There is no substitute for a culture of integrity in organizations. Compliance alone with the law is not enough. History shows that those who make a practice of skating close to the edge always wind up going over the line. A higher bar of ethics performance is necessary. That bar needs to be set and monitored in the boardroom.  ~J. Richard Finlay writing in The Globe and Mail.

Sound governance is not some abstract ideal or utopian pipe dream. Nor does it occur by accident or through sudden outbreaks of altruism. It happens when leaders lead with integrity, when directors actually direct and when stakeholders demand the highest level of ethics and accountability.  ~ J. Richard Finlay in testimony before the Standing Committee on Banking, Commerce and the Economy, Senate of Canada.

The Finlay Centre for Corporate & Public Governance is the longest continuously cited voice on modern governance standards. Our work over the course of four decades helped to build the new paradigm of ethics and accountability by which many corporations and public institutions are judged today.

The Finlay Centre was founded by J. Richard Finlay, one of the world’s most prescient voices for sound boardroom practices, sanity in CEO pay and the ethical responsibilities of trusted leaders. He coined the term stakeholder capitalism in the 1980s.

We pioneered the attributes of environmental responsibility, social purposefulness and successful governance decades before the arrival of ESG. Today we are trying to rebuild the trust that many dubious ESG practices have shattered. 


We were the first to predict seismic boardroom flashpoints and downfalls and played key roles in regulatory milestones and reforms.

We’re working to advance the agenda of the new boardroom and public institution of today: diversity at the table; ethics that shine through a culture of integrity; the next chapter in stakeholder capitalism; and leadership that stands as an unrelenting champion for all stakeholders.

Our landmark work in creating what we called a culture of integrity and the ethical practices of trusted organizations has been praised, recognized and replicated around the world.


Our rich institutional memory, combined with a record of innovative thinking for tomorrow’s challenges, provide umatached resources to corporate and public sector players.

Trust is the asset that is unseen until it is shattered.  When crisis hits, we know a thing or two about how to rebuild trust— especially in turbulent times.

We’re still one of the world’s most recognized voices on CEO pay and the role of boards as compensation credibility gatekeepers. Somebody has to be.

Finlay ON Governance Year End-Awards | 2009

Year End Awards 09

A year where, on Main Street, dreams slipped further away, but, on Wall Street, the path was cleared for yet more pay.  Government missed the dots again with a terror attack narrowly escaped, and Turbo Populism came knocking at the White House door, promising a political landscape to be reshaped.

Here again, for our fourth year, the Finlay ON Governance Annual Awards for the highs and lows of business and government leadership.


Barack Obama, who arrived in the White House in January on an unprecedented wave of optimism born of the promise of inclusiveness and the pursuit of a new kind of politics.

China’s President Hu, for making the world bow to the economic might of this increasingly powerful regime while backing away from challenging its human rights failures.

General Stanley McChrystal, commander of the Afghanistan theater, who stood up to the President and got him focused.

Ford CEO Alan Mulally.  No bailout.  No bankruptcy.  Big comeback.

Joe Biden.  Enough said.  (He’s wise to let his alter ego on Saturday Night Live do all the talking.)

U.S. District Judge Jed Rakoff, who stood up against the sweetheart deals the SEC is too used to making, this time with Bank of America, and struck a blow for investors and taxpayers in the process.

Wall Street and the big banks.  Free markets saved from self-inflicted disaster by taxpayer bailouts and profits fueled by zero interest rates.   The cost to society and to the economy is being measured in the trillions of dollars and in millions of shattered dreams on Main Street.  But on Wall Street, the only logical response was to bring on the mega-bonuses again.  More far-reaching than any Bernie Madoff scheme, this may be the biggest scam of the century.

Former Canadian prime minister Jean Chrétien and former finance minster Paul Martin, under whose leadership in the 1990s Canadian banks were prohibited from merging and weakening Canada’s banking laws.  The failures and excesses of the banking sector in the United States make these Canadians look visionary.


Barack Obama, who, by the end of the year was facing a Congress divided as never before, a plunging job approval rating and an alarming segment of the population who believe the country is on the wrong track.  He now rides a train that will lead to major Republican gains by the end of 2010 if current trends continue, and is witnessing the rise of what we call Turbo Populism, a combination of discontent over economic disparity, government overreach and skepticism about the motives and actions of entrenched interests.  Think, for instance, about the vocal reaction at the health care town hall meetings over the summer, the Tea Party demonstrations and the immovable populist stands of organizations like  There are counterparts to these grass-roots upheavals elsewhere in the world, including Iran.  It is a trend that promises to be an unsettling force in 2010 (see upcoming post).

Janet Napolitano, Secretary of Homeland Security, who claimed the “system” worked well immediately after a foiled terrorist bombing attempt on Flight 253 in December.  She did not inspire confidence in the first major test of her job.  She failed to call it what it was: a botch of unheeded signals, and presided over complete chaos in the introduction of new rules for airport screening.  Not a job for stand-ins or trainees, her shaky performance has already given former Vice President Cheney fresh material and is bound to give the White House cause to start thinking about a replacement.

Ken Lewis, who turned a profitable Bank of America into a debacle.  Former Merrill Lynch CEO John Thain, who decorated the office of his money-losing firm like a frilly French king.  Goldman Sachs CEO Lloyd Blankfein, who seemed to establish a new denomination by claiming he was doing “God’s work” all the way to the bank, leaving many to wonder about his judgment –“last” or otherwise.  Robert Nardelli, who, after being forced out of Home Depot and leaving a huge mess behind, presided over the collapse of Chrysler.

