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July 30, 2012


By now, most of the business world is familiar with the growing scandal at the British bank, Barclays PLC.  Although the story continues to unravel, it began a little over a month ago after it was disclosed that Barclays had reached a $450MM settlement with both British and American authorities over the manipulation of benchmark rates (the rates at which banks lend each other money) between 2005 and 2009. The announcement of the settlement has led to significant fallout for the bank, including additional regulatory investigations, shareholder lawsuits and the resignation of the Chairman, CEO and COO.  Although the details of the story behind the scandal are still emerging, a picture has emerged of the boardroom battle that centered on Barclays’ independent director, Alison Carnwath.  According to a report in the Wall Street Journal on July 26, 2012 (http://tinyurl.com/cqxmjpp), Carnwath was perhaps the lone voice in the Barclays boardroom who was trying to steer the bank away from the culture that contributed to the unenviable position it now finds itself in. 

Carnwath joined the Barclays Board in 2010. She is a former investment banker and is currently a senior adviser at boutique investment bank Evercore Partners.  She serves as a corporate board member on several other boards, including Zurich Insurance Group and British real estate investment trust Land Securities Group, LLC.  According to the Wall Street Journal article, Carnwath resigned from the Barclays Board over her growing frustration with the bank’s leadership and her clash with other directors over governance issues at the bank.  In particular, it was reported that Carnwath lost a dispute with other members of the Barclays Board over the compensation package proposed (and later approved) for then CEO Robert Diamond.

Sadly, there are not enough directors with the courage and fortitude, like Alison Carnwath, to do what is right in today’s boardroom.  Some will criticize her for abandoning the bank in its darkest hour – in my opinion this is an illogical condemnation.  It seems clear that Carnwath tried to do her best to set the bank and its board on the right course, but ran into a wall of opposition that reflects the “we know what’s best” culture, which is at the heart of the scandal. Truth be told, Carnwath made a louder statement in her resignation than she did by staying on the board.  And, it is in the way she resigned that is so noteworthy.  Carnwath did not (although it certainly would have been more than justified) resign with a staged press conference and a sermon focused on a theme of “I knew this was going to happen; I told them so.”  Rather, she resigned with a simple statement saying she is “no longer able to devote sufficient time” to the job.  Of course, the message was loud and clear – I tried my best, but I am but a lone voice and this board needs a complete overhaul.  Her resignation sends a clear message to regulators and shareholders – keep pressing.

Governance committees can learn a lot from Alison Carnwath – her willingness to act in the best interests of the company, at all times, and not just for an inner circle of directors and executives, serves as a symbol of corporate governance best practices. Perhaps as part of board member recruitment, corporations should be willing to ask prospective candidates if they would be willing to resign if the actions of the board stood in conflict with his/her personal values and their fiduciary duties.  Imagine a company that would be willing to include this core value in their list of board of directors’ qualifications.

The world of corporate governance needs more Alison Carnwaths.

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