Taking the fight to company management

Robert Monks met the BBC's Tim Sebastian

Shareholders should recognise the power they have over a company's management and use it to ensure businesses are managed honestly and responsibly.

That is the assessment of US shareholder activist Robert Monks.

He says corporations need to be more accountable to their owners - and the broader public.

It is a message that is finding wide support in light of the scandals that have engulfed Enron, WorldCom and others, leaving millions of investors - small and large - out of pocket.

Strength with responsibility

A successful investor for over 40 years, Mr Monks believes that stock ownership carries with it important responsibilities.

He has encouraged institutional investors, such as pension funds, to exercise their rights.

He believes that they have the power to make companies behave with greater responsibility.

We ultimately have to enforce the shareholder's obligation

Robert A G Monks

In an interview for BBC HARDtalk he told Tim Sebastian: "We ultimately have to enforce the shareholder's obligation to make management be responsible.

"There is an awareness by more and more owners that they have strength."

Scandals

Mr Monks is a graduate of Harvard Law school and after graduation joined the second largest law firm in Boston, where he progressed to become one of the company's youngest ever partners.

In a varied career he has been a businessman, corporate attorney and venture capitalist.

Corporate scandals: Tighter regulation is needed

But in his most recent role, as a shareholder activist, he has sought to improve "corporate governance".

He founded LENS to invest in underperforming businesses and then use shareholder rights to improve management - and increase company value.

But in America, the recent scandals surrounding Enron and WorldCom have severely shaken investor confidence.

These scandals were allowed to happen said Mr Monks because when the economy was performing well in the 1990s, "nobody wanted to think" about what could go wrong.

And he believes that investor confidence will not return until tighter regulation is in place.

He said: "The problem is we're not going to restore confidence until people can believe the numbers they see."

"It ought to be done with the owners giving authority and the government setting the rules."

This interview can be watched in full on Thursday 24 October on BBC World and BBC News 24 at the following times:

BBC News 24 (times shown in BST) 0430, repeated 2230

BBC World (times shown in GMT) 0330, repeated 0830, 1130, 1530, 1830, 2330