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.


With yet more losses and its recent credit downgrade to junk status following stunning statements by Bank of America regarding Countrywide’s debt, the question is how many icebergs will this Titanic of subprime lending need to hit before the inevitable occurs?

In a posting on Tuesday this week, we suggested that Countrywide’s sinking financial state might be a worrisome signal to Bank of America, and that the sudden 990 percent increase in bad loan provisions ($158 million for Q1 2007 vs. $1.5 billion for Q1 2008) might be something of an unanticipated iceberg for the deal. More and more, Countrywide is beginning to resemble the Titanic of modern subprime lenders: an enterprise that was based on flawed principles, that had become too large for its own good and was steered by overpaid egos who never contemplated the prospect of disaster. The question is: Will it meet a similar fate?

The record is not encouraging. Somehow Countrywide managed to strike another iceberg in a matter of days. On Friday, Standard and Poor’s cut Countrywide’s credit rating to junk status. It based its downgrade on a filing by Bank of America on May 1st that discloses it might not be taking on some $38 billion in Countywide debt. As a statement from the rating agency noted:

Until this filing it was our understanding that [B of A] would acquire all of Countrywide as stated in the January 2008 merger agreement. This new filing raises the possibility that this assumption is no longer true.

The downgrade could trigger a host of draconian actions on the part of lenders and insurers of Countrywide’s obligations that will prove very costly to that company and much more expensive and complicated for Bank of America to complete the transaction.

We have previously conjectured that in its acquisition of Countrywide, Bank of America may be trying to follow the JP Morgan Chase model for the Bear Stearns takeover. In that case, JPMorgan was able to get rid of nearly $30 billion in riskier Bear securities through a Fed-led bailout. B of A’s announcement this week that it might not be backing such a huge chunk of Countrywide’s bonds and notes was considered something of a surprise among analysts. We have been predicting for some time that the element of surprise will be Countrywide’s constant companion. So far, we’re batting 1000. The biggest surprise, however, will be if this deal actually goes through before the Countrywide ship has gone down and top managers and directors have decided to jump into the lifeboats.

A couple of weeks ago, I was interviewed by Barron’s on B of A’s plans for Countrywide. I suppose my comments were too trenchant for the folks at that magazine, since they did not run them. What I said, however, seems to have been fairly close to the mark, given recent events. Here’s part of the interview:

Bank of America may not be as smart in seeing the potential downside of this acquisition as it claims. What is at the heart of many fears about the deal is a concern that we may be witnessing the creation of another Frankenstein-like Bear Stearns monster that just causes a whole new set of problems for everybody. You have to wonder if Bank of America has a plan to get some of the poorer Countrywide assets off its books, as JPMorgan Chase did with Bear Stearns, leaving others on the hook.

Stay tuned for more surprises.