Canada’s Prime Minister Stephen Harper, who was rebuked by the Chinese premier while on a trip to that country and was utterly invisible at Copenhagen, except at the lunch table.  He has extended parliament’s winter break until March 2010 and will be appointing –yes, appointing– new senators in the meantime.  Canada is known for its long winters, but not until now for the fact that its democracy also falls into hibernation.

The American taxpayer, who is still footing the bill for the financial foolery of bonus-obsessed bankers and Wall Street titans, and making them richer in the process, while unemployment on Main Street rises to a U-6 rate nearing 18 percent and the middle class and small business are left still falling behind.

The U.S. dollar, which we predicted in our 2008 year-end awards would continue its decline as a result of dubious fiscal and monetary policies.

Planet Earth.   Amid melting ice caps, a shrinking Greenland, disappearing lakes and drastic changes in water levels, there were great hopes that the most concerted effort in history among global nations to arrive at a meaningful reduction in carbon emissions might produce real results.  Instead, it produced a statement of good intentions, which some regard as a commendable first step.  Steps are not what is required.  Huge leaps are.  Future generations will not look kindly upon this Munich of the morally-misguided and the environmentally blind.


Health Care Reform.  A big gamble in any presidency, as failed efforts in the past will attest.  If a compromise deal emerges that still resembles the kind of reform that is desperately needed, President Obama will deserve the credit for putting it on the agenda.  If it does not, and the effort stumbles –again– all bets are off for any future reform, and the President will have lost considerable political capital both within his own base and in the country.

Treasury Secretary Timothy Geithner.  Never having fully explained his role as a top regulator at the New York Fed (where he was president for five years) in permitting the conditions that led to the financial meltdown, it is unclear that he can or will turn away from an over emphasis on supporting banks and Wall Street and give his full attention to Main Street.  His role in pushing passage of financial reform legislation has also been disappointing (see below).

U.S. financial reform. In the nearly 18 months since Lehman Brothers collapsed, sending global credit markets into turmoil, not a single piece of major financial reform legislation has been enacted.

The board of directors as an institution.   After a full century of repeated scandals highlighting the need for reform, directors at bailed-out financial institutions and top corporations have proven themselves incapable of actually directing in the interests of either shareholders or society, but amazingly found the time to preside over the greatest accumulation of wealth by CEOs in the history of modern capitalism.

Michael Ignatieff’s leadership of Canada’s Liberal Party.  Other bright Liberals, like John Turner and John Evans, were destined for political greatness, too.  They landed in oblivion.  Lessons?  Don’t assume anything.  Get a crisp mission that resonates and stick to it.  Get lots of advice from outside the box.  And dressing like a leader might help.  (Consult B. Obama’s tailor).


Fraudulent elections in Iran involving Supreme Leader Ayatollah Ali Khamenei and President Mahmoud Ahmadinejad and in Afghanistan under Hamid Karzai.  The desperate acts of thugs and tyrants who cling to the imprimatur of democracy seldom have a happy ending, especially for the thugs and tyrants.

The SEC’s ineptitude in failing to discover Bernie Madoff’s massive Ponzi scheme, despite repeated warnings.

GM and Chrysler boards, which, despite years of flashing warning lights, finally ran out of gas and turned to the government’s pump for the survival of these iconic brands.

Canwest Global Communications, which sought bankruptcy protection and was de-listed from the Toronto Stock Exchange, showing the debt-plagued empire’s controlling shareholder Asper family to be way over its head.

Livent’s founders Garth Drabinsky and Myron Gottlieb.  Long seen as fraudsters by fleeced investors in the defunct entertainment company, the duo was finally sentenced to significant prison time, which has been a rare event in Canada.

Nortel.  A good idea killed (as we predicated) by bad leadership, clueless boards, and ethical lapses.  True to form, pension holders got dumped; existing bankruptcy management got huge bonuses.


The total mismanagement of the U.S. Treasury’s hodge-podge of bailout and prop-up plans, from the $700 billion Troubled Asset Relief Program (TARP) and the $1.5 trillion Temporary Liquidity Guarantee Program (TLGP) to the $1.4 trillion Government Sponsored Entity Purchases (GSEP) and the $1.4 trillion Commercial Paper Funding Facility (CPFF), and many, many more hugely expensive programs beyond.  They are beyond the capability of ordinary citizens, and probably those exercising Congressional oversight functions as well, to understand and monitor.  Their ultimate costs and benefits are unacceptably lacking in transparency, as are details regarding a number of Fed schemes, which it refused to disclose.  These programs were forced substantially as a consequence of concoctions in the banking world that were excessively complex, overly opaque and impossible for investors, and very often boards, to comprehend.  The same shortcomings should not be permitted to impair understanding and scrutiny of the so-called solutions.

Reappointment of Ben S. Bernanke as chairman of the Federal Reserve System.  He was blind to the coming financial storm, created an rescue economy dependent upon free money for banks, and gave Goldman Sachs and others billions more than necessary, while trying to keep it secret.  Now, he’s creating a new bubble buying up mortgages and financing government debt that, when it bursts, will make the global reaction to the Lehman bankruptcy look like a soft breeze.

The decision by the Obama administration, announced in the last week of the year, to place an unlimited federal guarantee on all mortgage losses by Fannie Mae and Freddie Mac.  Previously, the cap was placed at $200 million for each these financial wards of the state, but the consensus at Treasury was that this would likely not be enough to cover future losses. Add to this, a further bailout for GMAC (below) and questions emerge as to how strong the economy is and how much taxpayers will wind up paying.

