One of the strongest themes following on from the collapses of Enron, WorldCom and Andersen has been the ever-greater demands for corporate transparency. As far as shareholders and regulators are concerned, the more they can see of the internal workings of the company and the more they know of the chains of command and the structure of risk management, the happier they are. This was certainly one of the main themes running through the recent roundtable discussion on corporate governance hosted by Martin Issitt, head of the corporate department at Eversheds. The roundtable, entitled ‘Corporate Governance – the New Landscape’, was held in October in London.
Nigel Cannings, European general counsel at BEA Systems, said Sarbanes-Oxley had “injected an extra degree of nervousness into the way people deal with their day-to-day business”. More people, at much lower levels in the corporate structure, are being asked questions about potential compliance issues. “What we see now is that the whole net is being cast significantly wider. It is not just me who is being asked – all of our finance people are being asked. I think it is going to start flowing down through my organisation and is likely to get worse rather than better,” added Cannings.
Delegates agreed that the increased pressure on reporting and reporting lines is more apparent in those companies with US parents. This has two aspects: one is that the nervousness of the US parent leads to much more intrusive questioning of any subsidiaries about potential problems; and as the US corporations take a greater interest in the world outside their borders, the reaction in Europe is simply to push responsibility for any of these decisions back to them. It would be difficult not to see an element of resentment of what could be seen as US imperialism – the enforced co-operation with the Foreign Corrupt Practices Act as well as Sarbanes-Oxley.
