. stocks.In a profile today, The Financial Times reports that L&G owns 4.7 percent of the U.K. stock market and "usually ranks among the top three investors of any U.K. company. That immediately propels Mark Burgess, head of corporate governance at L&G and its active equity funds, centre stage in any dispute between shareholders and companies.See full...
More than a decade ago, when he was head of peacekeeping for the United Nations, Kofi Annan oversaw the blue helmets who failed to prevent the massacre in Srebenica and the slaughter of Tutsis in Rwanda. Those twin tragedies have tarnished his reputation ever since, even after two terms as secretary-general. Now retired, Annan has been asked to mediate in Kenya, where tribal killings that began after a disputed presidential election on Dec. 27 continue to rage. He spoke with NEWSWEEK's Scott Johnson about the talks, which showed some progress at the end of the week, and the shadow of those past crises. Excerpts:Johnson: Where do the Kenya talks stand?Annan: We're now at the critical item of resolving the political crisis. The two sides have stated their cases. The government side feels...
Billionaire investor Carl Ichan on Tuesday said he is establishing a blog to discuss ideas on corporate governance, an area in which he has strong opinions."This country is losing its economic hegemony," Icahn said at a corporate governance conference in New York. "I want to see who is interested in this. I really think there's a lot to do."The blog, whose URL is www.icahnreports.com, will be a forum where readers can respond or present ideas and Icahn will respond.See full...
McCreevy says EU will continue to focus on accounting, auditing, reinsurance and mutual recognition of securities and that existing files in the financial markets regulatory dialogue would not be affected by recent market turmoilCharlie McCreevy and Christopher Cox have been lauded with the prestigious Atlantic Leadership Award by the European-American Business Council.McCreevy - a European Union Commissioner for Internal Market and Services - and Cox - chairman of the US Securities and Exchange Commission - received the award on Friday, in recognition of their work in addressing issues of evolving transatlantic economic cooperation and regulatory harmony.See full...
by John W. White, Director, Division of Corporation Finance, U.S. Securities and Exchange Commission at the 35th Annual Securities Regulation Institute, San Diego, CaliforniaGood morning. Thank you David [Van Zandt]. I'm very pleased to welcome all of you to the 35th Annual Securities Regulation Institute. It is my privilege and honor to be chairing the program for the first time this year, and I thank each of you for being here. I believe we've put together a great series of panels for you over the next few days and I'd like to take this opportunity to thank everyone who has worked so hard to make this all happen. Our highlight will be at lunch today, when former Chairman of the SEC, David Ruder, who has been so closely associated with the Institute for many years, will give the Alan B....