Bailing out Chrysler.  The private equity-owned company that did not want any public shareholders, but required taxpayer money, is headed into oblivion.  Related blunder:  U.S. Treasury giving GMAC a third bailout in late December, leaving private equity firm Cerberus, whose CEO never appeared before any Congressional committee overseeing the bailouts and who refused to put any more of its own money into GMAC or Chrysler, laughing all the way to and from the bank.


We are struck by the idea –espoused by various chambers of commerce, think tanks and certain commentators– that only free market capitalism is the solution to the economic ills now facing the world.  Of course, the system is an important component in a democracy where freedom of choice and expression are fundamental.  But what exactly do these selective advocates of Adam Smith’s theory think the trillions pumped into the economy to prop up and bail out banks, Wall Street and the financial system over the past 18 months was all about?  Twice in the past 100 years, dire economic crisis has followed excesses in the market and failures in its responsible governance.  Even former Fed chairman Alan Greenspan recognized the most recent failure in this regard.  And it has always taken Main Street to pay for the damage that an over-indulgent Wall Street, never having the grace or wisdom to tell when the party is over, has wrecked.  It does a disservice to capitalism to pretend the past did not happen and only shows that it is entrusted to people who do not understand either its limits or its moral obligations.  Their faulty claims make them sound like fools baying at the moon of laissez-faire cheese.  Enough already!


Prison-based commentaries, published in a major Canadian newspaper and elsewhere, from Conrad M. Black, who writes about business, ethics and morality as if he were an innocent bystander and not a convicted felon currently serving time.  This is not the example young people need on these important topics.


Canada’s Health Care System. In the wake of the bitter health care debate in the U.S., Canada’s single-payer system looks pretty good.  The product of a ground-breaking consensus in the 1960s involving political parties and leaders on all sides of the spectrum, it has helped to reduce manufacturing and small business costs and made access to health care by most Canadians possible.  Far from a socialist scheme, it is estimated that 75 percent of Canada’s health care services are delivered privately.  It has its problems, to be sure, but looking at the divisive battle that has occurred in the United States, Canada’s system is something to be grateful for.  It was an idea that began in Saskatchewan with then-NDP premier Tommy Douglas.  But before anyone scoffs at its origins, they should be advised that Mr. Douglas was the grandfather of Kiefer Sutherland, otherwise known as Jack Bauer of the hit Fox series 24.  And nobody messes with Jack.

Rep. Ron Paul’s (R-TX) proposal, adopted by a committee of the House in November, to audit the performance and decisions of the Federal Reserve System, including its monetary policy.  A move long overdue.


Too big to fail.  It didn’t work for the Titanic, either.  The only thing worse is the sight of the Fed continuing to act as head waiter to Wall Street.

Zero-interest giveaway. Central bankers of the U.S. (under Fed chairman Bernanke) and Canada (under Bank of Canada governor Mark Carney) are stuffing billions into the bottom lines of major banks and financial institutions, while taking from seniors, savers and other prisoners of fixed-income products.  Economic recovery is not created by pitching money at Wall Street or Bay Street. These guys catch; they don’t throw.

Throwing money on the sidewalks.  Lavish spending by Canada’s Conservative government in preparation for the gathering of G8 nations in June would make drunken sailors look like paragons of fiscal management.  Even distant communities miles away from the meeting’s location in Huntsville, Ontario have been given so many millions that they have become giddy.  Not enough to reduce local taxes, however, whose hikes over the past few years have been higher than anywhere in the country, in some cases. Orders from Ottawa to spend it fast are causing a boom in new street lamps, sidewalks and benches which no G8 participant will ever see.  For some towns, it’s like the money is on fire.  One local weekly newspaper captured the moment this way in a December headline:  “Town Rushing to Spend G8 money.”  Every billion-dollar boondoggle has its feet planted firmly in a multitude of million-dollar fiascos like this.


White House chief of staff Rahm Emanuel, who was unable to keep the President focused or to manage expectations effectively.  He failed to preserve Mr. Obama’s popular support in the polls and blundered in managing the health care debate, where Senator Joe Lieberman, of all people, gained the upper hand.  Most of all, the Emanuel-run White House has produced a united and energized Republican party, which was otherwise planning to stay in the dumps much longer as a result of Mr. Obama’s decisive win.  Now the door is opened to major GOP gains in 2010, which, one assumes, was not part of Mr. Emanuel’s job description.  Look for a change in the West Wing within the year.

Edward Greenspan, famed Canadian criminal lawyer who lost two of the century’s highest profile white-collar cases (U.S. v. Conrad M. Black; Her Majesty v. Garth Drabinsky).  It’s enough to make boardroom actors think twice about going bad.

Virtually every head of any U.S. or global bank who failed to show the slightest hint of regret for their costly misjudgments, causing taxpayers to come to their rescue around the world.  To this list, add the chiefs of the American automakers.  These were not world-class acts worthy of men who commanded tens of millions in compensation and captained some of the oldest and most valued products of modern capitalism.  They revealed themselves to be, at best, ordinary people who were over their heads and could not cope with the adversity which their giant egos and reckless myopia had permitted.  What fitting poster children for the folly of excessive compensation and the scam we have long contended it represents.


GM’s new, revived and reengaged board, which ousted its CEO in November after successive blunders involving Saab and Opel.


