John Downing: ‘Corporate governance is not fun or interesting or sexy – but we know too well how important it is’

0
29

John Downing: ‘Corporate governance is not fun or interesting or sexy – but we know too well how important it is’


(Stock photo)
(Stock photo)

Sports Minister Shane Ross was abundantly clear: Get your corporate governance in order. If you do not get your corporate in order – you will not get any money.

He said he was talking directly – not just to the embattled Football Association of Ireland (FAI) – but all sports organisation bidding for a share of a €100m sports grant fund for which applications are due this week.

Now, ‘corporate governance’ is a term we do not hear very often. Many of us might not even be too sure just what it means.

Please log in or register with Independent.ie for free access to this article.

Log In

window.gigyaIntegration = window.gigyaIntegration || {};
gigyaIntegration.command = gigyaIntegration.command || ;
gigyaIntegration.command.push(function() {
gigyaIntegration.addEventHandlers({
onLogin: function(e) {
location.reload();
}
});
$(‘#datawall-sign-in’).click(function(e) {
e.preventDefault();
gigyaIntegration.showLoginScreenSet({
signupSource: ‘opinion’
});
});
$(‘#datawall-sign-up’).click(function(e) {
e.preventDefault();
gigyaIntegration.showRegisterScreenSet({
signupSource: ‘opinion’
});
});
});

As with terms like ‘justice’ or ‘honesty’, it can elude precise definition. But you would hope to know it when and if you encountered it. Perhaps it is better thought of in terms of what we would require from it.

Corporate governance is about pursuing sustainable results through prudent management. The main aim is to deliver the long-term success of a commercial or social enterprise through a fair system of direction and control.

The website of State agency Sport Ireland has a pithy delineation about what constitutes good corporate governance. It describes the concept as “an attitude of mind” – something which of itself points to the urgent need for a change of attitude at the heart of Irish soccer administration. But, as we will see, this is not the only sector needing action.

Boards of directors are responsible for the governance of their companies or organisations, be they social or commercial. Their work is indispensable. The current controversy surrounding John Delaney, the once and recent chief executive of the FAI, brings the theme into sharp focus once again.

There is no doubt that often it is very dull stuff – about as interesting as filing VAT returns. But like VAT returns, failure to pay attention can carry a heavy price. Failures of corporate governance come with a heavy price tag.

The notion does not sit well with the Irish view of life. As a people, we’re not always keen on rules, and can at times see them as a challenge. Rules are to be got around, stretched, and even broken.

We rightly see ourselves as pragmatists, who like to get on with things, and finish the job. But when it comes to that fuddy- duddy, corporate governance, that approach just does not work.

Things are changing in this world. We have to face the reality that citizens want to assert their rights more and more. The growth of that other tedious trouble-making concept, transparency, a dull cousin of corporate governance, has further changed things. Where public money is concerned, the citizens have the right to know what is going on.

That is why so many people were simply dismayed by last Wednesday’s proceedings before the Oireachtas sports committee. There were far more questions than answers and too many of our TDs and senators showed they have much to learn about how to question witnesses appearing before them.

Granted, our parliamentary committees have been hobbled by a failed referendum in October 2011 which had been aimed at giving them more investigatory powers. And a recent court case taken by former Rehab boss Angela Kerins has had something of a chilling effect.

But the mixture of political showboating and lack of application, which have characterised the work of committees on occasion, mean that our TDs and senators must up their game if they are to be taken seriously in their role as citizens’ watchdogs.

That is something which must be urgently addressed. We understand that politicians, needing to get re-elected, also need some publicity for their committee work.

This can lead them to make statements on the issue at hand, or the entities being questioned. But their job is to elicit information, pin down those who are naturally trying to dodge key issues and obfuscate unpalatable data.

The return of Sport Ireland chairman Kieran Mulvey and chief executive John Treacy to the committee at Leinster House tomorrow will be watched with interest. So far, the organisation has acted decisively by suspending and withholding FAI funding.

But an equally urgent issue is the development of an independent board of directors capable of supervising the senior business managers, challenging them to explain their decisions and keeping a keen eye on the accounts. There are now increasing signs that the FAI board lacks this independence and many members appear to be too close to the association, in large part because they have been a very long time there.

One champion of corporate governance, who defies the stereotype that such people must be dull dogs, told this writer yesterday that six years’ service is about optimum for a non-executive director. After that, there is a serious risk that the ‘old pals’ act’ begins to kick in.

Personal relationships can blur the rules and procedures, the slippery slope beckons. Half of the FAI board have been in office for 14 years or more. It is fair to ask whether this scenario has contributed to the organisation’ current pickle, with its Sport Ireland funding suspended, and other immediate grants under threat.

It is clear that John Delaney has operated well in cultivating grass-roots support in the game of soccer.

But right now he has led the organisation to a very dangerous place. A stronger board surely would have reined him in, asked serious questions about accounting procedures. They might even have a stiff word with him about singing rebel songs in late-night bars.

In fact, you can easily make the case that a stronger board could have spared John Delaney a whole hat-full of problems.

The FAI is in the crosshairs right now. But it is not the only organisation to have had difficulties with this issue. Anglo Irish Bank – which ultimately cost taxpayers a whopping €28bn – had very many troubles on all sorts of levels.

But its difficulties were worsened by corporate governance shortcomings. Its former chief executive, Sean FitzPatrick, went on to become chairman of its board.

We tend to think that other countries are better at corporate governance – and often they are. But all is not perfect.

The Volkswagen emissions scandal – the so-called ‘dieselgate’ which began in the USA and spread to countries across the globe – was caused by shortcuts to sell more diesel cars. But subsequent inquests into what became a global crisis for the carmaker cited an unwieldy board structure among the causes of a very costly error of judgment.

So, nobody is saying that corporate governance is easy. But it really does matter.

This week, it matters to tens of thousands of kids and their families, and the volunteers who week after week give their time and money, to ensure football is played and enjoyed.

This one involves far more than the uncertain future of John Delaney.

Irish Independent

LEAVE A REPLY

Please enter your comment!
Please enter your name here