GovernanceCulture - The Corporate Governance Professional

02/04/2025

DEI is discrimatory and anticompetitive in the extreme. It has no place ina market economy.

Adobe is moving away from its diversity hiring targets.

It joins firms like Google and Meta in reducing diversity, equity, and inclusion efforts.

(Credit: Courtesy of Gloria Chen)

11/03/2025

Interesting in the wake of the current US President's executive order to strike DEI from government policies and departments, an article in the Australian on ESG, of which DEI is an element, in 2024. It's a bit of a long read but worth it...

𝐉𝐚𝐧𝐞𝐭 𝐀𝐥𝐛𝐫𝐞𝐜𝐡𝐭𝐬𝐞𝐧 𝐓𝐡𝐞 𝐀𝐮𝐬𝐭𝐫𝐚𝐥𝐢𝐚𝐧 𝐌𝐚𝐫𝐜𝐡 𝟏𝟑, 𝟐𝟎𝟐𝟒
Corporate governance is no longer a niche concern of interest only to lawyers, company directors and a few policy nerds. The embarrassing failings of corporate Australia and the strangling influence of enormously prescriptive and inflexible corporate gatekeepers are now becoming material and mainstream economic issues. A per capita recession, crippling regulation (especially in industrial relations), rising taxes on business, flailing productivity, falling business investment, insolvency rates that may outstrip the global financial crisis – all these are ultimately down to the federal government.
But corporate Australia has been asleep at the wheel, if not downright complicit, in all these emerging threats to our economic wellbeing.
That complicity was driven partly by naivety and partly by incompetence, but significantly because the structures of Australian corporate governance force boards to distract themselves with social and political agendas that include diversity, equity and inclusion measures.
A striking example landed not long after BHP’s Mike Henry was reduced to offering to swap subsidies for BHP’s nickel business for more sensible IR laws. Cue the thoroughly clueless ASX Corporate Governance Council and its latest draft principles for listed companies.
What did these recommendations tell us about what worries corporate Australia? Are they worried about productivity, tax, industrial relations or other regulation? Are they worried about how they were so grossly out of touch with mainstream Australia on the voice or Australia Day? Are they worried their boards and management are living in a bubble, obsessed with teal politics and disconnected from the real world? No. Nothing so prosaic.
At a time when the US is well past the high-water mark of DEI and is back-pedalling on it madly, the ASX Corporate Governance Council is doubling down on DEI.
The major proposal from the ASX corporate governance gurus is to increase quotas for women on boards from at least 30 per cent to 40 per cent and to require disclosure of other “relevant diversity characteristics (in addition to gender)” being considered for board membership.
Additionally, the council wants boards to be forced to report on the effectiveness of their “diversity and inclusion practices”.
That the council’s consultation paper says increased board gender quotas will develop a “range of perspectives” is laughable. Gender quotas haven’t delivered intellectual diversity: they have cemented homogenous views among a group of directors who agree with quotas, and all the associated corporate guff that generally goes with supporting quotas. There are real concerns that never before have Australian listed boards been less diverse – on the matters that count.
No wonder, then, that in the US the DEI crusade has become increasingly discredited. In 2022, two separate California Superior Court judges ruled the state’s laws mandating quotas for, respectively, women and “under-represented” racial and other groups violated equal protection clauses of the California constitution.
Last year, the US Supreme Court ruled university affirmative action policies based on race were unlawful under the equal protection clause of the US constitution.
Soon after that decision The Wall Street Journal reported that major companies were laying off DEI executives.
Coca-Cola had already been forced to abandon a policy promulgated by its general counsel, Bradley Gayton, in 2021 requiring its outside law firms to ensure that 30 per cent of new legal work for Coke had to be performed by lawyers who were women, LGBTQ+, disabled or members of minority racial or ethnic groups.
This year, the pace of change has quickened dramatically. A little over a week ago, The Wall Street Journal reported that a number of states were “trying to extricate their public universities from the DEI quagmire”.