AIG.  Just about anything to do with this board has been a disaster.  It won’t be getting better any time soon, given its caustic CEO and the company’s obsession with hiking compensation while it is still a financial ward of the state.

Citigroup.  After a year –actually several years– of blunders and disintegrating shareholder value, the board decided that the stock that was once riding at $55 really does rate a $3.15 price after all.  Billions in share value gone, but Richard Parsons is still chairman of the bank’s board.  “It’s not about you” has become Citigroup’s new theme under the Pandit-Parsons demolition team.

Manulife Financial’s decision to give retiring CEO Dominic D’Alessandro a going-away bonus of $12.5 million, on top of $13 million in compensation and an annual pension of $3 million.  The board said at the time it was in recognition of Mr. D’s long-term contribution to the company.  Manulife posted a $1.8 billion loss for the fourth quarter of 2008, when the bonus and compensation were awarded.


Securities and Exchange Commission Chair Mary Schapiro and Ontario Securities Commission Chair David Wilson, both underwhelming in their presence and accomplishments in what has been the worst capital market crisis in generations.  They might review how William O. Douglas approached the task in the 1930s.

Phil Angelides, Chairman of the Financial Crisis Inquiry Commission established by Congress in May 2009.  Being the subject of rare sightings may work for certain birds but not for one who has inherited the mantel of the legendary Ferdinand Pecora, who was anything but hard to spot.


The young (and not-so-young) people of Iran, who are risking everything to fight a despotic and despicable regime.  Already, lives have been lost, including that of Neda Agha-Soltan, the young women killed in June.  There will be many more casualties ahead.  But as the great wave of human freedom has always started with a ripple and grown to a torrent, pushing kings and tyrants away, the struggle on the part of students, intellectuals, and workers will prevail.  This is the first regime change to be covered by YouTube.

The serving sons and daughters of U.S., Canadian and other NATO countries in Afghanistan, along with the civilians, diplomats and journalists who are also risking their lives.

Captain Chesley Sullenberger, who safely landed a jet full of passengers on the Hudson River after the plane’s engines had been rendered inoperative by a flock of birds.  He displayed the selfless courage that is the hallmark of true leadership and which is seen every day around the world among the millions of quiet heroes who help those in need and perform acts of remarkable bravery to save others. They don’t look for a building to be named after them or for an interview with Larry King.

Notably, Captain Sullenberger was the last, not the first, out of the plane.  He stayed until everyone was safe.  He didn’t jump into a private lifeboat and make a fast getaway.  Wall Street, take note.


The nearly successful Christmas day bombing of flight 253 was bad enough. But the revelations that numerous red flags about the would-be bomber went unconnected and that governments are still challenged in the dot connecting department after the lessons of 9/11, was the real shocker.  Chaos in airports around the world soon followed, along with a flurry of confusing and often inconsistent new security rules. Whatever else they might do to deter terrorists, the rule about no washroom use for the last hour of a flight was certainly a form of rare and unusual punishment inflicted upon older passengers and those with small children.

The roaring back of U.S. equity markets, with the Standard & Poor’s 500 index up 65 percent from its March low.  But is it real?  This time last year, Wall Street and its counterparts were in critical care.  Here, too, there was a failure on the part of Wall Street (which seeks a return to business-as-usual as if the past 18 months did not happen) and the Fed (which missed that last over-heated disaster big-time) to connect the dots.  Excessive valuation of stocks, along with zero interest rates and trillions in liquidity and Fed/Treasury support are an ill-matched and, ultimately, dangerous combination.  In the real world, after all, one-third of all home mortgages are under water and the wave of foreclosures continues.  What is it about the word bubble that these institutions do not understand?

Finlay ON Governance Year End-Awards | 2008


The Year of the Unthinkable, the Unprecedented and the Ghost of the 1930s

The first African-American to win the White House, and the complete meltdown of the credit markets leading to the biggest government intervention in modern history, marked 2008.   It was a year like no other.  All the playbooks were thrown out the window.  Those who had previously been the strongest advocates of free markets became the most vocal proponents for government rescue.  Every part of the globe suffered from the sea change in economic reality that took place.  It promises to continue to surprise in 2009.

Herewith, the Finlay ON Governance Annual Awards for the highs and lows of business and government leadership in 2008.  Happy New Year.


Barack Obama, who broke all the records and exceeded every expectation.   What was his secret?   He knew that the public yearned for fundamental change in the old ways of doing things so that government could become a positive force in the lives of ordinary people.

Hillary Clinton.  Nothing became her more than how she persisted in the face of defeat and ultimately dealt with the angst of a frontrunner’s reversal of fortune.

Carl Icahn, the first and only billionaire to start a blog and a campaign to empower investors.

Democracy, American-style, where millions turned out in record numbers to vote, thereby reversing decades of decline and hardening in the arteries of liberty’s last and best hope.

Books on the 1930s and the Great Depression


Gordon Brown, the British P.M. who showed leadership to shore up ailing banks in a way that a confused and befuddled U.S. Treasury secretary Henry M. Paulson Jr. could not do.

Meredith Whitney and Nouriel Roubini, who saw the gathering credit storm, sounded the alarm and have been shown to be remarkably accurate in their predictions.

Paul Krugman.  A Nobel winner in economics whose feet seem firmly grounded in reality.

Nicolas Sarkozy, who has become the Old World’s answer to Barack Obama and a rising star in an often fractious and divided Europe.

Tina Fey, who brought political mimicry to an uncanny level of reality with her impersonation of Republican Vice Presidential nominee Sarah Palin.

