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James Moore: This is why the ‘wonks’ should mind the shop

 

James Moore
Friday 24 October 2014 01:05 BST
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The investment community needs to take a good look at itself over Tesco.

I know the focus is on whether the company will face a heavy fine from the Financial Conduct Authority, or a full-blown fraud probe. But we should look at why it has found itself in this state.

Only six years ago the financial crisis exposed a series of appalling governance failings in banking. Supine and under-qualified non-executives acted as rubber stamps for executives who presided over deficient corporate cultures. We know the result of that. As taxpayers we’re still feeling it.

Tesco is not a bank (although it owns one), but what appears to have been happening is still jarringly familiar: a chief executive (Philip Clarke) spending too much time on the executive floor and not enough on the shop floor; a complacent, deficient and hubristic culture in which his team couldn’t or wouldn’t alert him to the problems the company was facing; a board that sat back and let it happen; an investor base that did the same.

When the governance lobby kicks up a stink, it all too often gets accused of box ticking – of being populated by wonks who get in the way of businessmen chasing profits.

If we want to avoid another Tesco, perhaps it’s time to start giving the wonks their head.

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