Whatever the cause of these scandals, they have cast a light on the ability of existing regulatory frameworks and principles to prevent abuses that have undermined public trust in companies and markets. This includes the OECD’s own benchmark, the Principles of Corporate Governance, first adopted in 1999. Now they need review and strengthening.
On 15 November 2002 Secretary-General Donald Johnston headed a high-level brainstorming meeting to launch the OECD on a drive to strengthen corporate governance practices worldwide. Guests included Sir Adrian Cadbury, who headed an influential UK review of corporate governance in the early 1990s; Andrew Crockett, general manager of the Bank for International Settlements and chairman of the Financial Stability Forum; Veronique Ingram, an Australian Treasury official who chairs the OECD steering group on corporate governance; and representatives of business and labour unions.
They discussed the role of the OECD's Principles of Corporate Governance, ahead of a forthcoming review mandated by OECD ministers at their annual meeting in Paris on May 2002, and of other OECD Instruments relevant to market integrity, such as the OECD Guidelines for Multinational Enterprises and the Anti-Bribery Convention.
The procedural challenge facing policymakers is to strike a balance between government and market oversight. But the aim is to improve corporate governance and reduce the risk of Enron-type tragedies happening again. Review begins in 2003 and OECD ministers are expected to receive the completed review in 2004.
The Trade Union Advisory Committee to the OECD (TUAC) is encouraged by the initiative, but would like to see more binding rules as well as a stronger role for stakeholders. “Corporate governance is too important to leave to an inner circle of CEOs and accountants,” says John Evans, TUAC secretary-general.
For expert articles on corporate governance, see OECD Observer No. 234 and www.oecdobserver.org.
©OECD Observer No 235, December 2002