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.

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.

There were losses in leadership and trust in business and government, as well as the loss of a brave leader who sought to return democracy and stability to Pakistan.

It was also a year when the great lost their footing: a U.S. attorney general who was a little light in the truth and brains department; a former prime minister of Canada who was a little light in the judgment department; and a British peer who fell from the lofty titled heights to which he aspired and where others had placed him.

Herewith, the Finlay ON Governance Annual Awards for the highs and lows of business and government leadership in 2007. Happy New Year.


Vladimir Putin. He has proved to be more wily than Stalin and just as smart as Lenin. Putin will be a problem with a capital P for the West, and for democratic interests in his own country. But he remains a popular leader and is presiding over a significant resurgence in Russia’s clout that demands that it, and he, be taken very seriously.

U.S. Army General David Petraeus. We continue to oppose the war and its execution, believing that valuable resources have been diverted from the real threats of terror in Afghanistan and Pakistan, while causing immeasurable damage to America’s reputation around the world. That said, we admire the skill with which this career army man has brought about a reduction of violence and provided a window of opportunity for the Iraqi government to get its act together. We doubt that it will. But the general’s calm under political fire, his demonstrated intellect and his forthright manner are qualities in any leader that deserve to be recognized. American forces are fortunate to have him in command to look out for their interests. We expect to see the general move into the political arena in the not too distant future.

Barack Obama, whose surge on the eve of the Iowa caucuses suggests that some Americans are not willing just yet to place the cartouche around the Clinton dynastic name.


Al Gore. Winner of the Emmy, the Oscar, the Nobel Prize, and the undisputed commander-in-chief of world forces to combat climate change, a reputation apparently undimmed by his role on the all-male board of Apple Computer.

Citigroup’s Charles O. Prince and Merrill Lynch’s Stanely O’Neal. They walked away with nearly a quarter-billion dollars between them after presiding over record subprime-related write-downs and losses soaring into the multi-billions. Let a secretary try that and see what happens.

Apple’s Steve Jobs and Research In Motion’s Jim Balsillie. Each dodged a bullet in the stock options backdating scandals, and any hint of outrage over presiding over their all-male boards during that period. Success is a gloss that covers a myriad of sins.

Maher Arar. The Canadian citizen received exoneration from a judicial inquiry, millions in compensation from the Canadian government and, finally, an apology from members of both parties in the U.S. House of Representatives for his detention by American authorities and rendition to Syria, where he was tortured.

Millions of minimum wage earners in the United States. They got a raise after 10 years.

Rupert Murdoch. He managed to win an icon of American journalism and did it with grace. On top of that, he is going to make the Wall Street Journal web edition free, a win-win situation for everyone. Just please don’t let Chris Wallace start writing for the Journal.

French President Nicolas Sarkozy. He de-de Gaulled the stuffy Elysée Palace with running shoes and fresh ideas.

German Chancellor Angela Merkel. Her growing visibility in the area of human rights and her campaign against excessive CEO pay in Germany are adding to her popular appeal.

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 Democrat-led U.S. Congress, which continues to languish in public opprobrium when it had a mandate to do much better.

President Pervez Musharraf of Pakistan, whose grip on power is surely down to one small finger.

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 wrecking financial havoc as the credit-challenged folks on Main Street they so often decry.


George W. Bush. Iraq, Katrina, and now the economy. This baseball-loving president has had his three strikes. The “out” part is not far off.

Alberto Gonzales. The performance of this U.S. attorney general was so bad he made John Mitchell, Nixon’s disgraced A-G, look good.

Conrad M. Black, PC, OC, KCSG, Lord Black of Crossharbour. To his list of titles the term “convicted felon” has been added. It was a fall from heights rarely seen in business or society, rivaling the plunge to disgrace -and prison– in 1931 by another British peer and prominent member of the business establishment, Lord Kylsant of Carmarthen.

