Where does a driver’s privacy begin or end?

Where does a company director’s private life begin or end? That question suddenly became topical this week after revelations about Jumbo’s managing director Frits van Eerd and in the case of the public prosecutor’s office versus Gerard Sanderink from the IT company Centric.

Van Eerd, CEO of the Jumbo family business, has been at home for a few weeks after it became clear that he is a suspect in a money laundering case. Financial Times reported this week that hundreds of thousands of euros in cash had been found in his home. Not forbidden of course, but suspicious. Formally, Jumbo has nothing to do with Van Eerd’s private expenses or assets, but it is clear that the CEO’s position reflects negatively on the supermarket chain. Van Eerd, in consultation with the supervisory board (SB), has already resigned from his post pending the investigation.

Gerard Sanderink, since starting a relationship with self-proclaimed cyber expert Rian van Rijkbroek, has made a number of remarkable decisions regarding his company and his ex. The relationship itself is a private matter, but here again business interests and private interests are now intertwined in a to such an extent that the Business Section, at the behest of the prosecution, removed him from his position as director of Centric on Thursday. evening. Sanderink wanted to stay in office and had the support of his board (mainly made up of loyal members).

This raises the question of the extent to which management auditors, in this case supervisory boards, must be aware of the private dangers to those under supervision. What do you ask a director about his private expenses, relationships, hobbies? And how do you weigh up whether and how private matters may come into conflict with the company’s interests.

It is none of your business

Former director (Aegon) and supervisory director (at Leaseplan, among others) Jos Streppel is relatively laconic about it: “It’s generally not that difficult: In itself, you have nothing to do with the private life of the directors. If someone is having an affair, you have nothing to do with it. Unless the driver’s behavior is detrimental to the company. You also intervene if ethical boundaries are violated. The problem is, as with all good decisions in life, you’re almost always too late.”

Being ‘late’ has to do with the difficulty of touching private matters in a business environment. It is therefore an extremely difficult subject, admits Manuel Lokin, professor of corporate governance at Utrecht University and lawyer at Stibbe. Here, the chairman of the board plays a leading role. He regularly discusses the function of the board with the chairman of the board – and possibly with other directors. Lokin: “It also always raises the question of whether there are conditions that need to be reported that the board should be aware of.” Sometimes it is with the general question, sometimes recent examples from other companies are also mentioned. “But don’t think that’s the solution,” Lokin says. “By citing examples, you suggest that these examples are an exhaustive list. You remove the incentive to also mention other things.”

It’s not just about scandals or criminal cases, says Lokin. You may also have to deal with family circumstances (eg a driver suddenly caring for a sick partner, child or parent) or drivers themselves struggling with illness. “You want to deal with this understanding, but up to a certain limit, namely: is it in the interest of the company?” For example, Ton Buchner, former chairman of AkzoNobel, temporarily stepped down as CEO in 2012 because he was struggling with burnout. Then he returned as supreme commander.

Counterforce and yes bullets

Openness about personal issues is extremely important, says Olaf Smits van Waesberghe, director of NRGovernance, which recruits and supervises supervisory directors. “Codes, rules, legal boundaries, it all forms the framework, but the question is how do you, as a supervisory director, handle it when a director has a conversation with you where he or she puts a problem on the table.” His advice: give space, don’t judge too quickly, don’t immediately call a lawyer, but create a familiar environment where everything can be discussed.

Make sure your information position as supervisory director is broader

Leanne Pape professor Nyenrode University

Even if there is a scandal or a criminal investigation, it is still up to the commissioners to decide whether or not the CEO can stay on. In 2019, only after approval by the board, it turned out that the intended top woman Dominique Leroy from the telecommunications company KPN had mistakenly sold shares in the Belgian telecommunications company Proximus – where she was the boss. This led to a criminal investigation in Belgium and prompted KPN’s board to cancel the intended appointment in the interest of the company.

