ACCOUNTING FIRM Grant Thornton has urged the Government to introduce new legislation to incorporate into law key provisions of the Combined Code on Corporate Governance and “serious sanctions” for non-compliance with the code.
Publishing a review which said that half of all Irish plcs admit they are not fully compliant with the code, Grant Thornton managing partner Paul Raleigh said that “governance problems” in Anglo Irish Bank and DCC underlined the damage that can accrue to individual firms and the damage that can be caused to the reputation of Ireland as a transparent place for business.
“Ireland has a long road ahead if it is to regain international credibility after the recent controversies in some of our biggest companies. In five years’ time we will either be looking back and passing judgment on Ireland as a flash-in-the-pan economic success that couldn’t live up to its responsibilities or we will mark 2009 as the year we put in place the measures that guaranteed our future economic success.”
Mr Raleigh said many firms paid only lip service to the spirit of good governance, adding that companies should be obliged in law to have independent audit committees. He also said it was not surprising that the public was questioning the independence of external auditors as 95 per cent of Irish plcs were audited by four firms and 70 per cent of firms were audited by two companies.
At home and abroad there was a perception that the boards of some Irish companies valued “camaraderie over competence”, he said. There should be a limit to the number of boards of listed companies on which individuals can sit, he said.
The Grant Thornton Governance Review said a point worth noting from the resignation of former Anglo Irish Bank chairman Seán FitzPatrick from other directorships was the number of other boards (four) on which he sat.
Citing other instances where Irish directors sat on multiple boards, the report said “these circumstances raise the question as to whether an independent director can be effective in terms of the time they are able to commit to each company, when they act for a number of listed companies at the same time”.
