In a recent talk, Charmian Gooch of Global Witness stated that a recent study of 200 cases of corruption had shown that “70%… had used anonymous shell companies” and referred, a little disparagingly to “that nebulous phrase ‘weak governance’…”. Unlike a lot of other commentators, however, she also mentioned that they all use the international banking system and if questioned I’m sure she would have happily admitted that 99% also use onshore companies for their transactions.
My gripe is not with her, nor the journalists who focus almost exclusively on the secrecy of offshore jurisdictions. While I do believe their focus is misguided and myopic, I do not doubt their bona fides.
There is another much-maligned concept lurking here, one that is often paraded out as a solution as quickly as it is damned as insufficient and inappropriate. That concept is our good old friend, corporate governance. “But I know it when I see it” wrote Justice Potter Stewart in 1964, observing how hard it is to define certain things; and I think a similar thing can be said about good, effective corporate governance.
Every jurisdiction, most recently with the assistance and guidance and threat of the FATF, makes a valiant effort to legislate effective corporate governance and yet there are failures in every corner of the globe, in every industry no matter how heavily or lightly regulated, no matter whether the companies involved are so-called shell companies or publicly listed, independently audited multi-national behemoths.
The reason is that in order to succeed at corporate governance you must have a culture of effective corporate governance. And that means, frankly, caring about all of your stakeholders, holding meaningful meetings and listening to what people are saying inside and outside the company. A culture of corporate governance doesn’t look like an audit firm, it looks like an active, engaged company, a thriving company. Good corporate governance is the same as good business practice and good strategy – it is simply adopting best practices for your company and your team.
In the offshore context, good corporate governance involves being dynamic about the products and services you provide your clients while avoiding the wink and the nod and being firm and unapologetic (but polite) when asked probing, off-kilter questions. It is always possible for someone to pull a fast one but the vast majority are easy to avoid by never looking the other way, by making it clear to clients and your team where the line is drawn and by maintaining pride in what it is that we do offshore – it’s a great industry and we should stand tall and proud and turn our backs on anybody that would abuse us for any sort of illegitimate purpose.
It’s the best thing for each of us and it’s the best thing for all of us. But it doesn’t start with ticking boxes on checklists, it starts with an attitude that’s shared throughout the team, it starts with your culture.
by Gordon Casey