NAB might have been weighed down by excessive corporate governance

It may be that the current swathe of governance proposals is attempting the impossible – fixing the system with additional layers of rules of the kind that have failed in the past. It could be that the modern corporate structure, complex and global, is ungovernable using the conventional means.

Rather than attack complexity with more complexity, perhaps a better outcome would be to invoke simplicity.

Rather than more rules and more board subcommittees creating information-silos (and producing more barriers between the board and the information they need to make the decisions) there needs to be less filtering and less sanitizing.

The best part of a century ago the educational philosopher Alfred North Whitehead explained that if something is said often enough, everyone begins to believe it.

That seems to describe the present corporate governance push – declarations that more compulsory procedures and more rules must be followed and that more mechanisms have to be in place to purge companies of their management ills.

It is noteworthy that the PwC report on NAB points to a focus on process, documentation and procedures manuals.

The same observation appeared in the HIH Royal Commission report.

What evidence is there that separating the functions of audit committees, internal control overseers, risk management committees, probity committees, remuneration committees, audit appointment committees and the like has achieved anything worthwhile? There isn’t any.

Contrary to the avowed intention, it could be that the path corporate governance reform is taking is making complex modern corporations ungovernable.

Perversely, the NAB affair might be a valuable catalyst for some new thinking on corporate governance.