Inquiring for truth and the re-engineering of the corporate contract

Abstract

The British Prime Minister, Gordon Brown, has called for a global re-negotiation of a social contract between investment banking and wider society. Given the scale of the losses now borne by the taxpayer as a consequence of the global financial crisis in jurisdictions as diverse as Iceland, the United Kingdom, Ireland and the United States, the proposal has undoubted rhetorical strength. It is also exceptionally difficult to render operational, not least because of (purposive) ambiguity over what constitutes and who should decide terms of reference. Moreover, piecemeal change may not only not secure legitimacy but may also have enormous if unintended consequences for the conceptual underpinning of corporate and securities law and the resulting regulatory framework. At a national level, one mechanism proposed to address this issue is through the establishment of a 'truth commission' an option chosen by Iceland. A second option is to convene an independent commission, a mechanism used throughout the Commonwealth, or an independent tribunal of inquiry, as used with increased frequency in the Republic of Ireland throughout the 1990s but rejected in relation to the global financial crisis. A third option is to convene a bi-partisan political commission, as deployed in the United States. Each option is exceptionally problematic within the domestic context, not least because of contention over remit and degree to which the findings translate into policy changes. The difficulties are compounded when applied to multi-faceted multi-jurisdictional problems such as the global financial crisis. This article examines whether – and if so how – independent commissions can provide a mechanism to re-negotiate a social and corporate contract capable of external validation and replication, critical factors for the maintenance of legitimacy, or whether official discourse simply reinforces the politics of illusion, privileging symbolic posturing over substantive change.