The bank rejects the CNMV mentions of corruption in its proposal for a new Code of Good Governance. Both the Spanish Banking Association (AEB) and the ECSC clarify in their comments to the text the regulator’s references to this matter, as well as the recommendations he proposes to exterminate the corruption virus once and for all. All this despite the investigations into the links of BBVA and the ex-commissioner Villarejo have returned the sector to the eye of the hurricane.

The number of comments to a CNMV document has marked historical highs. Sebastián Albella, president of the supervisor since November 2016, has not developed his own code of good governance, unlike Olivencia, in 1998, Manuel Conthe (2006) or Elvira Rodríguez (2015). But it has launched a dart that has worried issuers. The supervisor has received more than 50 allegations, of which he has published 45; I had no authorization to publicize the rest.

The bank association wants to preserve the privacy of the directors

The reference to “corruption”, which appears four times in its proposal to reform the Code of Good Governance, known on January 16, is the main criticism gathered in the comments that were published last Friday. Albella had previously launched a bomb, on November 25, 2019, when she urged through a hard statement to listed companies to contain and communicate corruption cases.

The AEB – which represents the big banks, such as Santander, BBVA, Sabadell, and Bankinter – is one of the toughest in its comments. From this kind of employer, they make practically an amendment to the totality of the most significant change by Albella’s team: the attacks on corruption The first criticism is that the word itself appears.

“Cases of corruption … are just some of those that can affect the reputation of a society. It cannot even be said that the term corruption, beyond its media use, has a coined and unique legal meaning. Therefore, it is considered that its inclusion does not improve the wording of the recommendation ”, the association states in its comment to the supervisor.

Another issue in Flanders of the text is that the board should examine as soon as possible the situations that affect a director, related or not to his performance in the company, without waiting, as expected, for the director to be prosecuted or Open oral trial. In addition, the opening of an internal investigation is specifically mentioned, which adds to the possibility of requesting the resignation or proposing the termination of the affected director. “It is a less formalistic approach,” said the president of the CNMV in the presentation of the reform.

Well, the AEB prefers formalism and recommends “expressly limiting the recommendation to open an internal investigation to those situations of the directors directly related to their performance in the company itself”.

First justice

That the auditor will explain the exceptions is in question

The AEB is also in favor of the fact that justice has taken action on the matter before the company does anything. In his opinion, the investigation should be opened only in those cases that imply that the director has the status of defendant or has been convicted by judicial authority “for respect to the principle of presumption of innocence and for the possible irreversible damage that could be caused by act differently. ” It is not enough to be “investigated,” as indicated by the CNMV.

The association of the banks also wants to preserve “the privacy of the directors”, so it opposes to break down the investigations in the annual corporate governance report unless it has been decided to request the resignation of the director or when he has presented it own motu.

The AEB also advocates that the power to issue contingently convertible securities issued for regulatory purposes (coconuts) for more than 20% of the capital can be delegated to the board. In addition, it criticizes several points of the recommendation that indicates that the variable components of remuneration are deferred for a minimum period of time sufficient to effectively verify that they have met the conditions (…) established ”. “It can have very negative impacts,” says the association.

The ECSC, an association of which some of the old boxes are part, is quieter in its comments. It does not oppose the term “corruption” itself, nor does it oppose the council to act immediately as soon as an irregular case is detected, but clarifies that the scope of the expression should be limited by replacing “corruption cases” with “crimes related to the corruption”. And he adds that, when the counselor is being investigated, he must also report on his procedural vicissitudes.

Emisores Españoles, an association created in November 2009 and claims to represent 50 listed companies, 70% of those on the Spanish Stock Exchange and 75% of those that make up the Ibex – its president is the secretary of the Enagás board and on its board of directors appear Acciona, Iberdrola, Indra and Red Eléctrica, among others – affirms that “the incorporation into the legislation of societies or codes of good governance of the term corruption may not be adequate”. One of the reasons given by this institution is that the concept “does not have as such a precise legal technical meaning in the Spanish legal system.”

Equivocal concept

From the legal department of Deloitte they are also reluctant to state the word “corruption.” They recognize that it is common and frequent use but, at least, they ask for clarification. “In order to provide legal security for the actions of the recipients of the code, it could be indicated if the term‘ corruption ’corresponds to the criminalization of business corruption established by the Criminal Code.”

The Uría Menéndez firm, in the same vein, advocates eliminating the mention of corruption because it is an equivocal term. “The mention of corruption cases seems unnecessary since the relevant thing is that, whether or not it is an assumption of corruption (whether in the colloquial or more technical sense of the term), the event in question may harm the credit and reputation of the society, ”he adds.

But not everyone criticizes the measure. The voting advisory agencies Corporance and Glass Lewis welcome the supervisor to incorporate this mention.

Another of the issues most questioned by the companies affected by the code of good governance is the need for the auditor to go to the shareholders meeting to explain possible qualifications. “It is proposed to limit the information to be provided during the general meeting of shareholders to that provided by the chairman of the audit commission in accordance with the provisions of the Capital Companies Act, and which could include information regarding the existence of qualifications, its content and scope, ”says the AEB.

The feeling of the majority of the contributions in this regard is summarized by the Institute of Certified Censors of Accounts, the employer’s board of auditors. In his allegations, he questions that this recommendation is compatible with the professional secrecy to which the law obliges them and puts the focus on the limits on the information that shareholders must have. Accept that the auditors attend the meetings, but only to “read the report and to answer generalities” and rejects that they can go deeper into more questions.

Conthe makes his own contributions

Manuel Conthe, president of the CNMV between 2004 and 2007. Juan Lázaro

Resignations. Although 13 years ago he resigned from his position as president of the CNMV, Manuel Conthe and that he developed a Code of Good Governance to which he gave his name, he has also advised changes to the text that the supervisor has presented. He suggests that “personal reasons” cease to be a valid explanation to justify the resignation of a director. In this sense, the proxy advisor Corporance advises that the CNMV interview the outgoing directors.

Corruption. Not to mention the specific word but without asking for its withdrawal from the text, Conthe proposes that the company specify its policy on “diversity, business ethics, fiscal responsibility, respect for human rights and prevention of illegal behaviors”, as well as information channels and the relationship with the media that companies adopt.


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