U.S. Associate Supreme Court Justice (“let’s talk about what those left-wing liberals did to me”) Clarence Thomas. The judge who has never had a word to say during oral arguments before the court and had too much of the wrong thing to say in his memoir. A judicial temperament now defined by a very injudicial temper.

Merck, the giant drug maker, who took too long to withdraw Vioxx when health concerns became known, took too long to settle claims for the injuries the drug caused and wound up paying out nearly $5 billion to settle in the end.

Chrysler’s private equity owners, Cerberus. It was a beyond strange to watch them hire former Home Depot CEO Robert Nardelli as CEO. He left Home Depot in a shambles after alienating shareholders, employees and customers. Now, six months into his new job, he says Chrysler is “operationally bankrupt”. One thing is for sure: he never will be. His $200 million-plus severance package from Home Depot will see to that.

Paul Wolfowitz. He showed he was not exactly a world class act at the World Bank.

Yahoo founder Jerry Yang. In what was as close to a public trip to the woodshed as one can get, he was excoriated by a Congressional committee for his company’s role in turning over emails by a dissident to the Chinese government. You did not need to search very far to discover how wrong that was, Jerry.

F. David Radler. After pleading guilty to fraud and having paid more than $60 million in restitution, he was the government’s star witness in its case against Conrad Black. Still, he wound up with more prison time than Hollinger executives Peter Atkinson and Jack Boultbee, who fought the charges all the way and were convicted on three counts of mail fraud. Atkinson got 24 months. Boultbee was sentenced to 27 months. Radler received 29 months in federal prison. Outcomes like this are not exactly encouraging to witnesses or potential whistleblower.

Marie-Josée Kravis, Richard Burt and former Illinois governor James Thompson. Under questioning in the trial of Conrad Black, the trio admitted they just skimmed what they saw, missed what they read or didn’t understand what was happening around them. They were known as members of the Hollinger audit committee. We call them the Three Stooges of the American boardroom.

Canada’s clueless corporate crime cops. The lame performance of Canada’s RCMP integrated market enforcement team and its top securities watchdog, the Ontario Securities Commission, have made the country a laughing stock when it comes to white collar crime.

Brian Mulroney. The former Canadian prime minister admitted that he accepted envelopes stuffed with cash just after he left office. He claims it was a mistake. It didn’t end well for Spiro Agnew, either.

John Howard, the unpopular Australian prime minister, who lost the government as well as his own seat in parliament. He was the last of the major coalition heads which supported the U.S. war in Iraq. Tony Blair went this year, too. In Egyptology, it is the curse of Tutankhamun that has captured imaginations; in Iraq, it will be the curse of George W. Bush and its ability to end the careers of the politicians who embraced him.

The vanishing stakeholder. Whether in matters of service, respect for privacy, shrinking incomes or in the battle against special interests, the individual is fast disappearing off the screen when it comes to institutions of business and government.


Merrill Lynch’s board. His handpicked directors let Stanley O’Neal walk off with a $160 million payday after he presided over the biggest losses in the company’s history.


The agonizing stupidity of the members of Hollinger Inc.’s audit committee while testifying in the trial of Conrad Black. Rarely has the world had such a disturbing glimpse into how business is conducted in America’s boardrooms by those who otherwise regularly demand and receive the highest deference for their reputed brilliance and high standards. It helps to actually read.

Bear Stearns’s first ever-quarterly loss of $854 million was bad enough. But even a series of bizarre revelations could not cause this board to show its spine. When the company’s hedge funds were collapsing during the summer’s subprime meltdown, CEO James Cayne insisted on completing a golfing and bridge playing vacation. There are allegations that he smoked marijuana after the bridge game. There are no reports about what he did after losing the billion dollars.

Bell Canada’s (formerly BCE) board, which decided the company could no longer hack it as a publicly traded corporation and decided to sell out to private equity, allowing management and directors to make a fortune in the process, of course, while removing an important institution from the capital market. It was CEO Michael Sabia and top management who needed to be ditched, not the public investors in the company.

