WHEN the present banking crisis finally passes, when the dust starts to settle, perhaps attention will be given to an aspect that has not been much highlighted so far: woeful standards of corporate governance.

Where were the boards of directors of these failing financial institutions when ruinous business was transacted?

Directors may not be involved in operations and day-to-day affairs, but should they not know the nature of business done by the companies in their charge?

Are they not supposed to protect shareholders' interests? If not, what is their purpose?

If a chief executive officer wants to spend $10 million on an office refurbishment, who approves that?

To an outsider, it looks as if these institutions were run exclusively for the benefit of senior management, and that the notion of shareholder control was absent.

Are the boards of directors of those failing banks not guilty of gross negligence?

The excuse that all the banks were playing the same game is not a defence.

If the present troubles bring about reform of corporate governance and a rebalancing of the interests of shareholders and the elites running publicly quoted companies, it would be a good thing.

One other thing: Almost every day, we are told that enormous bonuses are essential if the institutions are to recruit and retain the 'best talent'.

Which talent? The talent that has brought once great institutions to ruin?

I think we could have done with a lot less of that talent.

Philip Roberts

This article was first published in The Straits Times.