Senator Edward M. Kennedy.  He beat the odds on brain cancer with the courage and grace that defines the best of his family name.   Now he has a chance to crown his career with the health care legislation he has also fought so long for.  We wish him all the best on both fronts.

The quiet heroes who work hard every day to make the world better, whether in their backyards, their communities, or in far off places. They don’t require full-page ads, flattering magazine profiles or buildings named for them in order to do it. We honor them.


The shareholders of U.S. companies. Betrayed by greedy CEOs, slumbering boards and regulators who seemed oblivious to the mounting dangers of excessive risk, they saw trillions in share value evaporate and the world economy pushed to the brink of depression.   And they paid CEOs, boards and regulators for the privilege.

John McCain and the Republican Party.  The choice of an ill-informed and over-her-head Sarah Palin for VP confirmed the GOP to be a party in bankruptcy proceedings.

Henry M. Paulson Jr., who managed to get the world wondering how he ever made the millions he did with an almost terminal case of myopia and communications skills that seemed non existent.

The Securities and Exchange Commission. From Bear Stearns and Lehman Brothers to AIG and Bernie Madoff, the SEC dropped the ball.  Its slogan is “the investor’s advocate,” but to many, this regulator has become the investors’ nightmare.

Credit Rating Agencies.  With all the downgrades they deserve, the wonder is that they are still in business.


Russia, whose aspirations of global superpowerdom were derailed by plunging world oil prices.

Stephen Harper, the Canadian Prime Minister who called an election in October with for no real reason, wound up with another minority government and then pleaded with the Queen’s representative to adjourn parliament for several weeks in order to avoid losing a confidence vote in the House of Commons.  Leadership is not a prize found in a box of Crackerjack.

Robert Rubin, the highly paid, long-time Citigroup fixture whose lack of leadership at the corporate and board levels should cause shareholders to demand their money back.  What did he do at Citigroup?

The U.S. dollar.  Another casualty of the excesses and failures of the U.S. financial boardroom, it seems headed for more of a fall from the Fed’s unrestrained printing of money and its opaque lending practices.

Conrad M. Black, PC, OC, KCSG, Lord Black of Crossharbour, hoping for a pardon, predicted John McCain’s Republican victory.  It worked out about as well as his prediction for his own legal vindication.  Why is a convicted felon still serving his sentence allowed to hold his Canadian honors?

Iceland, where everything that could go wrong in finances did.  A warning to larger countries?

Encore of Our 2007 Selection

The too-clever-by-half, fee-greedy and, now, hoisted-on-their-own-petard investment bankers and financial wizards. Their subprime actions showed that, for all their much trumpeted brilliance, they were no smarter than the homeowners who failed to see the consequences of taking on obligations they could not meet. They also proved that high-income earners with top credit scores on Wall Street are just as capable of wreaking financial havoc as the credit-challenged folks on Main Street they so often decry.


The United States government decides to rescue the assets of Bear Sterns because of alleged systemic risks to the economy, opening a door the most costly and extensive government intervention in the economic since the Great Depression.


Citigroup’s directors long list of failures in effective corporate governance, leading the prized icon to see its stock fall to $3.05 in November.

AIG board’s surprise the day the U.S. government declared it insolvent and took the company over. The directors had no idea things were that bad.  Exactly. Then there was the failure to reign in perks and junkets even after its massive government bailout.  Think about a board where no one is home and the name AIG quickly comes to mind.

BCE drops the ball in its going-private deal.  The biggest transaction of its kind ever stumbled on the auditor’s desk.  It was an overreach by the Teacher’s Pension Fund from the beginning.  BCE investors lost billions.  The larger outrage is that half a billion went to lawyers and accountants, who did not anticipate and could not address the financial red flags that were raised.  Somebody should disconnect their phones.


Bernie Madoff, the $50 billion poster child for deception and deceit.  He was a darling of Wall Street and one of its most revered figures.  Somehow it is not surprising that he has become the new symbol of its ethical failure.

Robert Mugabe of Zimbabwe.   An evil tyrant in need of a modern Colonel Claus von Stauffenberg.


The NGOs and relief agencies who stood up against the thug regime of Myanmar  (Burma) in order to help that country’s typhoon-ravaged people.

The thousands of unpaid volunteers who got involved in the U.S. Presidential election and helped make it the highest voter turnout in history.  They are the modern citizen soldiers in the battle to preserve democracy.


The board of directors of the New York Federal Reserve System, made up of Wall Street titans that included former Lehman CEO Richard S. Fuld Jr., GE CEO Jeffrey Immelt and JPMorgan Chase CEO Jamie Dimon. How these people got appointed to the board of this most important public institution, and its self-serving system of governance, is a national outrage.

The refusal of the U.S. Federal Reserve to disclose specifically which, among the long list of financial institutions, it is lending to, and how much, or to provide information about the collateral it is accepting.  The amounts stagger the imagination.

The role of speculators and traders, aided and abetted by some of the world’s most prominent financial institutions (which have received public funds) in bidding up the price of oil in the summer and in causing sky-high commodity prices which led to starvation in poor countries and food riots from Egypt to Haiti.

For Canada, the appointment of 18 new senators by Prime Minister Harper, who vowed to reform this discredited and archaic institution but instead has used it as a pasture for political hacks and party supporters. That’s not the scandal, however.  The scandal is the lack of outrage on the part of Canadians who are supposed to know a thing or two about democracy.


Alan Greenspan, whose misjudgments laid much of the foundation for the current economic crisis.  Why does he think everybody still hangs on his every word?

