Three years after the meltdown of ENRON and more recently the problems of Hollinger and Conrad Black, the issue of corporate governance continues to be front page news.

In fact, governance has been an issue since people began to organize themselves for a common purpose. The OECD (Organization for Economic Cooperation and Development) provides a functional definition of corporate governance as the system by which businesses are directed and controlled.

The governance structure specifies the distribution of rights and responsibilities among participants in the corporation, including the board of directors, senior executives, managers and shareholders and spells out the rules for making decisions on corporate affairs.

Corporate governance has a wider implication. The World Bank defines it as “the balance between economic and social goals. The governance framework is there to encourage efficient use of resources and requires accountability for the stewardship of those resources."

David Ganong, President & CEO of Ganong Bros. Limited in St. Stephen, NB, is one of Canada’s leading advocates of corporate governance. Just a few weeks ago, he was invested in the Order of Canada (in the shadow of Shania Twain) for outstanding achievement and service to his country. The Order of Canada is the highest form of public recognition in Canada.

One of the reasons cited by Governor General Michaëlle Jean for Ganong’s investiture was his advocacy of corporate governance. He was also cited for his devotion to community and his contribution to economic development, particularly in New Brunswick.

Ganong employs an estimated 400 people in the border town of St. Stephen. It’s a business that others might have moved closer to markets in Ontario but Ganong and his family are fiercely loyal to their community and determined to grow their business from New Brunswick.

When it comes to corporate governance, David Ganong practices what he preaches. He surrounds himself with a powerful Board of Directors that includes Bernard Imbeault, the Pizza Delight entrepreneur from Moncton, Purdy Crawford, former Chairman of Imasco and currently Chairman of AT&T Canada, Roland Frazee, former chief executive of the Royal Bank and new appointees Krystyna Hoeg and Hubert Saint-Onge.

Krystyna Hoeg is the President & CEO of Corby Distilleries Limited.

Hubert Saint-Onge is the founder and Principle of SaintOnge Alliance, a company dedicated to improving organizational performance. Hubert was recently profiled in the best-selling book “What’s the Big Idea? Creating and Capitalizing on the Best New Management Thinking”. He’s one of the world’s elite “idea practitioners”, individuals who turn ideas into action and results.

David Ganong is not intimidated by these people; he draws from their experience and expertise. He’s an amazing guy. I’ve known him for years, having served with him on the Board of the Atlantic Provinces Economic Council.

• He’s a 'chocolatier extraordinaire’ but he’s also a man of the community.
• David is Chairman of the Board of Governors at the University of New Brunswick.
• He’s a Director of Sun Life Financial and the Conference Board of Canada and,
• he’s a member of the Canadian Council of Chief Executive Officers.
• He is also a former Director of Air Canada and Past Chairman of Clarica Life Insurance Company.

Three years ago, in a speech to the Faculty of Business Administration at the University of New Brunswick, on the subject of corporate governance, David opened his talk with a personal credentials statement. He said,

“My experience with corporate governance began in a privately owned business approach to governance. It began with Ganong Bros. Limited which has practiced a number of governance procedures for years, even though Ganong has been closely held by management and family since it began in 1873”.

David’s grandfather, Arthur Ganong was a governance leader and went on record with this statement,

“In private companies, even when the owners and management are the same people, the Board of Directors is required to protect shareholders from management decisions”.

Conrad Black might want to resurrect this principle in his next life because Arthur Ganong’s words continue to make good sense. When he delivered them, they may have sounded revolutionary. Use of an outside board of directors has proved to be a tremendous asset for the Ganong business.

Today, only one member of management, the President sits on the Board. A separate audit committee deals with management judgments and outside auditors.

Perhaps the most important governance experience for David Ganong was his involvement in publicly-traded companies. In 1981, he joined the Board of Air Canada and served on a number of committees, including the audit committee, which he chaired before and after privatization.

In 1991, he joined the Board of Mutual Life, which became Clarica before it merged with Sun Life Financial. There he also served on a number of committees and was Chair of the Governance Committee before becoming Vice-Chairman and then Chairman of the Board for three years”.

In his UNB speech, Ganong asked the question “why the attention on governance?”

His answer then was the “ENRON scandal”.

Today, it might be Hollinger or Conrad Black. The ENRON collapse was the result of an intended deception for the benefit of a few senior managers. What was significant about the collapse was the clumsy use of governance rules to protect the interest of shareholders and the absence of distance between auditor and management interests given that the auditors were hired to protect shareholder interests.

It might be easy to jump from there to the Quebec Sponsorship program but the difference would be intent. In the immediate aftermath of the1995 referendum, the intent of the sponsorship program was noble but it was hijacked by a tiny group of Quebec bureaucrats and businessmen who embarked on a program of deception to benefit themselves and a few friends.

Canada’s Auditor General exposed their behavior. Improved corporate governance may prove to be the most positive outcome of her revelations.