40

Listed | Winter 2016

The Directors Chair

Charles Curran

Bright ideas, maximum leverage

In The Directors Chair with David W. Anderson: The common thread in director and investor Charles Currans long list
of career successes? Always finding ways to ensure money, people, boards and organizations work better
Photography by James Horan

Australias Charles Curran began with the essentialsan early background in

law, accounting and stockbroking. Then he started making things happen.
First tabbed to help lead the reform of his countrys capital markets system,
hes since chaired many company boards, including his own investment
business, along with public agencies and philanthropic organizations at home
and abroad. Here, in conversation with governance and leadership adviser
David Anderson, Curran shares his well-honed views on such topics as good
governance, the work of a chair and the role of private equity in building
strong businesses and economies.

Charles Curran
Current role
Chair, Capital Investment Group
Additional roles
Chair of trustees, The St. Vincents Curran Foundation; board of international advisers, Goldman Sachs; ambassador,
Australian Indigenous Education Foundation
Former chair
Medical Benefits Fund of Australia; The Australian Wool Exchange; Amalgamated Holdings Ltd.; Greater Union Organisation
Pty Ltd.; Perpetual Ltd.; Unibuilt Holdings Ltd.; Scotts Food Ltd.; Capital Television Group Ltd.; Australian Ireland Fund; St.
Vincents Hospital Sydney; Garvan Institute of Medical Research; The Sydney Health Service; National Gallery of Australia
Foundation; New South Wales Commission of Audit; Independent Commission to Review Tasmanias Public Sector
Finances
Former director
QBE Insurance (Australia) Ltd.; Pioneer International Ltd.; Ampol Ltd.; Ampol Exploration Ltd.; Kleinwort Benson Australia
Ltd.; Sydney Stock Exchange; Haminex Ltd.; Australia Day Regatta (president); Young Endeavour Youth Scheme; Royal
Institute for Deaf and Blind Children (vice-president); National Gallery of Australia (deputy chair)
Education
Bachelor of Law, University of Sydney 1961; Stanford Executive Program, Stanford University, 1978;
Fellow, Australian Society of CPAs (FCPA)
Honours
kOfficer of the Order of Australia (AO), 1987
kElevation to Companion of the Order of Australia (AC), 2006
kPapal knighthood: Knight Grand Cross, Order of St. Gregory the Great, 2012
Age when first became a director
28
Years of board service
40

41

Winter 2016 | Listed

The Directors Chair

Charles Curran

David Anderson At a young age, you participated in changes to the

face of capital markets in Australia. In your 30s, as vice-chair of
the Sydney Stock Exchange, you chaired the joint committee that
led to the merger of it and the Melbourne exchanges, moving from
state-based to Australia-wide private ownership, and eventually
the worlds first publicly listed stock exchange. Then, still in your
30s, you chaired several large public company boards and entered
the investment world. What drove you and what did you learn?
Charles Curran In participating in these changes, I was interested
in reform in the capital markets and business world. The securities industry was not effective in bringing together the savings of
Australians and putting them to productive use. I recognized that
markets were not always efficient. Change was required and I wanted to be in business and influence decisions as an owner. I was later
asked to chair government commissions to improve government
operations and state finances. I also became involved in community
organizations by invitation, chairing several educational and health
boards to contribute as a citizen.
David Anderson At 40, you returned to the classroom for executive
education at Stanford. Why was that?
Charles Curran In my view, to be effective, one needs to have a preparedness to examine the status quo and identify areas needing change.
While this in itself creates challenges for companies and leaders, it is
essential. I wanted to learn the state of practice and theory in corporates around the world to broaden my perspective. The experience was
transforming and helped me considerably.
David Anderson Was there a formative experience at an early stage