Research In Motion’s directors, who appointed members of the compensation committee to oversee the internal investigation into RIM’s backdating of stock options. The board dumped some directors from the committee after Finlay ON Governance and others raised questions about the company’s governance practices. It turns out that some of those directors also received backdated stock options. No one has ever explained that one.

Mattel’s board, which demonstrated inexcusable failure to ensure the safety of its products even after a sordid history of fines, penalties and scandals.

Countrywide Financial’s directors, who allowed CEO Angelo Mozilo to pocket millions in gains from the sale of stock options even as the company faced billions in losses and a crisis in customer and investor confidence.


Verizon Communications, the first company to agree to shareholders having an annual advisory vote on executive pay.


The iron curtain of private equity that is descending over the publicly held corporation and thwarting the scrutiny of the individual stakeholder in society. The ownership of these new entities is often opaque and has begun to include sovereign wealth funds controlled by autocratic, non-democratic regimes. Chrysler and Bell Canada are among the most prominent examples of this trend.

The continuing role of boards as facilitators of the greatest transfer of wealth between CEOs and shareholders in recorded history, thereby creating an elite class that is effectively insulated from the consequences of their actions and who frequently profit from disaster by walking away with tens or hundreds of millions more.


Worrisome as the instability of Pakistan is in the aftermath of the tragic assassination of Benazir Bhutto, it is the resurgence of a bellicose Russia, headed by an autocrat whose own hold on power has been consolidated by dismantling governance reforms and press freedoms, that captured our attention in this category. Vladimir Putin is scheming to be around for a long time and seems to delight in sticking his finger in Amercia’s eye. Watch for a new arms race to begin. Expect a reappearance of the old spy game, too. It is never encouraging to see any country retreat from the path of better governance, improved transparency and political accountability, but with its history of mischief-making and saber rattling, and the fact that America’s moral authority around the world has been shattered, a Russia with greater economic clout and a tsar-like leader may prove troubling in unexpected ways.

The erosion of privacy throughout North America, allegedly in the name of fighting terrorism, continues its relentless march. Bigger and more detailed no-fly lists. Always more information demanded from law-abiding citizens. Telecoms working hand-in-glove with government intelligence agencies to collect information on customers’ phone use.


Israeli Prime Minister Ehud Olmert and Palestinian Authority President Mahmoud Abbas, for their courage to walk in the footsteps of peacemakers like Menachem Begin and Anwar Sadat.

Nicholas Negroponte, the visionary founder of One Laptop Per Child, who has overcome dizzying odds in carrying to fruition an idea that has the potential to bring about a sea change in education and opportunity among the globe’s often forgotten and impoverished children. This, too, is the face and mission of the American idea around the world. Billionaires take note: He did it without plastering his name all over foundations and buildings. A future nominee for the Nobel Prize, perhaps. But as an inspiring cause to support, this is one that is hard to beat. The staff of Finlay ON Governance was delighted to have been donors to the program.

Belinda Stronach. We had a few things to say last year, in a different category, about the billionaire business executive who left politics to return in 2007 to the helm of her family-controlled auto parts manufacturer. We underestimated her character and tenacity. In the past year she was diagnosed with breast cancer and underwent radical surgery. But instead of keeping quiet or hiding behind the gates of privilege and wealth, she came forward to help educate women and men about the disease and donated her time and money to that cause. We salute her courage, along with Elizabeth Edwards, wife of Democratic presidential aspirant John Edwards, who also demonstrated a forthright and positive spirit in dealing with cancer that is an inspiration to others. We admire their candor and wish them well.


U.S. wealth divide. The largest income gap since 1929, which was not a high point in economic stability and consumer confidence. This is the New Gilded Age in America.

U.N. Food Agency report that claims 18,000 children are dying each day because of hunger.

The use of known carcinogens, lead and mercury in the production of women’s cosmetics and personal care items that are manufactured and sold in the United States and Canada by top brands.

