There are a lot of bad scenarios out there for Directors. Most Directors have to stare down the reality that no matter how hard they work, they only focus on a company for perhaps 200-400 hours per year. There is simply no way you can keep on top of everything management does and even if you could, it would not create the climate and culture of trust and empowerment that you probably want to foster.
And yet the nightmare remains. The “I was misled” headline that makes national or international news. A number of recent examples jump out:
- Scouts Canada is currently embroiled in accusations that it not only did not do everything in its power to keep pedophiles out of the organization and protect its boys, but that it also covered up its actions (or alleged inactions). In December 2011, the Chair of the Board of Governors of Scouts Canada (Steve Kent) assured the news media that every suspected incident of child abuse or abusers in the organization had been reported to police.
- Ornge, Ontario’s Air Ambulance service, sent its very credible Chairman of the Board to meet with the Ontario Minister of Health to assure the Minister that “No public funds were being diverted to private purposes” in the increasingly complex Ornge arrangement.
In both cases, the assurances turned out not to be so well-founded. In the case of Scouts, a review initiated by the Governing Board has indeed found new information that is only now being sent to police for their review. At Ornge, a team of forensic auditors called in after things seemed to be spinning out of control has referred a number of matters to the OPP for possible consideration of criminal charges.
In both cases, the Chair of the Board has been caught saying something to the effect of I was misinformed when I last spoke on this matter. The Scouts painted it as an error arising from lost knowledge of old events and recently discovered by a thorough review. In Ornge’s case it was reported with a little more of a sense of deception.
In either case, the “I was misled story” has a nasty history. It is routinely what people say when testifying in parliament to parliamentary commissions. Think Rupert and James Murdoch testifying the British Inquiry into phone hacking. Think of the chair of the eHealth Ontario who said “We asked and they told us all procurement was being done properly….”
The Dilemma for Directors is as acute as ever. An effective risk management approach is a key tool that Directors can use to ensure that their questions and concerns are addressed in comprehensive and satisfactory way, and still build the right culture and governance models.