VINCE Cable’s right to crack down on rogue directors says Terry Murden
VINCE Cable is talking tough again. The nemesis of the banks, below, is now targeting reckless company directors, who may be forced to compensate the victims of their failed enterprises.
Penalties can already be imposed on wayward directors, such as disqualification, but the Business Secretary wants to strengthen the law to give courts more powers, which will include ordering them to recompense those who have lost out as a result of their behaviour.
The measures will hopefully tackle the age-old problem of directors leaving behind a trail of unpaid bills from collapsed enterprises and simply setting up a new company with a clean sheet.
This has always been a weakness in the argument that failure should be embraced as a stepping stone on the road to success. Maybe, but only to a point. Those who trot out this mantra believe that being scared of failure puts off many would-be entrepreneurs and that failure is accepted much more in the US, where even the venture capital firms are said to see it as a sign of someone with an aptitude for giving something a go.
But if failure is a result of poor management, reckless spending and misguided belief in a project with no chance of success then it is hardly to be worn as a badge of honour.
Too often, creditors of these companies are left out of pocket and pushed close to the brink themselves if they lose out entirely when the failed company’s administrators are called in.
Tackling rogue directors is an important measure that should provide investors, suppliers and employees with greater assurances that their interests are being protected. Some entrepreneurs may learn from failure, but unless they are checked the unscrupulous will take advantage of it.