The short sentences being served, on average less than 24 months, for white-collar crimes on the part of top-level company officers, according to a Bloomberg report.

Giant Pension Funds, which espouse flowery commitments to transparency and sound corporate governance, but which are quite eager to join in taking major enterprises private and placing them behind an iron curtain of secrecy and closed accountability.

The billions of dollars being sent to Pakistan, Iraq and Afghanistan that go unaccounted will be prompting inquiries about who is pocketing the money in those countries. Added to this is the question of what is happening with the tens of millions of dollars coming from the record poppy crops in Afghanistan that are being operated under the nose of coalition forces, and the resulting toll in crime and addiction around the world.


The five highest paid CEOs in 2007, who collectively took in through direct compensation and the exercise of stock options some $1.6 billion. Five CEOs. More than a billion and a half dollars. The amount is double what the top five earned last year.

We detail the figures below:

Steve Jobs Apple Computer $647 million

Ray Irani Occidental Petroleum $322 million

Barry Diller IAC/Interactive Corp. $295 million

William P. Foley Fidelity National Financial $180 million

Terry Semel Yahoo! $174 million


Karl Rove. When luck runs out, genius quickly follows. He left his party and his president in a shambles.

The G8, which meets regularly but accomplishes little and anticipates even less. Of the great challenges that confronted the world’s top industrialized nations, the credit meltdown being the most recent, was there anything this group saw coming and moved to address in a proactive fashion?

The annual World Economic Forum at Davos. A great place for the world’s great to talk about problems long known to most everyone else and who don’t need a private jet and endless parties to focus their concerns.


U.S. Treasury Secretary Henry Paulson; Fed chair Ben S. Bernanke, for missing the impact and extent of the subprime meltdown.


Bill Clinton. Eleanor Roosevelt we don’t expect. But he is taking the role of presidential candidate spouse to a new extreme. It already seems a lot more than two- for-one this time.


Alan Greenspan, whose clarity of thought, at least in reinventing history, is considerably more striking than it was during his tenure as Fed chief. The media’s constant running to him for his insights is also interesting, since he was unable to see the consequences of his own action –or inaction– when he was in a position to do something.

Donald Trump. Interviews, pronouncements, books, TV programs, musicals, operas, shopping center openings, diet pill programs, dog food commercials, star witness at the trial of high profile boardroom fraudsters,  cologne.  We probably gave him some ideas.  Sorry about that.

Conrad Black’s emails to the press and the fantasy which he continues to expound that Richard Nixon was a good president if you just leave out the Watergate part. Delusion is best kept to an audience of one.

Media profiles and magazine covers extolling Research In Motion’s co-founders, Jim Balsillie and Mike Lazaridis. We know they are smart and wealthy and not very good in accounting for stock options. Just put the rest in a BlackBerry email.

Dennis Kucinich, perennial Democratic presidential candidate. He made it into the word processor’s spell-check dictionary. That’s about as far as he can go.


The moneyed Laodiceans of boardroom lawlessness in Canada, who are quick to demand harsh jail sentences for welfare abusers and low level break and enter thieves but seem unwilling or to accept the fact that one of their own, Conrad Black, is now a convicted felon who is guilty of defrauding investors. That disgraced status appears not to be regarded by this group as a bar to showcasing the baron’s views or his attacks on others in the National Post, where ideas that run counter to the views of its publishers, especially on governance related issues, are generally regarded as being fatal to outside submissions. Criminality also seems to be of little bother to those entrusted with dispensing Canada’s highest honors: the Order of Canada and membership in the Queen’s Canadian Privy Council, which Conrad Black still holds. Not only is he a convicted felon, he’s not even a Canadian any longer. Quite an image for a country that claims to value civility and the rule of law.


Incidents of identity theft and breaches in the safeguarding of personal information were at an all-time high in 2007. Stronger penalties are urgently needed to deter wrong doers and force business and government to protect the sensitive information they require and collect.


