MAY 2018

to cut costs, they gave up this device, there was
nothing to distinguish members from customers in
general, and so the link between members, boards
and managers in the governance structure was
fatally broken.”
Mervyn Wilson, former principal of the
Co-operative College, says that a string of governance
failures in the past, with some high-profile UK
scandals in the early 1990s, prompted a move for
better training of governors.
“There’s whole raft of situations where governance
failures lead to recognition of a need for improvement
lead to training about codes,” he says.
“To me, the lack of director training in terms
of accountability training and the use of ‘external
business expertise’ led them to fail in their
responsibility to hold executives to account.”
Like Prof Birchall, he sees governance
as particularly difficult in large, complex
organisations and warns that sometimes “process
replaces competence”.
Worse, he says, the lessons of past governance
failures are not learnt.
“There’s a systematic refusal to learn from
experience in the co-op movement.
“In order to move on, there's almost a line drawn
under those failings – what’s most remarkable is
that people engaged in serial failings are given new
roles as part of a deal for a quiet life.”
But it is worth noting that better governance
alone may not always be enough. A recent casualty
for the co-op movement has been Australian dairy
giant Murray Goulburn, which was forced to cut
milk prices after being exposed to volatile markets.
It is now being taken to court by regulators and has
been sold to Canadian dairy firm Saputo (see p21).
Anthony Taylor of Australia’s Business Council
of Co-operatives and Mutuals says the MG case
“was more complex than governance – there were
arguably poor management decisions, and the
broader economic environment was a factor that
exposed this.”
Mr Taylor says the crucial thing is for co-ops “to
remain focused on their members to succeed ...
whether we are talking about how you approach
governance or management or anything else to
maintain a strong co-op over time.”
He says this is the starting point the BCCM has
taken when it develops Governance Principles for cooperatives
and mutuals, adding that BCCM’s original
blueprint stressed the need for the co-operative and
mutual sector to develop the highest standards of
governance. To that end, the BCCM has been holding
two chairs’ forums per year for the past three years.
These have been working on the first set
of Co-operative and Mutual Enterprise Governance
Principles for the Australian co-op and
mutual sector.
“We are getting close to publishing the first
version, for voluntary adoption by the sector
in the next couple months, after a final round
of consultation,” adds Mr Taylor. “A couple of BCCM
members have already indicated they are ready to
start reporting against the governance principles
when they are released.
“We will then continue to develop the governance
principles iteratively with our members over time.
“Alongside the self-help aspect of having a set
of governance principles for the sector, we hope
it will kickstart a dialogue with key stakeholders
outside the sector, such as governance training
bodies, about what fit-for-purpose governance
practices and governance training looks like
for the co-operative and mutual enterprise
sector, distinct from both the for-profit and not-forprofit
sectors.”
Murray Goulburn’s woes deepened when it cut
milk prices for its farmers, prompting many to leave
the organisation.
By contrast, Greg McNamara, chairman
of Australian dairy co-op Norco, says co-op values
which put farmers first are vital to good governance.
“If you don’t take the co-operative ethos
where farmers are the most important part of the
business, you are weeded out – you don’t survive,”
he told the agricultural Outlook 2018 conference
in March.
“We have to stay true to our core values,” he said.
“Our relationships with all our stakeholders is the
key to future success, building a proposition that
sets our business apart from its competitors... We
look for business partners who will build on this
value proposition.”
p Australian agri co-op
Murray Goulburn has been
sold to Canada’s Saputo
MAY 2018 | 35