» Context

In our global village, different business cultures have developed different approaches to matters of conflict of interest, related-party transactions and the independent board. The National Administration is to much more detailed governance frameworks, to address standards and processes.

» In the News [please contact us for further archival references]
07Aug07 G&M @A1 Public Sector: Job-swap Program has Risks of CoI Abuse
Interchange Canada Program to place private executives in public sector management positions, and public sector managers in private executive positions [of roughly 400 individuals, roughly 80% are private sector secondments to the public sector].
05Sept07 G&M@B3
Staff Sue KPMG for overtime, and gaps between hours billed and hours worked.
23Oct06/ 06Jul05 “Independent Directors: An outcome of the AIG accounting fraud activity (eg see NYT 06Jul2005) and related governance cleanup measures, adopting at least 2/3 of a board as independent directors, has now been embraced as a best practice (see G&M 23Oct2006). [with AIG it was closer to 75%]. This is not without risks of not going overboard and finding a board without critical business and industry knowledge.”
» Briefing Notes - © The Governance Counsel™ (2007)

“Independence” is a relative concept. It needs to be balanced with knowledgeable decision-making. A completely independent board is unwise if industry or market intelligence suffers, or possibly is just an illusion which turns on how “independence” is defined. Some independent members though, for sober second-thought and an informed curmudgeonly caution, are critical for good governance – not the least of which to chair the audit and governance committees.

The Principle behind the Practice?
The practice of favouring independent directors flows from concerns for conflicts of interest, which in turn are based on fiduciary duties to act in the best interests of an organization.

[Governance Literacy: see fiduciary duty, independence, conflicts of interest, material disclosure, best interests.]