The most striking example was the University of Florida closing the doors on its DEI department and saving $5m from its DEI frolic and ending all DEI contracts with external suppliers. As university president Ben Sasse told the Journal, the worst problem with DEI was the E – equity had trumped equality, which undermined a modern society premised on equality of opportunity.
Importantly for Australia – given we do not have an equal protection clause – DEI has become discredited in the US not merely because it is unconstitutional but because it is a terrible idea.
Right across America the realisation has dawned that DEI is not intended to end discrimination but to perpetuate it. DEI does not aim to end prejudice but to substitute new and different categories of oppressed groups for the old ones. DEI specifically rejects Martin Luther King’s dream of a colourblind America. That shocking realisation hit America’s Jewish community first and hardest. When Harvard president Claudine Gay was unable to bring herself to say that calling for genocide of Jews would violate Harvard’s codes of conduct, Jews realised that all Harvard’s enormous edifice of DEI rules, all Harvard’s intolerance of micro-aggressions, wasn’t meant to help them.
DEI simply established a new hierarchy of victims and if you were low on that hierarchy DEI won’t lift a finger to help.
To borrow again from King, DEI couldn’t care less about the content of your character, all it cares about is the colour of your skin. Or membership of some other preferred group.
This should not have come as any surprise given DEI was, in many respects, simply the popular outgrowth of critical race theory. But it did.
Simultaneously, the US has seen a large and growing anti-ESG (environmental, social and governance) movement.
According to the Financial Times in December last year, 18 states had “adopted some kind of anti-ESG legislation” (although to be fair many states have rejected such laws and four have adopted pro-ESG laws).
Though by no means universal, there is certainly widespread doubt over the propriety of companies or funds imposing the political preferences of their management or board on investors. The Financial Times quoted one prominent fund manager’s argument “that ‘it makes no sense’ to try to impose one universal do-gooder framework on all clients because each of them holds different values. His prediction? ‘ESG will be dead in five years.’ ”
All this has apparently passed corporate Australia, and especially the ASX Corporate Governance Council, by. Here is where the political becomes a matter of economics. The ASX’s individual business failings are matters of record – its botched attempt to replace its CHESS system induces laughter all over the country. Its corporate governance blunders are worse.
The corporate governance council is responsible for enforcing doctrinaire DEI and ESG policies that have hobbled listed companies. No wonder initial public offerings are down and private markets are replacing public markets.
These failures have been aided and abetted by the standard setter for corporate boards, the Australian Institute of Company Directors. Together they have strangled innovation and diversity of thought on Australia’s boards.
This explains their universally uncritical analysis of the voice and their complete lack of understanding of what the Albanese government had in store for them. Economic underperformance is guaranteed by governance cultures such as this.
Which brings us to the puppet masters. Industry superannuation funds wield disproportionate power in corporate Australia. They are union dominated, are chaired by people such as Wayne Swan and Nicola Roxon, are unaccountable to super fund members and are highly politically active, especially when it comes to setting governance standards.
There can be no reform of the governance, and therefore the performance, of corporate Australia unless their stranglehold can be broken. The ALP is a major beneficiary of Big Super’s power as it enables them to muzzle corporate Australia.
Any future change to enhance the performance and culture of Australian corporations will have to be driven by a future Coalition government. Will it be prepared to take on the vested interests necessary to lift Australian economic performance out of the ESG and DEI quagmire?

