London, 26 February 2015 – On 23 February Claire Davies, Group Secretary at The Co-operative Group and Rob Bellhouse, until recently the company secretary at Lonmin PLC, addressed governance professionals in the North West about how company secretaries work with rather than for the board and must ask tough questions if they are to add value in times of crisis.
Claire leapt from the frying pan into the fire after helping the board of Lloyds Banking Group to navigate the financial crisis when she arrived at the Co-op to turn its governance around following damning reports of serious governance failings of the Group by both Sir Christopher Kelly and Lord Myners. Drawing on her experiences since joining the Co-op, Claire outlined the extraordinary array of challenges that company secretaries need to be able to deal with, including board resignations and executive exits, business losses, disposals, reputational issues, investigations and Government inquiries, media leaks and intense scrutiny.
“The company secretary,” says Claire “adds value during a crisis by being able to navigate through icebergs when everyone else is just seeing the top layer. Things always get worse before they get better and it is up to you to judge what lies below the surface and to work out what needs to be dealt with today and what can wait. Company secretaries are in the thick of it; they need to be able to help the board spend its time on the right things whilst not compromising the business as a whole.”
Rob Bellhouse experienced similar challenges at Lonmin with the Marikana mining crisis in 2012 that threatened the company’s very existence and a five-month-long strike in 2014. In 2012, he dealt with a change of leadership when the long-serving Chief Executive fell ill at a time when industrial relations were at crisis point and a human and humanitarian crisis occurred in the glare of global media attention, leading to a judicial commission of inquiry, a financial crisis, a rethinking of the business plan, an opportunistic takeover attempt during a rescue rights issue and a $750m bank debt refinancing.
“It is mostly instinctive; no training can really prepare you,” says Rob on the subject of dealing with crises. “You add value by maintaining good governance, by solving problems in order to keep things moving, by seeing the bigger picture and by doing the right things in the right way for the right reasons. Knowing the characters around your board table is hugely important, as the role of the board, the chairman and the non-executive directors can change dramatically during a crisis. It’s crucial that the executives who are managing the crisis are receiving the advice and backing that they need.”
Muriel Thorne, who chaired the event which was organised by the North West Branch of ICSA in conjunction with law firm DAC Beachcroft and the Institute of Directors North West, added: “Both Claire and Rob made it clear that it is essential to be able to recognise danger signs and sound a warning when necessary. Being a company secretary is about more than just advocating best practice standards. You need to be able to support the board in making decisions that are demonstrably sound and withstand public scrutiny.”
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