Corporate Governance in the UK of the 1990s

The Maxwell Scandal

The Maxwell Scandal occurred in the early 1990s after Ian Robert Maxwell was found dead in the Atlantic Ocean. After the death of the owner of the huge publishing empire, the banks called in the loans, and the fraud made by Maxwell was discovered by a wide public. Maxwell had used hundreds of thousands of pounds belonging to the pension funds of his companies for protecting the business from bankruptcy and left thousands of scheme members without pensions. The pension funds were partially replenished. The problem that was identified following the scandal was related to the risks caused by holding the position of the chairman and the chief executive by the same person. This fact was so powerful as it gave Maxwell an opportunity to make frauds without informing anyone else.

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Similar scandals of that time in the UK

Another scandal occurred around Polly Peck International, whose chief executive Asil Nadir transferred big sums of money to the Northern Cyprus. Such fraud machinations led to the company’s collapse in 1990. The Bank of Credit and Commerce International was in the centre of another scandal in the early 1990s. The bank operated in bank secrecy jurisdictions and made extensive frauds, which were detected and led to the liquidation of the bank.

Corporate governance code at that time

I consider the corporate governance code the best course of action at that time as it helped to collect all major principles that should govern the practice of the public listed companies to avoid the situations similar to Maxwell’s or Polly Peck’s cases. The code requires the companies to reveal how they follow the listed principles or explain why they do not do this. Such obligation is vital for ensuring the fairness of the companies’ actions.

The effectiveness of the Greenbury Report

The proposals of the Greenbury Report were rather successful in reducing fat cattery in director remuneration, as they have brought significant improvements to the process of the disclosure of data related to the amount of executive pay provided by the public listed companies. The Greenbury Report promoted the scrutinizing attention to the prevention of excessive directors’ pay.

The effectiveness of the Higgs Report

The consultations on the Higgs report resulted in the revealing of certain features of the report that could not reflect the investigated issues objectively due to the limited number of senior civil servants involved in its creation and the authorship belonging to the only person.

The reactions to the draft and final Cadbury Report

The reactions to the draft Cadbury Report included various types of criticism due to the accusation that the system was too bureaucratic from the side of the business community and the need to remove the requirement for reporting compliance with the code proclaimed by the Confederation of British Industry (CBI). However, Cadbury proved the need to use legislation to make the companies comply with the code. Besides, CBI expressed its concerns with the role of non-executives as policemen because playing down the distinction between executive and non-executive directors was crucial to make the process of control of the director’s activities more objective.

The implications of this for the development of corporate governance code include the emphasis on the necessity of ensuring that the system of governance does not give the power of making crucial decisions to one person and provides the objective selection of remuneration committee and non-executives.

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The similarities and differences between the Cadbury and Higgs report investigations

Both the Cadbury Report and the Higgs Review investigations were stimulated by the corporate governance failures and scandals faced by several companies. Therefore, both of the reports attracted much media interest. However, while the Cadbury Report investigation was not influenced by non-government organizations, the Higgs Review investigation experienced such influence. Besides, the government interest was stronger in the Higgs Review investigation than in the Cadbury Report. Moreover, the Higgs Report relied more heavily on financial institutions for its implementation than the Cadbury Report did.

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"Corporate Governance in the UK of the 1990s." StudyCorgi, 29 Mar. 2021,

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StudyCorgi. "Corporate Governance in the UK of the 1990s." March 29, 2021.


StudyCorgi. 2021. "Corporate Governance in the UK of the 1990s." March 29, 2021.


StudyCorgi. (2021) 'Corporate Governance in the UK of the 1990s'. 29 March.

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