LETTER: The board can never know everything

Peter Bruce has some interesting views on corporate governance ("DA’s economic policy document doesn’t resonate with the electorate", March 5).

The first that stands out is his belief that the chairman of the board should represent the company’s largest creditor. Such a chairman would never pass the King code’s test of independence (absence of any interest, likely to unduly influence or cause bias in decision-making, etc), but Bruce is certainly not alone in holding the opinion that director independence may be overrated.

What rather spoils the credibility of his views is when he opines that if unions were represented on the board “workers would have perfect information”. If a certain previous chairman of Steinhoff is to be believed, even being the chairman of the board left him with rather less than perfect information for decision-making purposes, not least with respect to his own investments.

In his latest letter to shareholders Warren Buffett notes that board audit committees “remain no match for managers who wish to game numbers”.

Employee representation on company boards may well be a sensible idea, but even were these representatives seasoned and savvy directors it is too much to expect omniscience at the level of the governing board.

Gary Cundill, Wilderness

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