Cable Pledges Crackdown on Directors of Failed U.K. Firms
U.K. Business Secretary Vince Cable announced a crackdown on reckless company directors, making it easier to ban them from future board-level roles and for their victims to sue them for compensation.
Cable has called in the past for prosecutors to look at whether the people who were running Royal Bank of Scotland Group Plc and HBOS Plc when they collapsed should be banned from acting as directors. So far, only Peter Cummings of HBOS and Johnny Cameron of RBS have faced any formal sanction.
At his Liberal Democrat party’s annual conference in Glasgow, Scotland, Cable said he’s concluded that courts need to be allowed to expand the range of factors taken into account when considering banning someone from acting as a director.
“I am preparing to legislate to make it easier to prosecute and ban rogue directors who repeatedly walk away from their debts and their customers,” Cable said. “We Liberal Democrats see business as a partner not an adversary in creating responsible capitalism.”
The Institute of Directors warned Cable’s plan may be counterproductive. “Any corporate enterprise involves risks which are shared amongst the various company stakeholders, such as shareholders, creditors, employees and directors,” Simon Walker, director-general of the IoD said in an e-mailed statement. “If risk is loaded onto one group -– such as the directors -– the result will be counterproductive for the wider economy. The risks and challenges involved in taking on the role of company director, already significant, will become impossibly large.”
Liberal Democrat leader Nick Clegg, the deputy prime minister, told BBC Radio 5 earlier that he wants to see “new criminal sanctions” on those responsible for failing financial institutions.
“I don’t think we can have this buck-passing culture in some of our banks where people mess things up; everybody else -- all other taxpayers in the country -- had to bail them out and they got away with it pretty well scot-free,” Clegg said. “That culture has to end. We cannot ever again have people like that putting a gun to the head of the rest of the British economy.”
In a speech with the theme of ensuring fairness for both high and low earners, Cable asked the Low Pay Commission to report on “how we might achieve a higher minimum wage without damaging employment.” His office said faster increases wouldn’t be inflationary. The wage is set to rise to 6.31 pounds ($10.02) an hour on Oct. 1 from 6.19 pounds.
Cable also announced a consultation on “zero-hours” contracts, which allow employers to take on staff without guaranteeing them a minimum amount of work. Opposition Labour Party leader Ed Miliband said last week that such contracts should be restricted. Cable will call for greater transparency about their operation and for rules to stop employers exploiting staff.
The speech echoed words from Clegg, who on Sept. 14 attacked the party’s Conservative coalition partners, saying they wanted to take away workers’ rights. Cable argued that the presence of Liberal Democrats in the government since 2010 has blocked such moves. The party is trying to persuade voters it has made a difference in government in the runup to the next general election in 2015.
Cable also announced moves to increase transparency about corporate ownership, to make money-laundering and tax evasion harder.
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