OECD Wants To Name And Shame Countries With Weak Corporate Governance

By Agence France-Presse The Organization for Economic Cooperation and Development (OECD) is taking a close look at its guidelines for best practices in how companies are run and might make big changes in the light of the Enron and WorldCom scandals, OECD officials said on Nov. 19. The organization also wants to assess how corporate governance is supervised in its member countries. OECD Secretary General Donald Johnston said that the organization should have a role in assessing the way governments apply the principles and in highlighting weaknesses in their corporate governance regimes. "This would be an ongoing role for the OECD," he said, adding that the organization would first have to assess applications in different countries, but it could then move on to censuring countries with systems falling short of the required standards. "It's basically naming and shaming after that," he said. This would have a cost for individual countries because it would highlight the risks that international investors would face in investing in particular markets. The OECD would need approval for country studies from its 30 member governments, and there is no guarantee that they would authorize the organization to "name and shame" individual countries. The organization has relatively strong powers in fields such as bribery and harmful tax practices, but its economic surveys require the endorsement of the country concerned. The review of the OECD corporate governance principles, requested by ministers in 2002, is due to be completed by the time of the May 2004 annual ministerial meeting. Among the key issues being considered in the review of the OECD principles is the presence of independent directors on companies' remuneration and audit committees. Also under discussion are the clear separation of chairman and chief executive roles, the number of independent directors on companies' main boards and stock options. Copyright Agence France-Presse, 2003