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Thanks.
Easier said than done. These big IIs are too scared to be seen being against management as they’ll likely receive backlash and have limited access, especially in emerging markets.
None of them have a clue about corporate governance, they are in bed with management half the time.
Big investors rapped for failing to spot problems at NMC Health
Trouble-hit company’s directors received across-the-board support from shareholders nine months ago
Some of the world’s biggest asset managers are under fire for failing to respond to governance concerns at NMC Health, an embattled FTSE-listed healthcare operator that last week sacked its CEO and suspended trading in its shares amid a potential accounting scandal.
Pirc, the shareholder advisory firm, has criticised NMC shareholders for not spotting what it described as deviations from corporate governance best practice at the company, which is now being investigated by the Financial Conduct Authority.
Tom Powdrill, head of communications at Pirc, told FN: “I find it inexplicable that people could look at this company and not think there were some things worth voting against.”
According to FN’s review of fund managers’ voting disclosures, companies including BlackRock, Vanguard, State Street Global Advisors, Capital Management & Research and Hermes Investment Management voted in line with NMC’s management at its AGM in June 2019.
Hermes declined to comment. None of the other fund managers responded to requests for comment.
Ahead of NMC’s 2019 AGM, Pirc argued that at least two board directors were not considered fully independent under the UK’s corporate governance code, and recommended voting against them. A spokesman for the directors, joint-chair Bavaguthu Shetty and non-executive Abdulrahman Basaddiq, declined to comment.
Pirc also recommended voting against the reappointment of NMC’s auditor, EY, on the grounds that its fees for non-audit work during the preceding three years amounted to more than half its audit fees, raising questions over the independence of its audit. Spokespeople for EY and NMC declined to comment.
Baroness Sharon Bowles, a director of the London Stock Exchange and a former chair of the European Parliament’s influential economic affairs committee, suggested the multiple deviations from corporate governance best practice should have raised concerns when considered together. “For example NMC might fail a ‘three strikes and out’ test… multiple departures from the code should not be allowed,” she said.
But shareholders approved all resolutions at NMC’s AGM last June with “yes” votes ranging from 93% to 99% — including approval of the auditors, and votes on the appointments of the directors concerned. Shetty and Basaddiq resigned from the company in early February.
Two weeks later, on 26 February, NMC disclosed that a review of its finances had uncovered “discrepancies” in its bank statements, and sacked its CEO. It suspended trading in its shares a day later, and notified the market it was under investigation by the FCA. The former CEO, Prasanth Manghat, could not be reached.
Powdrill said: “We have been recommending that our clients challenge this board over the level of independence for years. These are fairly basic hygiene f
Thanks TQ - do you find posting the full article?