Vince Cable promised to shine “a harsh light into the murky world of corporate behaviour” yesterday, but critics claim his attack was less about helping UK enterprise and more about political point scoring.
Alongside his speech to the Liberal Democrat party conference this week, the business secretary announced a wide-ranging consultation into corporate governance, following warnings that the industry could be heading for a “train crash” if it continues to award staff huge bonuses while refusing to lend money to businesses.
In an outspoken attack on City greed and self interest, Cable said, “The government's agenda is not one of laissez-faire.”
He continued: “Why should good companies be destroyed by short-term investors looking for a speculative killing, while their accomplices in the City make fat fees? Why do directors forget their wider duties when a fat cheque is waved before them?”
Thecorporate governance review
will run alongside the existing project to revive the Operating and Financial Review (OFR) and the Takeover Panel's investigation into the rules on corporate aquisitions. Cable said the review would “ask fundamental questions” about corporate governance and short-termism, executive pay and ways to encourage shareholders to exert more influence over corporate decision.
“Short-term investors and financial gamblers value a quick buck above all else, for example, by driving company boards into accepting takeover bids that make no economic sense. We need shareholders that act like long-term owners,” said Cable.
Not everyone was convinced by the business secretary’s pledges. One of the firmest criticisms of the speech came from the Adam Smith Institute after Cable used the think-tank's namesake to back up his own views on capitalism.