Fred Thompson, one-time Watergate counsel turned actor, turned senator, turned actor again, turned Presidential candidate.  He was heralded as the next Ronald Reagan before he joined the race for the Republican nomination in 2007.  After all his bumbling and his inept audition as a candidate, people were just shouting “Next.”

Richard Parsons, CEO of Time Warner and director of Citigroup, two institutions that show the dire consequences of poor leadership, yet the media still cling to his every word.

The annual World Economic Forum at Davos, the place for the globe’s blind elite to gather in splendid oblivion to the problems that are unfolding around them.

Stikeman Elliott LLP, the Toronto-based law firm that was lead legal counsel in the ill-fated BCE deal and represented the board.  Its website boasts “They execute transactions seemlessly and flawlessly.”   Tell that to BCE shareholders, who paid the law firm tens of millions for…nothing.


U.S. Treasury secretary Henry M. Paulson Jr. and Fed chair Ben S. Bernanke, for missing the impact and extent of the subprime meltdown in 2008, just as they did in 2007, and for producing more TARP flip flops than a boatload of summer sandals.

Canadian Finance Minister James Flaherty who in late November declared that Canada had already had its economic stimulus package and nothing further was needed.  A change of tune followed in December.  Memo to the Minister:  read the newspapers before you say stupid things.


Sarah Palin. An example of why the Vice Presidency of the United States is not something that should be picked up at the local flea market.

Joe the Plumber.


Trickle Down Economics. The world has been sold the hoax that as long as the rich get richer, ordinary folks will get their due.  What they got was an economic wealth gap larger than anytime since the 1930s and the worst financial crisis since the Great Depression.

High CEO Pay Promotes Stellar Performance.   In the year before the 2008 credit crisis, the CEOs of the top financial firms were paid record compensation. Most of their companies this year teetered on collapse.  Some did.

Conrad Black’s emails to the press, along with his regular columns about all things of interest to this convicted fraudster.


Past CEOs of disgraced mortgage giants Fannie Mae and Freddie Mac, who, appearing before Congress, tried to justify their huge bonuses and shift responsibility for the ineptitude and disasters that occurred on their watch.

The first appearance of the CEOs of GM, Ford and Chrysler before Congress, where they were ill-prepared for questions and thought nothing wrong in descending upon Washington in separate private jets to appeal for public funds.


World Economic Forum CEO Klaus Schwab, claiming that he saw the subprime credit fiasco coming but could not convince the elites of his annual Davos conference to   take any interest.


Still missing in action: Army Lieutenant General Douglas Lute, White House Czar for the Iraq and Afghanistan wars, who is rarely seen or heard.

Canadian Foreign Affairs minister Lawrence Cannon, appointed last October to the post once held by former Prime Minister Lester B. Pearson.  Mr. Pearson was a quiet giant on a tumultuous world stage.  Mr. Cannon’s presence is nowhere to be found.


The TARP. Never in the history of man’s relationship with government has so much been spent so ineptly on so few with such little accountability or support.  They said approval of the TARP, which was to involve a clumsy reverse auction process for troubled bank assets, was essential to the survival of the credit markets.  President George W. Bush and Treasury secretary Henry M. Paulson Jr., along with a slew of Democratic leaders and economic commentators, all painted a picture of financial Armageddon if the TARP was not passed and the distressed assets bought up at once.   It has turned out to be all about as we predicted when the harebrained idea was floated. To date, not a single reverse auction has been held.  And few, if any, underwater mortgage holders have been benefited from the program.


HOPE NOW Program. With more than $300 billion to help distressed homeowners of troubled mortgages, the program was supposed to assist 300,000.  By year-end it is reported to have helped just 300.

The SEC’s temporary ban on short-selling.  A classic case of government attempting to defy the laws of physics.

Still dead from last year: the move to lobby President George W. Bush to pardon Conrad Black on his conviction and sentencing for fraud and obstruction of justice.


“The fundamentals of our economy are strong.”

U.S. Senator and Republican Presidential hopeful John McCain, in September.  Neither the economy nor Mr. McCain’s campaign was quite that.

“We’re closer to the end than the beginning.”

Lehman Brothers CEO Richard S. Fuld Jr., speaking about the credit crisis in April.  He was right, but not in the way he thought.  A few months later, the fabled Wall Street icon that had survived the Civil War, two world wars and the Great Depression had disappeared.

“We have no liquidity problem.”

Bear Stearns CEO Alan Schwartz.  A week later the company was gone.

“I do believe that the worst is likely to be behind us….”

U.S. Treasury Secretary Henry M. Paulson Jr., in May.  Three months later, he would be on his knees begging House Speaker Nancy Pelosi to support to his plan to save the imploding credit markets by passing the largest financial commitment in the history of government.


U.S. Vice President Dick Cheney, in interview with ABC News, when told that recent polls had shown two-thirds of Americans believed the war in Iraq is not worth it.  Less than 48 hours later, the 4,000th American troop was killed in Baghdad.

“I can’t imagine us not doing well, as we waxed the floor with them in the briefs and replies.”

Conrad Black, in an email to the Chicago Tribune, in June, as his appeal was being heard by the 7th U.S. Circuit Court of Appeals.  From prosecutorial metaphors involving toilet seats at his trial to floor care during his appeal, Lord Black remains the very model of the modern household cleaning optimist from his presumably pristine confines at the Coleman Correctional Complex in Florida.


Angelo Mozilo, CEO of Countrywide Financial, in an email responding to the concerns of a homeowner asking for temporary forbearance in the payment of her mortgage due to financial hardship.


