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The Forum > Article Comments > Na´vetÚ of directors and regulators revealed by GFC > Comments

Na´vetÚ of directors and regulators revealed by GFC : Comments

By Shann Turnbull, published 17/9/2010

The GFC revealed the na´vetÚ and irresponsibility of governments, regulators and company directors being involved in firms 'too big to fail'.

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Good sense as usual Shann. Keep putting the word out.
Posted by Geoff Davies, Friday, 17 September 2010 10:41:27 AM
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" ... network governance facilitates the ability of stakeholders to protect their own interests ... Network governance introduces self-regulation and self-governance to reduce the need for many laws, regulations, regulators, and governance codes. Stakeholders become co-regulators to take over many functions of regulators. In this way network governance provides a basis to reduce the size, cost and role of government while increasing stakeholder protection and economic efficiency."

The author's academic scribblings reveal his 'naivete' regarding the politico-economic class interests of ALL those who have profited from the 'de-regulation' of the finance sector and its many related money-making industries under neo-classical/neo-liberal THEORY. This includes, of course, the battalions of 'professional' accountants and those who are well-paid to 'audit' their public books of account and provide 'advice' to 'naive' but nevertheless extremely well-rewarded CEOs and company directors. And then there are the equally well-rewarded senior "people's representatives" and 'executive' public servants ...er, sorry, Public MANAGERS (with their MBAs) who are said to devise and police corporate governance legislation, rules and regulations etc. before moving into the private (for profit) sector upon early retirement.

Its all so bleeding obvious who would benefit or profit most from his proposed Network Governance scheme!
Posted by Sowat, Friday, 17 September 2010 12:08:04 PM
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Just so, Sowat.And he ignores the painful truth that for the small retail investor the stock market is a swindle. Leslie
Posted by Leslie, Friday, 17 September 2010 6:50:23 PM
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I would very appreciate Sowat providing evidence of network governance producing the results he implies. Evidence from the case studies contained in my Phd dissertation posted at http://ssrn.com/abstract_id=1146062 contradict the assertions of Sowat. I would value contrary evidence to present a balanced view. I very much share all the other concerns of Sowat as set out in my "Seven deadly sins of capitalism" posted by the NSW Labor Council at http://workers.labor.net.au/147/c_historicalfeature_sins.html and later translated into Polish at www.nfosigw.gov.pl
Likewise I share Leslie's concerns about retail investors. I introduced one element of network governance into an Australian company that was also proposed by Senator Andrew Murray for the privatisation of Telstra. Retail investors would obtain the power to elect a separate governance board with one vote per shareholder and so out number the power of big shareholders with one vote per share. The governance board would have the power to chair shareholder meetings and veto excessive remuneration, self dealing by directors and directors nominating themselves for re-election.
Posted by Shann Turnbull, Saturday, 18 September 2010 6:47:40 PM
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Restrict the salaries of execs and board to 20 times the lowest worker salary. When 1 year's salary can pay for a house and an annuity for life, where is the incentive to look further than a year or two? And who is *so* valuable that they deserve lifetime stability from a years work?
The saying "pay peanuts, get monkeys" needs amendment: "Pay a fortune, get greedy pirate pigs".
The article implies naivety. That is being too kind. When so many articles correctly picked the oncoming crisis and the inevitability of it all understood, it took willing ignorance to "not know" the GFC was coming. (Even I predicted it 6 months ahead here on OLO, see post history)
There is also the issue of "hush money". When a CEO does a truly awful job (profit loss, jobs lost) yet is still paid several million in termination fees, what is going on? The answer is hush money. Leave quietly and all is forgiven. This enables the scam to continue.
Enron revealed the crazy world where the same company that does accounting also audits the accounts. That same company has simply renamed itself (the "brand" was ruined) and now carry on much the same business. Meanwhile every other company has had to spend $Billions on the Sarbanes Oxley compliance rules...many millions of which are going straight to the company that started it all! In big business, crime pays very well indeed, and politicians fawn at the feet of the master criminals.
Thank God for China as the Western Oligarchs have nothing to fear from internal regulation! Look at the PPP debarkle in Victoria. Rampant profiteering and waste, minimal accounting and financial management, zero prudential judgement.
In the life-cycle of civilisations, we are just at the "waiting for the barbarians" stage.
Posted by Ozandy, Monday, 20 September 2010 4:06:19 PM
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