6 November 2007

The Honourability of the Directors

In August I wrote on this blog, an article (Geronzi: a step back) in which I asked for the suspension from his position of Cesare Geronzi until the final verdict is given, so as to safeguard the international reputation of Italian finance. The call fell on deaf ears.
I am publishing a letter by Antonio Borghesi, a deputy with Italia dei Valori. This letter is a further attempt to encourage the news media and the politicians to take up the discussion.
In the deafening general silence, on 10 October, Italia dei Valori put forward a draft law on this matter.

”It is unacceptable that at the top of important financial institutions, there are people who have lost the required honourability as they have been convicted of fraudulent bankruptcy. International credibility in our financial and banking system is needed and now we have decided to take action.
This is not the first time that I am intervening on this scandalous affair that has already gone beyond the boundaries of our country since the news has been reported by CNN.

At the top of two important institutions, namely Capitalia and Mediobanca, there’s a person who has lost the required honourability. I am referring to Cesare Geronzi, convicted at the first level for fraudulent bankruptcy and sentenced to eight months, and now considering recent happenings that see him being sent for trial for fraud in the collapse of Parmalat.

At the moment, the administrators of banks and financial institutions who have lost the required honourability must be suspended from their duties, however the Board of Directors has the power to reinstate them, if they feel that if they continue to have the trust of the shareholders there can be no obstacle.

But I am thinking: what counts more? The shareholders of a bank or the protection of savings and of savers?
It seems evident, even following the serious financial happenings that have been occurring in recent years, the need for a more rigorous behaviour from the investment companies and the banks in relation to the Directors, the CEOs and the Auditing Supervisors when they are convicted, even though it is not definitive, for banking and financial crimes, for the crime of false accounting, for crimes against public administration (embezzlement, abuse of office), crimes against public trust (falsity of money), against property (theft, robbery), against public order (associating to commit a crime), against the public economy and for tax matters.
I have decided to take action, by presenting a Draft Law (Proposta di legge 3135) with just two articles to modify the TUB (Testo Unico Bancario) and the TUF (Testo Unico della Finanza) so that the shareholders meetings cannot decide to reinstate people at the top of the company who have been temporarily suspended because of a conviction that is not yet definitive, until the criminal proceedings have had a definitive verdict.

This is a cautionary measure that is completely legitimate. We need international credibility in our financial and banking system.”

Posted by Antonio Di Pietro in Economy