Directors personal responsibility

In the wake of the Berkshire Hathaway affair, where David Sokol, a senior executive, recommended a bid for Lubrizol, a company in which he had recently bought shares, I have been thinking more about personal responsibility. I strongly believe that rules and regulations matter. After all, I have a vested interest, with a forthcoming book on UK corporate governance (Financial Times Briefings: Corporate Governance). But rules can only provide a framework and a minimum standard of behaviour - they can never cover every situation. And only an ethical approach can fill in the gaps that are not covered by this framework.

Driving from the airport this morning I heard two juxtaposed items on the radio that illustrate this. The first piece reported on a football match in Chechnya to celebrate the opening of a new football stadium in the capital, Grozny. The local side, bizzarely, included Ramzan Kadyrov, the country's president, as striker and he scored a hattrick in his side's victory over an international all-star's side. But it was this team of former international players that interested me. It included two former England internationals, Robbie Fowler and Steve McManaman, who were interviewed. Both insisted they were not interested in politics, just in playing football. Yet this was not just an ordinary football game. All its unusual features proclaimed this fact. The presence on one team of the country's dictator, a man accused of personal involvement in murder and torture, whose opponents, as well as local  journalists and human rights activists, have a habit of being killed, proclaims that this was not just a football match. This was clearly not an instance where politics relates to polite political debate but an instance where the event was an integral part of a plan to confer legitimacy on a much harsher political reality.

The other item was a report on UK banks misselling of Payment Protection Insurance that was meant to protect people who were unable to repay loans. It seems clear that at some level of the hierarchy within not one but a numberof banks a decision was taken to encourage and incentivise staff to sell of these instruments in reckless disregard of whether they were suitable to the customer. I am sure that staff were not actually told to sell this insurance to everyone, whether appropriate or not. However, some people within the organisations must have realised there was an absence of the controls that would ensure the insurance was only sold where it was appropriate. They were either reckless or dishonest or were unable to make themselves heard within the management system: which would probably point to someone else having suppressed their concerns.

Both of these stories point to the need for individuals to take responsibility for their actions. Whether it is footballing whores or banking executive whores it is always important to accept personal responsibility. It is easy to recognise the thirty pieces of silver you are being paid but, usually, it is also easy to recognise the reality of what you are being asked to do in return. The biblical story of Cain and Abel reports Cain saying "Am I my brother's keeper?" and it carries two lessons. The obvious one is that Cain was involved in a cover up: the more difficult one is that, yes, you do have responsibilities for your brother.

At the heart of corporate governance we find integrity and ethical behaviour and it is actually not that hard to spot the right thing to do. What is sometimes hard is to turn away the thirty pieces of silver but it is down to each of us to behave properly and to speak up when others do not.