It’s unusual—rare, even—for the CEO of a major financial news and information concern to serve on the board of directors of a giant global bank.
There’s a reason for that.
Rona Fairhead, who heads the Financial Times Group, the unit of British publishing and education giant Pearson PLC that owns the Financial Times newspaper, sits on the board of HSBC, the banking behemoth now engulfed in a money-laundering and corporate-governance scandal.
Long story short, a Senate report this week found that HSBC let Mexican drug lords launder billions in blood money, intentionally helped rogue states, especially Iran, get around U.S. sanctions, and did business with an Al Qaeda-connected Saudi bank. That’s quite a list, and it’s just a partial one for the sake of brevity.
So, the FT has to cover the HSBC scandal, while the CEO of its parent is on the board responsible for the bank’s oversight.
Not helping matters, Fairhead chaired the board’s Audit Committee, which at the time, was broadly responsible for making sure management’s internal controls were adequate. Those systems failed, and amidst several law-enforcement investigations into its anti-money laundering controls, the bank created a Risk Committee, which Fairhead heads.
The FT hasn’t mentioned its boss’s position in its coverage, though to be fair, no one else has either. But it’s the FT reporters who must report on a company that includes the boss on the board.
There’s no evidence of any chilling effect on the paper’s coverage of the HSBC story, and Charles Goldsmith, spokesman for Pearson PLC, says in an email, “We refute any suggestion that the FT’s coverage of HSBC was or could be affected by Rona Fairhead’s position on the HSBC board.”
He also says, “The FT is editorially independent of Pearson, and of executive management, including John (Ridding, the FT’s CEO) and Rona. Editorial decisions are taken by appropriate journalists and editors, and the editor is ultimately responsible for them.”
Fair enough, but it’s worth asking whether it’s worth it to have your executives on the board of a major company, much less a giant bank, which, these days, is almost certain to be bound up in the news in a bad way.
We’ve got our own conflicts at CJR, but they’re necessary ones, and we disclose them when we run into them. As a nonprofit, we wouldn’t exist but for donors. The FT‘s conflict here seems unnecessary.
I’m sure the Brits think all this is typical American navel-gazing nonsense. But its readership is more American than European, so it’s fair for us to hold it to American standards.
It’s true that Richard Parsons sat on Citigroup’s board while he was chairman of Fortune’s parent, Time Warner. That wasn’t great, but Fortune was a small part of a sprawling empire, and it disclosed its boss’s role.
That should be the minimum.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.