Private Sector Must Earn Public Trust, Business Leaders Tell Senate Committee

November 6, 2002

The private sector must lead the way in improving corporate governance in order to restore public trust, the Canadian Council of Chief Executives (CCCE) will tell the Senate Standing Committee on Banking, Trade and Commerce today.

“Individually and collectively, it is business leaders who must earn the public trust that they need to build their enterprises and strengthen the economy. No government can legislate that trust. No regulator can restore it. Businesses must earn it,” said CCCE President and Chief Executive Thomas d’Aquino.

Corporate scandals such as Enron and WorldCom have led to a raft of new laws and regulations in the United States that affect many Canadian companies directly and have prompted calls for similar rules in Canada. Many large Canadian companies are directly affected by United States legislation, but the Council warned that wholesale adoption of the American approach could hurt rather than help the ability of thousands of smaller public companies in Canada to attract investors.

In its recently released statement entitled Governance, Values and Competitiveness: A Commitment to Leadership, the Council laid out a detailed private-sector driven approach to improving corporate governance.

Mr. d’Aquino made it clear to the Committee that in emphasizing a principles-based approach to reform, the Council is not calling for looser standards. “Rules define the minimum that is acceptable. Principles move personal and corporate behaviour beyond that legal minimum. The question then is whether and to what extent investor confidence will be increased by raising the minimum rather than by enhancing the norms of actual practice.”

Informed investors are a powerful force for change, Mr. d’Aquino concluded in his presentation to Senators, and Canadian chief executives understand that good governance is critical to sustaining business growth. “Compliance with the highest standards globally is a way to create an important competitive advantage.”

While supporting a comprehensive regulatory review, Mr. d’Aquino noted that restoring public trust will require more than the adoption of new rules and codes. “Yes, we need to be constantly vigilant in catching and punishing those who break the rules, but there is simply no possible substitute for honesty and integrity. In an age of information overload, character matters more than ever.”

Formerly known as the Business Council on National Issues, the CCCE is a non-profit, non-partisan organization composed of the chief executives of 150 leading Canadian enterprises. The members of the Council head companies that administer in excess of $2.1 trillion in assets, have annual revenues of more than $500 billion and account for a substantial majority of Canada’s private sector investment, exports and research and development.