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.

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?