The FEMA officials who held a fake press conference, pretending to answers questions from legitimate journalists but which in fact were posed by other FEMA employees because no reporters were present. The questions and answers, not surprisingly, were all complimentary to FEMA. Brownie himself could not have asked for better.


Former Ontario Lieutenant Governor James Bartleman, who admitted to a Canadian judicial inquiry that for 20 years he sat on information that he received advance warning of a specific threat to an Air India flight while he was a foreign affairs officer with the Canadian government. Within days of the warning, Air India flight 182 was blown up off the coast of Ireland, killing 329 passengers and crew. He did not tell his superiors of the threat nor did he write any memos regarding the matter after he was rebuffed by Canadian police authorities. The admission left families of the victims who are still searching for justice and answers reeling with shock and disbelief. Asked why he waited two decades before revealing this, he said he thought the commission of inquiry might be interested in his story.



Army Lieutenant General Douglas Lute, White House Czar for the Iraq and Afghanistan wars, who was appointed by President Bush in May of this year and has not been seen or heard publicly since.


U.N. Secretary General Ban Ki-moon. Virtually undetectable in world events, U Thant he is not.


Baker-Hamilton Commission on Iraq. Even co-chair James Baker seems to have abandoned his support for the report’s recommendations.


The Bush administration and Business Roundtable led push to loosen Sarbanes-Oxley reforms. Not after the subprime mess that shows there is not enough transparency in financial reporting even after the impact of SOX.

Private Equity is more efficient. Plunging Blackstone stock after its IPO and Chrysler’s performance being just two cases now in evidence.

The move to lobby President George W. Bush to pardon Conrad Black on his conviction and sentencing for fraud and obstruction of justice. Unfortunately for Mr. Black, only a few of his friends seem to be taken with the idea and they all live in Canada. Still, you can expect to see a few t-shirts soon in Toronto.


“I am not a homosexual.” Nebraska Senator Larry Craig, at a news conference announcing his intention to resign after pleading guilty to a misdemeanor in a public washroom. It is never an encouraging sign when a politician’s name and the words “public washroom” appear in the same sentence. Bobby Baker could have given Craig some advice on that score.

“You’re all vermin. I’m sick of it.” Former Hollinger director Barbara Amiel to reporters during the trial of her husband, Conrad Black, in Chicago.

“I see the trend. My strategy is working.” Former Hollinger CEO Conrad Black, to reporters in the midst of his criminal trial.

“Within the United States, Mr. Black, there is equal justice under the law. The law applies equally to everyone no matter how high your social status, how powerful you are, how wealthy you are, how successful you are, how intelligent you are, what your title is, or how well educated you are. No one is above the law.” U.S. federal court judge Amy St. Eve in sentencing Conrad Black to 6 1?2 years in prison for fraud and obstruction of justice.

“Let’s get the f**k out of here.” Sallie Mae’s CEO Albert Lord, ending an analyst conference call in December where he was asked about the significance of his having sold 97 percent of his company stock. Now that’s leadership.


There are many who passed from the scene in 2007 whose talent has left the world a brighter place. A few we were especially partial to are recounted here.

Arthur M. Schlesinger Jr., the historian who in his youth captured the interest of a similarly youthful president and never veered from the values and tenets they both shared; David Halberstam, a chronicler of the times and follies of leaders and governments, who applied the term “quagmire” to describe Vietnam and predicted the same fate for America in Iraq; Robert Goulet, the Canadian-born singer, and Oscar Peterson, who was born and died in Canada, and in between enthralled the world with his inimitable talents; Deborah Kerr, whose performance in An Affair to Remember will for decades to come be sending women, and not an inconsiderable number of men, for the Kleenex box; Luciano Pavarotti, who needs no embellishments or adjectives, which is the mark of a singularly unique genius; and Alfred Powis, the head of Noranda Mines for many years, who was distinguished by his thoughtfulness and a common touch that is also fading from the ranks of business leaders.

We salute, and thank, them all.

The Finlay ON Governance Outrage of the Year follows.