Thursday, October 29, 2009

Evelyn de Rothschild, Chairman, Concordia BV

‘Auditors haven’t done a good job’
Sir Evelyn de Rothschild, chairman, Concordia BV
Naren Karunakaran
His considerable wealth and lifestyle lends an old-world halo to Sir Evelyn de Rothschild, patriarch of Europe’s Rothschild banking family. The Chairman of Concordia BV spoke to Naren Karunakaran on corporate responsibility but was reticent on the Rothschild involvement in the Russian oil giant Rosneft’s controversial $10.7-billion IPO in 2006. Sections of the financial community had railed against it on ethical grounds, for Rosneft’s principal asset, Yuganskneftegaz, was allegedly acquired in a forced auction by the Russian government.
Debates on corporate responsibility are gaining in decibels. Why?
Evelyn de Rothschild, Chairman, Concordia BV

It goes in waves. A change in government may bring about more regulation or less regulation. You see that in the US with Sarbanes Oxley. In the UK, we split responsibilities between the Bank of England and the Financial Services Authority. These moves reinforce corporate responsibility. I think, shareholders have to be well cared for.
There is an accusation that corporates are obsessed with shareholder value and tend to look away at hard, societal aspects of doing business.
Investor groups, like hedge funds, are moving in. They are only keen on quick returns and aren’t particularly interested in the company per se. Their focus is on capital gains. To me, it is rather difficult to understand. It’s a question of the type of investors a company has.
The key to modern corporate responsibility, therefore, is the appointment of independent directors on the board, those who understand the business and issues, like competence of auditing. I think, the auditors worldwide have failed to do a good job.
How does one rectify the situation?
There are two sides to auditing. One is actually doing the accounting procedures; and the other is to be absolutely upfront and tell the management that the people running the accounts in the company are not doing it satisfactorily. Auditing firms have to engage in staff assessment. However, these firms are so keen to keep the business that they tend to go soft on the company. They have to be tougher.
You see this happening in the short-term?
I don’t know whether it will happen. But it should happen. Three or four companies
"Today, the key to modern corporate responsibility is the appointment of independent directors on the board"
control the entire audit world. That’s wrong. There is little to choose from. Frankly, the whole standard of ethics is the key criteria to good business. The government also has to put in tougher systems. Basically, we have to train people to behave correctly.
You’ve had a close association with the global metal and mining industry.
I was director of De Beers and was close to Rio Tinto and others. I am familiar with the issues—environment and resettlement of the displaced. The shareholder has to be protected. A company cannot spend large amounts of money on the environment if it is detrimental to the value of the company.
Did it worry you when controversy hit the Rosneft IPO? ABN Amro-Rothschild was joint bookrunner to the IPO, which investor George Soros and others described as facilitating the sale of stolen goods.

Was there a controversy? I can’t remember, my memory is bad, it was a while ago.

Interviews / Q&A Magazine | Dec 01, 2007


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