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 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.