09/02/2025

Interesting and vitally important from a governance perspective

'What I’ve seen with the United States is a different set of standards based on gender'

31/12/2024

From 15 June 2015...

Today we celebrate the 800th anniversary of what has been said to be "The greatest constitutional document of all times – the foundation of the freedom of the individual against the arbitrary authority of the despot" (Lord Denning, one of the 20th century's greatest jurists), the signing of the Magna Carta in 1215.

Let us reflect on what this freedom has meant to us and not forget it. In these post COVID times, it is perhaps time to reflect on how the "despots" have, or at least tried to (a la the for the time being aborted "Mis-information and Dis-information Bill) to reduce these hard fought rights.

19/12/2024

𝗪𝗼𝗿𝗹𝗱 𝗝𝘂𝘀𝘁𝗶𝗰𝗲 𝗣𝗿𝗼𝗷𝗲𝗰𝘁 𝘀𝘂𝗿𝘃𝗲𝘆 𝘀𝗵𝗼𝘄𝘀 𝗿𝘂𝗹𝗲 𝗼𝗳 𝗹𝗮𝘄 𝘂𝗻𝗱𝗲𝗿 𝘁𝗵𝗿𝗲𝗮𝘁 𝗮𝗿𝗼𝘂𝗻𝗱 𝘁𝗵𝗲 𝘄𝗼𝗿𝗹𝗱
Chris Merritt The Australian December 19, 2024
In the months ahead, we can expect to be deluged with all sorts of promises from politicians about the laws they intend to enact after the coming federal election. When assessing those promises you should keep in mind that the erosion of liberty is sometimes dressed up in beguiling terms.
Danger arises when those promises are implemented in ways that disregard the principles underpinning the rule of law. And that is exactly what has been happening here and elsewhere.
The latest survey by the World Justice Project shows that rule of law principles are in trouble – globally and within Australia.
The WJP’s leadership council includes Beverley McLachlan, a former chief justice of Canada; Judy Martinez, a former president of the American Bar Association; and Sir Jeffrey Jowell, who was the founding director of London’s Bingham Centre for the Rule of Law.
The WJP’s latest Rule of Law Index, which was published in October, shows the rule of law declined for the seventh year in a row in most of the countries surveyed.
The decline in Australia was less than 1 per cent, much lower than in most other countries. But some worrying signs are hidden within the overall assessment of this country’s performance.
That assessment is based on eight factors and in five of them, Australia’s performance went backwards last year.
The deterioration in each of these areas was slight, but they point to a worrying trend that should be kept in mind when considering the performance of our governments – state and federal.
According to the WJP, last year saw a reduction in constraints on government power in Australia as well as deterioration in order and security, regulatory enforcement, civil justice and criminal justice.
The only improvements were in the absence of corruption, open government and fundamental rights.
Australia’s deteriorating performance is not a short-term aberration. Our performance on every one of those factors has declined from peaks between five and nine years ago.
This coincides with the global rise of authoritarian rule that has been identified by the WJP.
“Since 2016, a global rule of law recession has affected 77 per cent of countries studied, including Australia,” according to the WJP.
This country’s overall performance on the rule of law is still stronger than all but 10 of the 142 countries covered by the latest report, but the trend over the past few years is clear.
The rule of law is in trouble. And our governments are to blame.
The long-term decline in all of the factors measured by the WJP suggests Australia’s lawmakers have a faltering commitment to the principles that underpin the rule of law. That needs to change.
Those principles, which temper the power of the state, are a bulwark against arbitrary rule – if they are respected by those we elect to parliament.
In a healthy society, these principles are above party politics and help lawmakers enact policies in ways that preserve the concept of freedom under the law.
They include equal treatment before the law, the separation of powers, the requirement that the law be clear and capable of being known in advance, that punishments can only be imposed in line with the law and, most importantly, the requirement that we are all presumed innocent until the state proves otherwise.
Yet anyone who was witnessed some of the decisions of Australia’s governments could hardly be surprised by the WJP’s findings.
Any government committed to equal treatment before the law would have acted with alacrity to ensure the Jewish community – like all other Australians – enjoyed equal protection from threats of violence. Put that down as a fail.
Now consider how far the federal government has departed from the principle that laws be clear and capable of being known in advance.
Witness this year’s vague – and failed – proposal for government officials to punish the online dissemination of anything they deem to be “misinformation” or “disinformation”.
Nor is there any sign of legal certainty in the federal government’s use of statutory provisions known as “Henry VIII clauses” which allow ministers to unilaterally change acts of parliament after they come into force so the words might no longer mean what they say. Federal parliament waved through one of these clauses last month when it approved schedule 12 of the Anti-Money Laundering and Counter-Terrorism Amendment Act.
It says the minister is free to modify that act or any other act or instrument for four years.
On November 11, the bills digest produced by the parliamentary library examined this bill and warned that Henry VIII clauses “should be used in very limited circumstances”.
As the name suggests, they date back to 1539 and the domination of the English parliament by a tyrannical king. That’s a shameful heritage that has no place in a modern democracy.
When it comes to departures from principle, it’s hard to beat NSW. Consider how that state has ignored the requirement that penalties should only be imposed for breaches of the law.
The former Coalition government ignored that when it stripped NuCoal Resources of an exploration licence after it had paid $90m for the licence and spent $40m on exploration and development. NuCoal has never been accused of wrongdoing, nor compensated.
Instead of fixing this, the current Labor administration of Chris Minns has averted its eyes from one of the Coalition’s biggest blunders.
It’s time to judge politicians not on their virtue signalling, but their commitment to the principles of the rule of law.
Chris Merritt is vice-president of the Rule of Law Institute of Australia.