The failure of the most powerful leaders, the most respected regulators and the boards of the largest corporations, banks and Wall Street institutions, including rating agencies and the SEC which oversees them, to detect and prevent the excesses that led to the worst credit crisis since the 1930s.  Detect and prevent?  In many cases they set the calamity in motion.  It is an issue that surpasses even the election of the first African-American as President for its long-term effect.  The seeds of folly that are being laid in the form of the multi-trillion dollar “solution” and a Federal Reserve that has become opaque, unaccountable and out of control, may prove in the long run far more costly and troubling.

Also, all those stock market experts and high-priced commentators: their ability to understand what is happening and why, where stocks and commodities are headed, and when sanity will return to the equity and credit markets is really no better than most taxi drivers’.  At least when they take you for a ride, you get somewhere.

Editor’s Note

Over the years, we have commented extensively on the policies and actions of President George W. Bush, who has also featured prominently in previous year-end reviews. Mr. Bush will leave office in less than a month.  A modest sense of decency disinclines us to add to the catalogue of criticisms that confronts his departure.

Finlay ON Governance Annual Year-End Awards | 2007

The Year of Toxic Toys, Toxic Loans and Toxic Leaders

Two thousand and seven was a year distinguished by toxins and losses. From China came millions of contaminated toys, poisoned toothpaste and tainted pet food. In America, a different poison was brewing that would infect the credit market around the world and inflict staggering losses on investment banking firms and homeowners. The full extent of its harm is yet to be felt.


Finlay ON Governance Annual Year End Awards | 2006


Year End Awards.jpg

The Highs and Lows of Leadership in Business & Government 

 Biggest Winners

Nancy Pelosi, who helped to bring the Democratic majority back to life in the House of Representatives and thereby secure her place as that institution’s first female speaker; Warren Buffett, probably the world’s most respected businessman, for showing that you can win by promising to give it all away; North Korea dictator Kim Jong-il, who thumbed his nose at the U.S. by firing off missiles on July 4th, then testing a nuclear bomb, and is still alive to talk about it; Canada’s Conservative leader, Stephen Harper, whose election brought an end to more than a decade of Liberal rule.

Biggest Losers

George W. Bush; Karl Rove; Saddam Hussein; former HP chair Patricia Dunn; Conrad Black, who wants his Canadian citizenship back after giving it up to become a British Lord (that was before he met U.S. federal prosecutor Patrick J. Fitzgerald, however); Apple CEO Steve Jobs, who, according to a year-end internal probe by Apple’s board, participated in a scheme to manipulate the purchase price of stock options for other participants in the plan; the ordinary people of Iraq, whose daily and increasing dissent into anarchy make them hapless pawns in the greatest American foreign policy disaster of all time.

Most Significant Political Moment

The U.S. mid-term elections, which saw Republican domination of Congress come to a crashing end;

Most Significant Corporate Moment

The sound of prison doors slamming on former icons of corporate America: Bernie Ebbers of WorldCom for 25 years; Jeffrey Skilling of Enron for 24 years; Sanjay Kumar of Computer Associates for 12 years, and numerous lesser figures.


The SEC votes for more detailed disclosure of CEO pay, then later blunts the impact of the move at the urging of business lobbies; Canada’s Finance Minister Jim Flaherty ends the tax holiday for income trusts and puts that country’s corporations back to focusing on their business and not their tax status.

Biggest Political Scandal

America’s prosecution of the war in Iraq, which has lost the confidence of the American people, alienated the country’s allies, cost hundreds of millions of dollars and tens of thousands of lives, and whose damage as the greatest blunder in U.S. foreign policy history may be incalculable. America, in Iraq, has shown itself to be the “pitiful giant” Richard M. Nixon always feared America could become if it did not carefully think through the consequences of its foreign policy decisions.


The wave of improprieties and wrong-doing involving a host of disgraced Republicans, including Tom DeLay and Randy Cunningham, the Abramoff lobbying scandal involving payoffs and bribes, and the House Republican leadership’s turning a blind eye to the disgusting antics of former congressmen Mark Foley.

Biggest Corporate Scandal

The 195 companies, including names like Home Depot, Apple, Restoration Hardware, Staples and Research In Motion, involved in either federal or internal investigations over stock option manipulation –a huge scandal that has already seen the departure of 59 senior executives. And the problem took a stunning year-end turn with the filing of Apple’s internal probe into stock option irregularities, which confirmed that CEO Steve Jobs’ role in the backdating was greater than previously disclosed. A very big job ahead for SEC investigators.


HP, where its own directors brought discredit upon this icon of American technology with a pretexting scandal that intruded into the personal lives of directors and reporters where the board failed to ask the right questions about how the information was being obtained.

Most Admired Board Move

IBM, for taking the lead, albeit belatedly, in ending the insidious policy of issuing stock options to directors. Apple Computer and Research In Motion, take note.

Most Dysfunctional Board

HP –hands down. (But see the Home Despot Award for a close second).

Home Despot Award
For uncommon obliviousness to the growing discontent of shareholders and customers.

Home Depot’s board paid more than $245 million to CEO Bob Nardelli over five years, during which time share value continued to plummet. His heavy-handed domination of the company’s annual general meeting where he routinely cut off shareholders questions after one minute and where not a single member of the board bothered to attend, was an event that would bring a smile to Kim Jong-il. Add to this the low marks the company receives for customer service and recent revelations that it routinely backdated stock option dates for the past 19 years, and the conclusion is that Home Depot and its board are in need of serious renovation. Time to bring in Mike Holmes.