in your career that caused you to think carefully about corporate

governance?
Charles Curran Yes, I was asked to come in as chair to sort out serious
issues concerning the future direction of the Medical Benefits Fund of
Australia, a not-for-profit mutual that provided medical insurance for
its members. The fund had been established after World War Two, by
doctors, who did a good job meeting community needs. As it grew, it
continued to be controlled by doctors, not by those who contributed
the money. This led me to think about the longer-term governance of
organizationshow they should be led and the consequences of not
getting it right. Governance involves the selection of a board accountable to the contributors of money, not just the membersin this case
the doctors. The democratic outcome of one vote per member resulted
in other mutuals becoming politicized organizations; they did not benefit from having large shareholders who could assess the situation in
an experienced and professional way. With the aid of outside advisers,
I recommended a governance model that instituted a member-elected
electoral college that appointed the board under the supervision of
three incorruptible and unpaid governors. This scrutiny ensured the
board was responsive to needs of contributors.
David Anderson In discussing corporate success, the costs to directors of their service are rarely raised. What are the sacrifices you
made to provide your leadership?
Charles Curran First, and inescapably, one faces a significantly heavy
workload. When I could, as chair, I reviewed the amount, quality and
style of material the board had to consider. Undistilled, it could be overwhelming. I sought to provide information to independent directors

that was manageable to analyze and adequate to take decisions. I called

upon expert, outside advisers and ensured a proper recognition of the
role of the board so that we werent drawn into management. My task
as chair was to make sure diligent directors could properly discharge
their responsibility.
Second, the increasingly public role required of chairs and directors can be an unexpected burden. It can force you into a greater role
in public debates than you might have chosen. For example, when I
chaired an investment group with tens of billions of dollars of investments, we faced pressure from some stakeholders to take certain positions on ethical and environmental questions when they couldnt get
leaders in the political field to do so. Unlike politicians, directors are at
risk of legal suits as a function of their decision-making.

An important role for the chair is to ensure

a proper relationship between the CEO
and the board. I endeavoured to fulfill that
role by ensuring I was available to the
CEO and had the ability to discuss ideas
privately as a sounding board.
David Anderson How do you think of the role of board chair?
Charles Curran I start with the proposition that the chief executive, ap-

pointed by the board, is the person who should be running the company. Immediately, you then recognize the need for an accountability
function. Corporate governance arises because of the split between
the owners of businesses and managers of businesses. In an earlier era,
this was not an issue. But when you have providers of capital who are
not the people running the company, you have the issue of how you
will organize the relationship. The shareholders need representatives,
who are the directors. In Australia, invariably, we have a distinction between the chair, not having executive responsibility, and chief executive. An important role for the chair is to ensure a proper relationship
between the CEO and board. The way in which I endeavoured to fulfill
that role was to ensure I was available to the chief executive to discuss
ideas privately as a sounding board. I wouldnt give any commitment to
the CEO concerning those ideas, other than they would be considered
by the board. I worked with the CEO to ensure there was an effective
board accountability and approval process.
David Anderson Is there a caution you would offer chairs in managing relations with the CEO?
Charles Curran Other than in crisis, be careful of not being in lockstep
with the CEO, so as not to deny other directors from participating in
decision-making. Maintain a respectful relationship, avoiding becoming too close. Also, the board and chair will have discussions on succession, which can be awkward if the chair and CEO are too close.
David Anderson How did you deal with the added pressure on

chairs and boards to deliver economic performance, particularly

as measured by share price?
Charles Curran The big issue that arises is the short-termism of much
of the investing community. Many investors are large organizations

