Vatican can teach financial institutions some things

Well, so much for corporate governance at the Vatican. They obviously haven’t heard of the King code of corporate governance principles. It seems that soon-to-be ex-Benedict has decided that at the end of this month he will retire to a monastery inside the Vatican state.

According to the Financial Times (FT), the pope has told priests he would be “hidden from the world” in his monastic retreat. But, says the FT, his proximity to his successor has raised questions about his continued influence over Vatican matters.

For those who follow corporate affairs closely this may sound familiar. Remember back in 2002 when Eugene van As decided to stay on as executive chairman of Sappi when Jonathan Leslie was appointed to take over as chief executive?

Back then shareholder activist Theo Botha warned us all that it would end in tears – and so it did, three or so years later.

And then there’s the matter of the Institute for Religious Works (IOR), which seems to play a central role in the Vatican’s enormous financial business interests. The head of IOR was fired last year for incompetence amid a probe by Italian authorities into suspected money-laundering activities. Pope Benedict has just appointed his successor, which means the ex-pope might have some influence over him.

The FT also points out that Italy’s central bank blocked electronic payments in the Vatican last year following the Vatican’s failure to comply fully with anti-money-laundering rules.

This all sounds a little too secular, a little too much like the global financial institutions that daily seem to get caught out doing something unspeakably bad like interfering with the London interbank offered rate.

But the fact is that the Vatican has been at it for much longer than the global financial institutions, who have obviously learnt much from their spiritual peers. Remember the pope’s banker who was found hanging from a bridge in London in the early 1980s?

Perhaps the new pope will toughen up on corporate governance at the Vatican.

Grape farmers

It is difficult not to feel sorry for the grape farmers in the Western Cape. It is, of course, much easier to feel sorry for their farmworkers who somehow survive on R105 a day, but still the farmers must often feel a terrible sense of helplessness and frustration.

Things must have been extremely tense for them as they watched their grapes getting close to being too ripe to harvest as the workers’ protest continued – but then the strike ended and it seems that everybody worked extremely hard to ensure the grapes could be harvested and shipped off to Europe.

For a few weeks things went well. Until the southeaster started to blow and for eight days nothing could get out of the Cape Town harbour.

While the weather has always been beyond the influence of farmers, now it is just one of the many things that they cannot control. In the old days South African farmers could rely on a supportive government to ensure that labour costs were kept low. The government also ensured that the cost of water and electricity was kept low, as well as the cost of finance.

And when the farmers wanted to develop markets the government did its best to ensure that the necessary infrastructure was in place and functioning well.

That has all changed and now the farmers are just one of the many voices making demands on the government’s much more stretched resources. Gone are all the attractively subsidised input costs; farmers have to engage with bankers just like any ordinary business and pay the same for electricity and water as other businesses.

Then came the final straw, the hike in labour costs. Having tolerated electricity price hikes and cost of finance hikes and being able to do nothing, it was probably inevitable that they would hit back, which is presumably why there has been so much talk of retrenchments.

Edited by Peter DeIonno. With contributions from Ann Crotty.