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.

outrage 121.jpgLack of daylight in boardrooms and in the way business was done on Wall Street and in the financial sector is what brought this company and the world to this perilous and costly state. Darkness and a lack of transparency are still being employed today under the guise of bringing a solution to the problem and in failing to disclose who the real beneficiaries of American taxpayer dollars are.

It has been asserted that the directors of AIG did not fully understand what a small unit within the organization, which was responsible for spinning out hundreds of billions of dollars in credit default swaps and other derivatives products, was doing. According to them, they were kept in the dark, so to speak. Throughout much of the financial sector, excesses in leverage and in the syndication of risk were also taking place. Regulators did not fully appreciate the extent of the risk or the complexity of these special investment vehicles. They are of the view that they, too, were kept in the dark. They are not alone. A lack of daylight has also brought serious injury to millions of investors who trusted banks to operate in a sound manner, but alas discovered a lot of gambling going on behind their backs in respect of investment devices, obligations and transactions that were taking place in the dark of night and without full disclosure to shareholders.

The prevailing opinion among policy makers, regulators and investors is that a deficit of transparency and candor has significantly contributed to the worst financial crisis since the 1930s. Trillions of dollars have been required to bring the credit markets back from the brink of collapse. AIG has received at least $173 billion in direct investment and assistance from the federal government, according to the Wall Street Journal. In the process, the company has incurred the ire and skepticism of investors, politicians and, as we noted on a previous occasion, the Attorney General of New York.  Questions have been raised as to why such lofty sums were necessary and what was actually being done with the money. The response from Fed chairman Ben S. Bernanke is that the collapse of AIG posed a systemic risk to the entire financial system. A definition of what “systemic” involves has never been provided. Until this week.

The Wall Street Journal revealed this week what AIG and Mr. Bernanke have preferred to keep from public scrutiny: the fact that billions of dollars in aid to AIG have been funneled to U.S. banks that also received government funds under the TARP, and to institutions headquartered outside the United States. The Journal reports:

Among those institutions are Goldman Sachs Group Inc. and Germany’s Deutsche Bank AG, each of which received roughly $6 billion in payments between mid-September and December 2008, according to a confidential document and people familiar with the matter.

Other banks that received large payouts from AIG late last year include Merrill Lynch, now part of Bank of America Corp., and French bank Société Générale SA.

More than a dozen firms with smaller exposures to AIG also received payouts, including Morgan Stanley, Royal Bank of Scotland Group PLC and HSBC Holdings PLC, according to the confidential document.

We wonder what a complete list of the beneficiaries of public largesse to AIG would look like and what other far-off institutions, perhaps even sovereign funds, have been included. Last week, the U.S. Senate Banking Committee attempted, without success, to get details from the Fed about what was being done with the public funds invested in AIG. You can see why.

After making bets that went bad, these sophisticated institutions, which, in many cases already have received billions in taxpayer sums, think they should be made whole. Americans and individuals around the world are paying a steep personal price as they are buffeted daily by a more foreboding financial cyclone that is largely beyond their control. They have been called upon to save the financial system with their own dollars. Every month, hundreds of thousands are losing their jobs and their homes. But in the midst of all this pain and uncertainty, AIG, and companies like Goldman Sachs, Bank of America, Morgan Stanley, as well as foreign-run institutions like Royal Bank of Scotland and Société Générale seem to be of the view that the public should be kept in the dark about these transactions. Mr. Bernanke and -much to our dismay- a number of decision-makers in the Obama administration appear to concur.

They, too, have adopted the view that such entities should not have to take a haircut on their derailed (or should we say deranged?) deals. Could these institutions have accepted, in the circumstances, say,  50 or 70 cents on the dollar?  It seems not.  Nothing but the full amount will do, even if it has to be paid with taxpayer dollars, once more. This, it appears, is what is meant by “systemic.”  Did we not hear Bank of America CEO Ken Lewis saying this week that it was a mistake to take TARP funds and that they were not really needed?  He doesn’t seem to be holding to that view about the public funds received through AIG.  Only slightly larger than the elephantine size of the bailout involving these institutions, and many of  their leaders, is their disingenuousness.

Lack of daylight in boardrooms and in the way business was done on Wall Street and in the financial sector is what brought the world to this perilous and costly state. Darkness and a lack of transparency are still being employed today under the guise of bringing a solution to the problem, which, in the case of AIG appears to be a situation where, fearful of incurring the systemic wrath of these Myan-like gods of banking, the high priests of the Fed and other public institutions prefer to appease them by bringing an endless bounty of sacrifice and wealth to their doorstep, conveniently out of sight of the curious eyes of the masses. After all, it’s only their money. We find it a troubling display of opaqueness and a lack of good faith that is hardly in keeping with the crucial need to restore confidence and trust in both Wall Street and in public efforts to restart the economy.

The companies which have been parties to this scheme, and the officials who have permitted a further descent into the lightless world where much of the disaster began, when they should be demanding exactly the opposite, are our choice for the Outrage of the Week.