43

Winter 2016 | Listed

The Directors Chair

Charles Curran

that are accountable on monthly and quarterly bases to their investorsso they put pressure on their investee companies to get the share
price up. Yes, share price is how we measure economic progress, but
its a short-term measure. There is a tension between looking at share
performance to satisfy shareholders who are short term in outlook and
trying to build sustainable value. Accordingly, companies need to educate investors to show potential long-term benefits. At the end of the
day, corporations are there to serve the community in terms of provisions of goods and services and creation of community wealth. In the
modern era, so much of the equity in corporations is owned by retirement funds; their success is a community objective served by companies and directors.
David Anderson As chair, you sought to lessen the compliance
workload while enabling your boards to contribute greater governance value. How did you do that?
Charles Curran Simply put, I set up structures for much of the compliance work to be done by others. For example, with Perpetual, which had
operated primarily as a trustee, we decided to make our investment services available to a wider group of clients through investment products.
This required the issue of prospectuses. Signing off on these prospectuses became an undue time commitment , so we set up separate boards
with skilled people not drawn from our own board. Our board oversaw
the process and auditors made sure the documents were reliable. As a
result, we freed up directors from tedious but important work, to concern ourselves with even more important work. A second example is
QBE, a global insurer of which I was chair of the audit committee. QBE
operated in 30 countries and by habit we looked at voluminous audit
reports from various operations on a cyclical basis. This was valuable,
but ate up our time. So we required our external auditor to review all
internal audit reports and provide the audit committee with a twopage synopsis, highlighting items they thought we should look at more
closely. The full reports were tabled at audit committee meetings. This
freed us up for bigger-picture work, primarily to do with the actuarial
reports addressing estimations of losses and related trends.
David Anderson For many years youve served on Goldman Sachs

board of international advisers. How would you characterize the

role of investment banks and private equity in the capital markets?
Charles Curran Private equity performs a valuable role in ensuring
dynamism in capital markets. Companies often are unable to demonstrate to shareholders a sufficiently attractive outlook to achieve a good
share price, but private equity can see greater opportunities by way of
restructure. In practical terms, private equity interests buy such a company, make the change and re-float it, having made the company ready
for public capital.
Investment banks are uniquely positioned to aid businesses by bringing ideas for growth, hedging liabilities and arranging financing to enable corporate growth. Few companies have these varied and valuable
skill sets resident within them. I constantly see valuable advice given
to corporates to assist them determine strategic direction and pursue
business development. Large, well-organized investment banks bring
demonstrable value to the economies and financial markets in which
they operate. Goldman Sachs keeps large amounts of surplus capital to
provide billions of dollars on short notice to enable business opportunities. Some investment banks failed in their risk management leading
up to and during the global financial crisis, demonstrating the need for

a strong regulatory environment. Goldman Sachs makes huge investments in its risk management processes and this expertise helps clients
manage their risk, too, bringing great benefits to clients.
David Anderson In future, how can boards improve their perfor-

mance to provide a higher quality corporate governance?

Charles Curran While the corporate sector is generally well led, I would

like to see greater recognition of the merits of performance evaluation

for boards and limited tenure of directors, so that others can make their
contribution. Formalized annual review of board performance can
identify gaps in experience important to proper board functioning, as
well as identifying underperforming directors. Sometimes people will
be disappointed, but a board needs experienced people who, as directors, accept that the environment and company are changing and that
what was right 12 months ago may not be right now. They must accept
their fit on the board may not be right, and despite their self-interest we
must go to the fundamental need for change to achieve the right skill
set. The use of consultants here can be valuable in bringing dispassionate and respected views on these matters.

Investment banks are uniquely positioned

to aid businesses by bringing ideas for
growth, hedging liabilities and arranging
financing to enable growth. Few companies
have all these valuable skill sets resident
within them.
David Anderson How can boards help companies lead change

through innovation and adapt to change in the environment?

Charles Curran The rate of change is enormous and profound. It raises

the question of what sort of organization should the board be endeavouring to createand how will it enable the company to survive, grow
and prosper, and not be left with legacy businesses losing value. Boards
must put a premium on looking forward to identify and understand
changes in technology that will equip them for the future.
In an earlier time, planning involved looking at business operations
and examining how to expand them by scale or geography in a linear
fashion. Physical resources and quality management were needed to
grow organically. Today theres the same need for organic growth, but
organizations also need to be built to be adaptive. They must rapidly
see emerging trends and change the organization itself to survive and
take advantage of opportunity, often beyond the extension of the current business. At the board level, directors need more than information; they need the mental ability to think in this wider context. Do we
understand this well enough to survive and prosper?
David W. Anderson, MBA, PhD, ICD.D is president of The
Anderson Governance Group in Toronto, an independent
advisory firm dedicated to assisting boards and management teams enhance leadership performance. He advises
directors, executives, investors and regulators based
on his international research and practice. E-mail:
david.anderson@taggra.com. Web: www.taggra.com

45

Winter 2016 | Listed