- The CNMV warns of its "concern" about the irregular practices of listed companies
- Courts: BBVA blames the 'Villarejo case' on Francisco González and his team
In the business world there is a concept called Good Governance and the opposite is irregular practices that, at times, end up resulting in something very similar to corruption or corruption itself. The dripping of cases and news in recent days about Spanish companies and doubtful practices has been such that the National Securities Market Commission (CNMV) has launched this week a severe statement in which it confesses "worried" about the way in which that can "compromise the image and reputation of our stock market."
Just looking back in recent weeks, the walk through the courts of companies, businessmen, executives and former managers gives an idea of the reaction of the body chaired by Sebastián Albella: Antonio del Valle , Mexican businessman who was the main shareholder of Banco Popular , has declared in the National Court for the drift of the entity that ended up disappearing; Francisco González , former president of BBVA, appeared days earlier in the framework of the Villarejo case , as did several legal representatives of the entity. Antonio Asenjo , responsible for security at Iberdrola, has been charged for his alleged involvement with the former Police Commissioner and then there is Mikhail Fridman. The Russian tycoon owner of the Dia chain is being investigated for his performance to take over the supermarket group and for his role in the purchase and subsequent fall of the Zed Group . Precisely this week has filed a complaint against Javier Pérez Dolset , owner of the Spanish technology, for falsehood and procedural fraud and, at the same time, Pérez Dolset has denounced him.
Corporate scandals are nothing new. There have always been cases of fraud, conflict of interest, bribery or corruption within corporations, large and small. The difference is that they matter now. They matter a lot. Inside and, above all, outside the company. "Traditional corporate governance is no longer enough. Until now, that government had almost the sole objective of serving the shareholder, but we are turning towards a model that we call governance with a capital G ", explains Jaime Silos , director of Corporate Development of Forética , an organization that analyzes sustainability and corporate social responsibility.
That capital G implies that companies flee from short-termism and establish their guidelines thinking big, long-term and in areas that go beyond the economic: the impact on the environment, the impact on society, the ethics of their activities ...
Good governance implies many elements, but some are basic: that the administrative bodies are independent , that they have diversity - in terms of skills, knowledge, gender of their members ... - and that they are committed to corporate objectives and strategies of the firm.
It seems easy, but giants like Facebook , without going any further, are not so clear. "When your case is analyzed, you can conclude that it is one of the worst governed companies in the world, although this lack is supplemented by its good economic results," says Silos. He also warns that, sooner or later, companies in that situation will face a governance shock and "only then will they understand its true importance."
Others did it a long time ago. The year 2008 was a before and after in this area . Before the outbreak of the great global financial crisis, governance crises had hardly any consequences on capital markets; Now the bill is high.
Up to 30,000 million euros cost Volkswagen the dieselgate , the case that broke out to the automaker after verifying that it had been installing software in its diesel vehicles for years to falsify the gas emission tests into the atmosphere. Another giant, Facebook, lost 79,000 million dollars of market capitalization after the Cambridge Analytica scandal and more than 31,000 million was also left Wells Fargo to reveal the creation of accounts without the consent of customers to meet the objectives set by the entity , which meant a 13% collapse in their actions in 21 days.
What has changed in the wake of 2008? On the one hand, the sensitivity of investors and consumers, who now do not overlook behaviors they consider outside business ethics; on the other hand, social networks , which make the invisible visible, viralize any episode that has to do with bad practices of a firm and are capable of creating reputational problems the size of the company itself. "And in addition there has been a huge development of the powers of extra-financial analysis," explains Jaime Silos. Firms and analysts specialized in measuring how well or badly a company is headed and incorporate its results into investment decisions.
For managers like Bestinver , this factor is fundamental, "one of the most important when making a decision, and that's why we spend a lot of time. You have to be invested with someone you trust, with a clear, focused and focused strategy. that they know what they have to do to generate return to shareholders and other stakeholders, "explains Ricardo Cañete , manager of the firm.
Cañete says that when analyzing a value, it is set at several points, such as that the person who runs the company has experience in the sector or in similar companies; that its profile is adequate for the moment the company is going through - "a restructuring process is not the same as an expansion process, for example" -; that understands what is the creation of value and does not get carried away by fashions and trends of the market or its sector. It also checks the alignment of interests in the remuneration of managers - "that the bonus is linked to the creation of value" - or "that they have bought shares of the company," he says. And it does not refer to a few actions , but to the investment of a considerable amount of money.
Cañete is clear that there is a correlation between good governance and good returns on an investment. However, looking at the route in the Ibex 35 of the companies most affected by the latest suspicions of bad practices, it is observed that BBVA, for example, accumulates a revaluation greater than 9% so far this year, while Iberdrola rises more of 32%.
Is it incompatible? No Market sources consulted ensure that their cases are not comparable with those of other companies such as Facebook or Volkswagen. "In Spain they are very police and media cases, but they do not have a systemic or institutional character, " they point out. These are very personal cases starring executives who have used their corporations for private and private interests; Corruption is personalized in them and when the company removes them from their functions, it eliminates much of the problem.
How are they detected?
The difficult thing, perhaps, is to detect it. The CNMV developed a Code of Good Governance that includes, in the form of recommendations, the requirements that listed organizations must take into account when developing their models of good governance. Its use is voluntary, but companies must report their level of compliance annually, indicating the recommendations they fully comply with, those that they partially make and those that do not comply - and why they do not. In theory, its application is not mandatory; de facto, yes.
Among the Spanish listed companies, "there are several that are doing quite well and are leading sustainability indices worldwide. In fact, many investors have entered the Spanish market through them," says Jaime Silos. Among the unlisted, the size makes the difference. "The larger ones imitate those of the Ibex and apply the Code of Good Governance with some delay; the problem comes with the small and medium ones," says the Forética expert.
The cost of a governance crisis, in any case, is high. Some end up leading companies, but others become an opportunity. And in this, "the case of Bankia is a positive example," says Jaime Silos. He had to start from scratch, reformed his leadership, acknowledged his mistakes and increased the number of independent directors. Beyond its economic results, the changes managed to relegate the image of the hand on the cervix of Rodrigo Rato on the way to the police station.
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