At the Swiss bank UBS, the balance turned in the opposite direction: the bank looked for and found the ideal chairman of the board in the then ING boss Ralph Hamers. That appointment was continued even as it had long been clear that Hamers would be personally prosecuted for his part in the money laundering scandal involving his bank in the Netherlands. Hamers has been a boss at UBS for over two years now, the investigation into him is still ongoing.

also readAnd then, like a family business, your CEO is suddenly stuck. What are you doing?

Leen Paape, professor of business management at Nyenrode University and responsible for the board program there, sees that the subject of integrity has become much more important in recent years. On the course at Nyenrode, a lot of time is spent on ethical issues based on practical cases. “With companies like Jumbo, a family business, and Centric, this is even more complicated than with listed companies,” says Paape. “At Centric, Sanderink was a director and major shareholder who only gathered yes men around him. Then there is hardly any opposition from a supervisory board, if at all.”

But even if the balance of power is fine on paper, the question is where to draw the line. As supervisory director, do you have to ask questions when your CEO drives up in a brand new sports car, or suddenly turns out to have a huge collection of expensive watches? “Not necessarily,” says an experienced supervisory director and executive who wished to remain anonymous. “If financial or legal conflicts of interest arise, they must be appointed, and the director may no longer participate in decision-making in matters that affect the conflict of interest in question. But there is also a reputation side which is more complicated. If you see that your driver has remarkable hobbies, you can mention it, discuss it, but you really can’t do more than that.”

To address potential conflicts of interest between the boss and the company early on, stricter controls could be enforced on directors, but that quickly collides with the ethical boundaries and privacy rules of what you can do as a company. “You can’t just do an investigation into a driver’s privacy,” says Streppel. “Besides, an oversight board is not there to find the truth.”

The relationship between director and supervisor should also not be too awkward in informal contact, says Smits van Waesberghe from NRGovernance. “It affects your independence as a supervisor. So no endless dinners between supervisory directors and management, no meeting each other all the time on the golf course. Distance is the condition of independence.”

Dysfunctional behavior

When asked, Leen Paape has the golden tip for supervisory directors who want to avoid such situations: ‘Ensure that your information position as supervisory director is broader than your general consultation with the executive board. I myself always talk to people under the board, at meetings, receptions. Then you hear what is really going on.” Smits van Waesberghe agrees: “You don’t often see dysfunctional behavior in a meeting. At drinks you see the drivers among their people, then you see how they operate if they don’t down six glasses of whiskey. Then it is about human knowledge on the part of the supervisory director to interpret this correctly and act on it if necessary.”

Jos Streppel swears by a good relationship between the supervisory director and the director: “If they know where to find you in cases where they themselves have doubts about their integrity, you have come a long way.” He himself talked a lot with ‘his’ board chairman Morris Tabaksblat about the limits of entrepreneurship. It was Tabaksblat who, at the beginning of this century, drew up the Corporate Governance Code (for good corporate governance), and Streppel succeeded him as chairman of the committee to monitor compliance with the Code. “If the relationship between director and supervisory director is good, from a business point of view, you can prevent a lot of problems.”

It is impossible to determine how many problems can be prevented by a good relationship or by a good information position with the supervisory directors. It is certain that there are more than the cases that appear in the media. Smits van Waesberghe: “In that respect, the cases surrounding Jumbo and Centric are the tip of the iceberg. Commissioners who succeed in getting the cases on the table before they become public naturally prefer not to make them public because this in turn harms the interests of the company. Then the drivers are said goodbye with the message that they are ready for another challenge or want to spend more time with their families.”

Ultimately, the extent of the supervisory director’s responsibility also stands or falls with the director’s willingness to provide transparency. In that sense, the supervisory director must also be aware of his limitations: they are not there to find the truth. Furthermore, Paape says; “If you’re not straightforward as a director, you don’t tell your supervisory director. Then he can ask a hundred times, but the answer remains the same.” There is no cure for falsehood.

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