Bad corporate governance: the fightback begins

A group of reforming academics have written an effectively strident polemic against all the ways capitalism is going wrong

Fighting Corporate Abuse – Beyond Predatory Capitalism by The Corporate Reform Collective. Pluto Press. ISBN: 9780745335162. 210pp. €23

Fighting Corporate Abuse – Beyond Predatory Capitalism by The Corporate Reform Collective. Pluto Press. ISBN: 9780745335162. 210pp. €23

Mon, Dec 15, 2014, 01:00


Book Title:
Fighting corporate abuse – beyond predatory capitalism


by The Corporate Reform Collective

Pluto Press

Guideline Price:

The title of this book gives a clue to the stridency of the approach to the subject of poor corporate governance. The authors are mainly academic figures from the UK who have come together in a group called the Corporate Reform Collective to highlight the need for reform of corporate law and practice.

The book opens with the assertion that the public is “very angry about recent corporate abuses and the way in which the capitalist system is working”.

Citing as evils that need to be addressed are tax avoidance by the likes of Google and Amazon; bloated salaries for bankers and other corporate types; rising utility costs to boost shareholder dividends; the socialisation of private debt; and the lack of accountability for bad corporate practice.

Behind a wall of secrecy, companies are devising complex schemes to boost their profits. An unholy trinity exists here, the authors assert.

Firstly, you have corporation itself in the form of its shareholders. Secondly, you have a management whose remuneration level is tied to boosting financial performance. Thirdly, you have a “tax avoidance industry”, as it is termed here, in the form of the all-too-eager-to-help accountancy and legal professions.

The taxation division within major corporations often acts as a profit centre, with assigned profit- and revenue-generating targets. The salary increments of its members will often depend on meeting those targets.

Businesses, in their defence, say they are merely playing by the rules decided by governments. This is disingenuous, the book states. Business advisers and lobbyists are also heavily involved in influencing those rules and moulding how they work in practice, through the mutual understanding of business representatives and regulators. The practice of those moving from public regulatory and supervisory positions to join the ranks of the private sector is frowned upon because it helps form a “closed community of interpretation”.

Auditors take a good hammering in this book. Supposedly independent of company directors, they have “more powers than the police” and, without a court order, can demand any information and interview any person to understand the financial position of the audited entity.

In reality auditors are dependent on directors for their appointment and resulting fees, and can remain in office for decades building a fee dependency and collusive relationship with those directors.

The sins of auditors of the likes of Enron, Lehman Bros and Robert Maxwell’s media empire, among many others, are cited. Predatory capitalists, asset strippers and bad bankers, among others, are also put in the dock.

There is wide scope for reform, however, and the authors set out their ideas in the second half of the volume. Alternatives to the typical limited company and plc should be encouraged, for one.