Jack Welsh – Dick Grasso Award for Brazen Excess

The boards of Capital One Financial, Yahoo, Cendant, KB Home and Lehman Brothers Holdings, which paid their CEOs what amounts to over $800 million for the fiscal year 2005. Five CEOs. Eight-tenths of a billion dollars. One hundred percent insanity in the boardrooms that produced this outrage


Hank McKinnell, who, after leaving as Pfizer’s CEO earlier than expected amid shareholder outrage over compensation issues, will receive a retirement package estimated at $180 million; Goldman Sachs, for out-of-this-world bonuses, including a record $53.4 million to CEO Lloyd C. Blankfein; members of Ontario’s legislature, who voted themselves a record 25 percent pay hike just days before going off on a three-month break.

Chutzpah Award

Research In Motion’s application to the Ontario Securities Commission (which was granted) to temporarily lift the trading ban on company insiders so its co-CEOs could exercise 750,000 options at just over a dollar a share at a time when the company had not made statutory filings for it second quarter and its own internal stock options investigation was not completed. Talk about moxie.

E.J. Smith Award for Myopic Vision

President George W. Bush, in a strikingly convincing portrayal of the Titanic’s ill-fated captain, who continued to shout “stay the course” long after America hit Iraq and the devastation was apparent


Members of the self-appointed Capital Markets Regulation Committee, composed of corporate leaders and accounting executives and funded by a former target of New York State Attorney General Eliot Spitzer, which called for a roll back in enforcement against white color crime and higher bars for suing corporate directors and accountants at a time of mounting boardroom scandal over CEO pay and stock option backdating.

Pass the Antidote Award

For all the stories of excess about Conrad Black, his febrile campaign to regain the Canadian citizenship he renounced only a few years ago, and his assertion that he has really become a freedom fighter. Yasser Black? We think not.

The George Costanza “Was that Wrong?” Award

William H. Swanson of Raytheon, who wrote a book containing homespun wisdom that was substantially lifted from one written more than half a century earlier by California engineering professor W.J. King; Tom Parkinson, who, as Canada’s Hydro One’s CEO, put his $45,000 expense tab on his secretary’s credit card to avoid scrutiny and then approved the expenses himself. He’s gone now, too; AT & T, for disclosing without warrant or court order hundreds of thousands of customer telephone records to the U.S. government.

Stupid Utterances Award

“We’re not winning, but we’re not losing.” — The sudden mantra of Bush administration officials to explain why, after spending more than $400 billion on the war and costing hundreds of thousands of lives of coalition forces and Iraqi citizens, the world’s only superpower is in a scientifically neutral position. Absolute zero, Bush style.

“My problem with governance is that it’s really hurting American business.” — Barry Diller, who was paid $265 million in 2005, commenting on corporate governance advocates who question high CEO pay. And you thought it was really Enron and the like that did the damage.

Encore Award

People we would like to hear more from because their voices further understanding of principles of responsibility in governance and leadership:

Harvard professor Lucian Bebchuk, who is doing the most interesting work on CEO pay and stock options in decades; Gretchen Morgenson and Floyd Norris of the New York Times; former White House advisor Richard Clarke; CBS veteran correspondent Bob Schieffer; CBC Washington correspondent Henry Champ, who brings an informed insight to the intersection of Canadian and U.S. politics; corporate governance eminence Robert Monks; former U.N. chief weapons official Hans Blix and U. S. weapons inspector David Kay, two courageous public servants; Generals Zinni, Odom and (Wesley) Clark, who have a commanding sense of vision that has been vindicated by events ; Bono; Belinda Gates, whose mind seems more intricate in its functioning than her husband’s, and she has considerably more style and personality; the (as yet unrevealed) Canadian who can rightfully take Nobel Prize winner Lester Pearson’s place on the world stage to further global peace with the former prime minister’s quiet dignity and professionalism; Zbigniew Brzezinski, perhaps the best foreign policy mind in the United States; Lou Dobbs, who had the courage to see things as they are and speak out; Warren Buffet, who is unique among billionaires; and Michael Beschloss, as graceful a historian as you will ever find.

Enough Already! Award

Belinda Stronach (if you don’t know who we mean you are lucky); lobby groups for corporate directors; David (“Axis of Evil”) Frum, in either his U.S. or Canadian persona; Newt Gingrich, because it really takes a special talent to blow it like he did when he was House Speaker; Jack Welsh. Especially, Jack Welsh; the Business Roundtable’s long since discredited positions on CEO pay and corporate governance; demands for the roll back of Sarbanes-Oxley; CNBC’s James Cramer is on the border line; the dynasty approach to the American presidency, which leads to great tedium and sclerosis of the political arteries due to a lack of fresh thinking. America can do better than alternating its leadership between the Clintons and the Bushes and might just be better off seeing less of both families.

Outrage of the Year: The Two Americas

The war in Iraq continues, demanding the ultimate sacrifice of courageous men and women in the U.S. military and causing unimaginable pain and suffering among the Iraqi people, while at home it continues to be party time for the rich and the powerful with record high CEO pay, oil company bosses pulling in a king’s ransom from astronomical gas prices courtesy of Middle East tyrants and despots, and tax breaks for the wealthy that enable that group to spend like drunken sailors on luxuries. It is a time in which neither the pain nor sacrifice of the war is being shared fairly, nor, for that matter, is the great leap in wealth being enjoyed by a select few.