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VIPsight

Corporate Governance – portrayed in the individual cultural and legal framework, from the standpoint of equity capital.

VIPsight is a dynamic photo archive, sorted by nations and dates, by and for those interested in CG from all over the world.

VIPsight offers, every month:
transparent and independent current information / comments / facts and figures on corporate governance locally and internationally,

  • written by local CG experts,
  • selected and structured by the Club of Florence,
  • financed by its initiator VIP and other sponsors with a background of “Equity and Advisory” interests.
     

VIPsight International


Article Index

 

 

Buhlmann's Corner

 

35 years of tools, 20 years of examples ... the world just one month ago

Who knows today what NOBO/OBO voting is? Until the 1980s, the question of Non-Objecting Beneficial Owner (NOBO) or Objecting Beneficial Owner (OBO) was about the secret power of uncontrolled brokers.

More details can be found here:

https://www.investopedia.com/terms/n/nobo.asp

In the USA, the much larger voting platforms of today owe their genesis to the irritation they have caused.

In 1985 ENRON was born in Houston through a merger. Until 2001, the company under CEO Keneth Lay was considered the greatest investor favourite: "The World's Greatest Company". With well-tested financial statements and unlimited credit standing.

With just a few techniques of creative accounting (derivatives, offshore, mark-to-market of exotics) the dream of the all-rounder came true until his CFO Andrew Fastow and his chief accountant Richard Causey got tangled up. A balance sheet hole opened up in which the company disappeared together with Arthur Anderson LLP (after 88 years of membership of the Big Five Global Auditors). The pension assets (invested in ENRON) of over 22,000 employees went up in smoke.

Bernie (Bernard) Ebbers will remember this. He was one of the few CEOs who grew up even faster and even bigger than ENRON. Whether the telephone company learned Worldcom from ENRON is not known. The fact is that Worldcom was listed on the stock exchange for only 5 years and shocked the investment world with its MSCI bubble.

Both bankruptcies made it clear that more governance and greater transparency were needed - worldwide. This was a major milestone for today's corporate governance and regulations such as the EU's Shareholder Rights Directive II.

Bernie Ebbers, who regained his freedom just over a month ago, can judge whether this helps or has helped; he has served half of his 25-year sentence. Now the so-called "Marlboro Man", born in Edmonton (Canada), can wear his Stetson and cowboy boots again. Will today's governance, spurred on by mega-accidents and extreme fraud, make the world a better place?

Executives earn a multiple (not only in exceptional cases) after two decades, for supervisory boards /NED's the multiple is even higher and the metaphor once described by Hermann Josef Abs (one Josef Ackermann's predecessors): "It is more difficult to make a supervisory board liable than to hold a sow by its soapy tail" still applies.

I am afraid that not much has changed.

Carlos Goshn still manages to drive Renault, Nissan and the judiciary through the ring with his double bass box - his waiver of 12 million bail and travel expenses to Lebanon is at least as high as he earned and received in half a working day as their CEO. For years, my friend Pierre-Henri Leroy in Paris publicly accused him of some of his misdeeds with blame and shame.

Here is an example:

http://www.proxinvest.fr/?p=3615&lang=en

Today we know how much more happened, not only about the famous time-out of a Ghosn's Board meeting of 20 minutes. Read here:

https://www.vipsight.eu/index.php/vipsight-south-africa-npos-lend-a-helping-hand-2-may-2015

As so often in life, the beginning is the most difficult, the famous first time.  Also the Catholic Church now publishes a set of rules for ethics and more. You can find some excerpts here:

Currently the Bafin as regulator is looking more and more at 35 /135 pension funds - whether looking is required, whether (potential) pensioners are informed - nobody knows.

At the moment everybody is looking at Australia, where coal and forests are relentlessly mined -

but ... and who invests, as repeatedly suggested and demanded, in projects for the benefit of the African population, or is working on the ENRONs and Worldcoms of today?