What The Board Of Directors Looks Like To The Aspiring Outsider

A case study at a Future Directors Class went like this:

A well established conglomerate that had strong links with a certain government often won tenders to supply some essential products widely consumed by the public.

The board of this company held annual retreats in the countries that they served, and the bigger the business, the more frequent the visits were to those countries. All the directors looked forward to holidaying after concluding the business of the day and often just a two-hour meeting. Some of them had purchased holiday homes in the country in question and they would return quietly for private meetings with government officials frequently.

This particular country held elections and a new president came to power on the back of an anticorruption promise. The new president was previously in the cabinet and knew about the dealings of this particular firm.

He decreed that the country would only do business with this company if its entire board of directors was changed and replaced with a crop of forthright board members.

The current board suppressed the news from reaching its shareholders and instead sent an entire board of alternate directors to meet with the new president. At the meeting, the president demanded to see the AGM resolutions that effected the change of directors and the guys in the room were hard pressed to explain themselves out of the situation. The meeting ended with no new business commitments. Needless to say, there were two clear attempts on the president's life but they were thwarted.

The president had been to the firm's parent country on government business a few times and had some solid connections. So he tapped their advice and it came to his attention that the board had not changed.

The president then wrote a protest letter to the government of that country and complained about what had happened. The intelligence agencies of both countries launched undercover investigations that unearthed several findings.

Past and present cabinet ministers on both ends were deeply involved and had benefited through fully paid trips, properties in the new president's country and obscene amounts of money held in descrete bank accounts.

The Institute of Directors of the country from whence the directors lived was ropped in.

The story will continue towards the end but at this point, the Future Directors Class was asked to comment on the case study thus far.

Two groups emerged instantly. One with arguments supporting the status quo on account of not wanting to disrupt the flow of high quality products that were of great benefit to the public and the other, recommended that the directors and ministers be prosecuted, sucharged and jailed.

The pro-status quo group felt that a lot of things were at stake and it would badly shake the country's investor confidence if this was made public.

The anti-status quo group felt that it was better to bite the bullet and go further and audit many other deals entered into by the government with other suppliers of the myriad of products and services.

A physical count was taken in class and the pro-status quo side had the majority, but is the majority always right? Pack this for now.

Everyone employed or has been in a formally structured organization knows of the boardroom and its principal users, the board of directors. These are the decision makers that delegate the day to day operations to management.

Typically the board has oversight responsibility and the text book definitions that go with it are fairly clear.

There are people who have made a career out of sitting on several boards. Many are genuine and find themselves best placed to contribute meaningfully to those organisations. But some are trophy collectors hell bent on doing it for both the dough and the show — a boastful excuse for showing up late at a friend's party, because you came right from your second board meeting of the day, brings home our point, and especially when accompanied with a cheeky chuckle.

These displays of mixed signals make for confounding decisions when mentees are seeking role models to help them navigate the tough terrain as and when they encounter it. Mentorship is never from text books, it is from the experiences of those who've been there and done it — the exception here is if the textbook forms part of the mentorship program.

To the outsider, depending on what they percieve as the role of a director, as witnessed from those in service, the allure of directorship can prove irresistible to a guy clearly after quick bucks from insider trading and silently supported pilferage. Yet, to another guy, serving on the board only appeals if he has the time to remain commited to the course of that establishment.

So, we have two kinds of outsiders. The negatively selfish ones and the well-meant types.

As the case study conitnued, it was revealed that both governments jointly charged all participants from their respective countries and went ahead to recover all the proceeds of corruption.

The Institute of Directors of the country in question, recommended a life ban on all the main and alternate directors from ever serving in any boards.

Here at home, opinion must just be as divided and this is mainly because of observations and interactions with serving directors.

The class finally learned that the directors had broken all three duties of a director.

The duty of care, duty of loyalty and the duty of obedience — these are subjects for another day.

Do you want to be a director? Attend a class organised by any of the director training institutions. It pays to get taught.