The chief executive of the Irish Stock Exchange (ISE) said today Ireland must earn from recent failures in corporate governance, as Tánaiste Mary Coughlan denied a "light touch" regulatory regime existed.
Speaking at a conference on corporate governance hosted by the ISE in Dublin today, Deirdre Somers said if Irish listed companies want to attract international investment, they must meet international market expectations today.
"Companies must consider whether their historical practices, although accepted in the past, will meet market expectations in the future," she said.
Ms Somers called on investors to demand better standards and disclosure, and to penalise companies that do not provide them.
Ms Coughlan said it was clear mistakes had been made in the financial sector, but said it was essential to learn from the errors and take action where necessary.
"Getting the right reforms implemented in the right places will be crucial. One size will not fit all. We have to distinguish between commercial banks and investment banks- and between banks and other financial services institutions," she said.
"Our reformed regulatory regimes and governance codes must be vigorously implemented to discourage recklessness by our systemically important banks and financial institutions. They must be robust enough to deflate any "bubbles" before they inflate to catastrophic proportions."
She denied a "light touch" regulatory regime existed, citing 15 Companies Acts introduced since 1963.
"This body of legislation, when consolidated, is expected to total some 1,400 substantive sections. Clearly there is no such thing as a 'light touch' regulatory regime for Irish companies," she said.
ISE chairman Padraic O'Connor said most Irish listed companies complied closely with the guide for Corporate Governance issues for public companies, but said problems had occurred when some companies deviated from the principles of the code, known as the Combined Code.
However, he said responsibility for corporate governance issues was not solely down to publicly listed firms and called on the Government to "lead by example" in ensuring that public sector companies practiced the highest standards.
"The hundreds of thousands of privately owned companies and the numerous semi-state companies are equally responsible for ensuring our national reputation for probity and good corporate Ggvernance – and indeed many of the damaging revelations of recent years have arisen out of those sectors rather than amongst listed companies."
He called on the Government to "lead by example" by ensuring that public sector companies adhered to the highest standards.
Fine Gael enterprise spokesman Leo Varadkar told the conference Ireland needed a new corporate culture to restore Ireland's reputation which he said had been damaged by the activities of the banks, Government and State agencies
"This reputational damage, however, does not have to be lasting damage. We are not alone. Other countries have endured reputational damage too. But it is up to us to put our house in order, to do it quickly and to show the world that Ireland is second to none when it comes to corporate governance, ethics and open Government," he said.
He said new laws were required to bring in change, including the restriction of the practice where chief executives become chairman of the board, the introduction of a "conflicts of interest" regime to prevent an overlap of directors between boards of financial institutions and State bodies, and legislation to protect whistleblowers and regulate lobbyists.
"Ireland's reputational crisis is real and damaging but it need not be permanent. We can restore our reputation quite quickly. But no amount of rules, ticked boxes or laws can do that. At the end of the day, it is down to people, their behaviour and their attitudes. That's what we need to change," he said.