29/11/2024

Interesting...

The Environmental Defenders Office has been ordered to pay gas company Santos more than nine-million dollars over its failed attempt to stop a major project off the Northern Territory coast.

09/11/2024

As with anything politically or ideologically motivated, it always goes tot he extreme...

Diversity, equity and inclusion programs have come under attack in boardrooms, state legislatures and college campuses across the country.

18/06/2024

27/02/2024

COVID-19 vaccine mandates for Queensland police and ambulance service workers were made unlawfully, the sta...

06/02/2024

Shane Drumgold fails in bid to scrap ‘irrelevant’ evidence of Walter Sofronoff

Ellie Dudley The Australian February 6, 2024

Former ACT chief prosecutor Shane Drumgold has failed in a bid to strike out evidence from Walter Sofronoff KC explaining why he engaged with the media throughout an inquiry into Mr Drumgold’s conduct while prosecuting Bruce Lehrmann’s r**e case, with a Supreme Court judge ruling that the evidence could go some way to clarifying how contact with the press could have been “necessary or convenient for the fair and prompt conduct of the inquiry.”

Mr Drumgold objected to parts of an affidavit sworn by Mr Sofronoff in which he says he informed a solicitor that he planned to make himself available to journalists throughout the inquiry to answer questions, and that “his interest was to ensure the accurate coverage of the work of the inquiry so far as he was able to do so.”

The affidavit also reveals that The Australian’s columnist Janet Albrechtsen contacted Mr Sofronoff after having received the inquiry’s final report from him under embargo, to alert him to the fact that she and a colleague had obtained the report from another source and planned on publishing the following day.

Mr Drumgold launched legal action against the Sofronoff inquiry and the ACT government last year, challenging findings in the report that he engaged in serious malpractice and grossly ­unethical conduct in Mr Lehrmann’s trial, which led to his termination as the DPP.

After Mr Sofronoff’s report was given to The Australian and the ABC under embargo, Mr Drumgold said he had been denied procedural fairness, alleging that Mr ­Sofronoff failed to comply with s. 17 of the ACT Inquiries Act, which provides that board members must not provide inquiry documents to others or communicate inquiry information ­except under provisions provided by the act.

As part of these proceedings, Mr Drumgold is seeking a declaration that the report and decisions are invalid. Mr Sofronoff denies the allegations against him.
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With the matter set to be heard over three days next week, Mr Drumgold had made attempts to have parts of Mr Sofronoff’s sworn affidavit deemed inadmissable. However Justice Stephen Kaye has rejected all of Mr Drumgold’s objections bar one, and upheld the bulk of Mr Sofronoff’s affidavit on the basis of relevance.

“I am not persuaded, at this point, that the contents of paragraphs 10 to 45 of the affidavit of Sofronoff are irrelevant. At the least, they give some content to the reason, given by Sofronoff, as to why, in the course of the inquiry in the present case, he actively engaged with the media and provided documents and other material to them,” Justice Kaye wrote in the judgement.

