On her weekly podcast Ryn Melberg (www.rynmelberg.com) reviews the status of corporate governance reforms and continued shortcomings of three large and very high profile organizations. Earlier in the year, Ryn had discussed each of these and their unique governance challenges in depth. During this week’s edition of The Guardian podcast, she reviews each. On the surface these organizations seem very different. But each shares in common shortcomings of corporate governance.
Since the original broadcast about FIFA, founder and president Seth Blatter has announced his resignation. This did little to boost confidence about future reforms for FIFA as Blatter, according to Ryn, will likely seek re-election in February, 2016. While FIFA has announced some governance reforms, there is still no global reform move. “The only significant deep and sweeping reforms are at the confederation level,” Melberg said. “The six confederations represent member countries from Africa, Asia, Europe, North/Central/South America, Oceana, and South America.” Governance authorities like Ryn state that while a completely new organization is not needed, current or past members should not be considered for office or board membership. “Different candidates will be enough,” Ryn said. “With another World Cup scheduled in a couple of years, starting with a new organization would be too disruptive for fans, athletes and sponsors. The boards of the six confederations will need to elect a new board and new president.”
On June 4, 2015 Reuters reported that the U.S. Securities and Exchange Commission was investigating allegations that Andrew Liveris, chairman and chief executive officer of Dow Chemical misused company funds for personal benefit (http://www.reuters.com/article/2015/06/05/us-dowchemical-probe-exclusive-idUSKBN0OK24Z20150605). “It was not a surprise to anyone in the audience that the SEC was investigating Dow and Mr. Liveris,” she said. “This opens the door for the SEC to investigate and likely find significant improprieties at Dow. My fear for Dow is that this behavior is cultural because they have been getting away with it for such a long time.”
Unlike the indictments taken against FIFA or the investigation by the SEC into Dow, there is generally no progress to improve governance in the cruise industry. Reported incidents of crimes against passengers on board cruise ships now extend to excursions on shore. Rather than take steps at reform, the cruise industry sees this as a marketing challenge. “Cruise lines are offering kids travel free or free wifi to entice Americans to take their vacations with them,” Melberg said. “This does not address the fact that through March of this year, fifteen people have simply vanished from cruise ships.”
More shocking is that people go missing from cruise ships all the time. “The industry refuses to give people tracking bracelets or install man overboard alarms,” Ryn stated. “They also ignore issues of food safety and will not allow people to postpone a cruise when they are ill. Financial penalties for rescheduling a cruise are often more than the cost of the original ticket. This is how entire ships full of people get sick.”
Ryn remembered the infamous ‘poop cruise’ from November, 2014. According to CNN, 158 passengers and 14 crewmembers caught a virus, which caused vomiting and diarrhea. People reported feeling ill as early as the first week of the cruise, but the boat still completed its month-long tour around Hawaii and Tahiti.
The ship in question last November, the Crown Princess, was the site of a norovirus outbreak twice that year, making it the fourth outbreak since 2012. In addition, the same ship was sent back out with a new set of passengers the same day it arrived back in Los Angeles. “The cruise industry could choose to manage itself and put the safety of passengers ahead of all other concerns,” Ryn said. “The challenges of the cruise industry are serious governance issues and not marketing related.”
To hear the entire podcast, go to www.rynmelberg.com or subscribe on iTunes at: https://itunes.apple.com/us/podcast/ryn-the-guardian-melberg/id977764101?mt=2