“In essence, they provide some background to the explanation given by Sofronoff as to why he considered that his conduct, in providing the documentation and information to the media, constituted an exercise by him of a function under the Act (for the purposes of s. 17) and as to why he considered it necessary to engage in that manner with the media for the ‘fair and prompt conduct of the inquiry’.”

Mr Drumgold objected to parts of the affidavit that explained how Mr Sofronoff “recognised that the subject matter of the inquiry concerned public confidence in the criminal justice system” and he was of the view “that appropriate engagement with the media would be essential to the performance of the inquiry’s functions.”

He objected to one paragraph, on the basis that it is “vague and meaningless”, in which Mr Sofronoff explained why it was important for journalists to understand “the real issues of the inquiry.”

“The paragraph is relevant, because it provides some explanation as to why Sofronoff considered it necessary to provide some detailed information to the media as to the proceedings before the inquiry. As such, evidence is not sought to be adduced as opinion evidence,” Justice Kaye wrote in the Judgement. “The passage in question is clear, and is not ‘vague and meaningless’, as contended by the plaintiff.”

Justice Kaye also upheld a paragraph explaining how The Australian came to publish the report prior to it being made public by government, however said the relevance of the paragraph “is, at best, marginal”.

“In paragraph 87, it is stated that, on 3 August 2023, The Australian newspaper published a story, dealing with the content of the report of the Inquiry, which the government had not then published,” the Judgement reads.

“It is then deposed that, on the previous evening, Ms Albrechtsen had contacted Sofronoff to inform him that she and her colleague had obtained a copy of the report from another source and that, using that source, they would publish a story the following day. That section of the affidavit is objected to by the plaintiff on the basis that it contains inadmissable hearsay.

“In response, the first defendant has stated that the evidence is sought to be adduced for a non-hearsay purpose. The relevance of the evidence on that basis is, at most, marginal.

“With some reservation, I would uphold its admissibility, on the basis that it may explain why Sofronoff did not, apparently, take any steps in relation to the publication by The Australian newspaper of the report before it had been published by the government.”

Justice Kaye struck off one paragraph of the affidavit on the basis that it was irrelevant and “argumentative”, but did not explain what the paragraph contained.

The ACT Supreme Court last Wednesday heard Mr Drumgold’s lawyer Dan O’Gorman SC wished to submit evidence of text messages, phone calls and emails between Mr Sofronoff and Ms Albrechtsen, which he claimed spoke to the “unreasonableness” of their relationship while the inquiry was being conducted.

“We say that the apprehended bias arises in this way – that in the months leading up to and during the inquiry, Ms Albrechtsen was writing numerous articles which were critical of Mr Drumgold,” Mr O’Gorman told the court.

He continued: “A comparison is made of communications Mr Sofronoff had with Ms Albrechtsen in particular and with other journalists. For example, we point out that Mr Sofronoff made 65 telephone calls between Feb 9 and July 31, and we outline how 55 were with The Australian and 10 with all other journalists.”

“There was a total of 9 hours and 57 minutes (of phone calls) – 7 hours and 33 minutes with The Australian, therefore other journalists, one hour and 34 minutes,” he said.

“During the actual public hearings, Mr Sofronoff made 10 calls to The Australian (journalists), eight to Ms Albrechtsen.”

Mr O’Gorman last Wednesday also said he would seek to cross-examine Mr Sofronoff when the matter is heard. However Justice Kaye seemed extremely hesitant to permit the cross-examination.

“I’d be very loathe to give leave to cross examination unless it’s relevant,” he said at the time. “It’s not a fishing expedition, this is not an inquiry.”

The matter will be heard on February 13, and is expected to last for three days.

1/ Walter Sofronoff (left) and Shane Drumgold (right).

14/12/2023

BP’s former chief executive Bernard Looney was formally sacked after the oil giant found he knowingly misled the board over his relationships with staff.

07/12/2023

Author: Emma Foster Posted: December 4, 2023 Ralph Khoury > CFOs Must Step Up Stewardship Game Seasoned international CFO Ralph Khoury says the scandals that have shaken Australia’s corporate landscape this year should be a wake-up call to all CFOs about their role as “stewards” of governance ...