Dear Abi, Help! I have joined a board whose Chair and CEO seemed to support good governance and have effective governance policies and procedures, but I have discovered they are engaged in illegal price fixing with a competitor. What should I do?

Dear Abi,

Help! I have joined a board whose Chair and CEO seemed to support good governance and have effective governance policies and procedures, but I have discovered they are engaged in illegal price fixing with a competitor. What should I do?

I am a newly appointed non-executive director for a publicly listed company in construction products. I did my due diligence before joining. The Chair and CEO are prominent in our sector and have good reputations, as does the company. I reviewed the governance policies and practices and all seemed in order.

At a recent board meeting, the MD and other directors brainstormed how to signal to a key competitor in one of our core products to raise his prices in his highest market share region and we would raise prices in our highest market share region. I was gobsmacked by the discussion, but before I had a chance to speak up, the Chair asked another director to use his network to connect to a competitor to discuss this price fixing arrangement.

It became clear that to all the other directors this was normal and accepted practice.

I did speak up to raise concerns that this was illegal but was ignored, and although I asked for my comments to be recorded in the Board minutes, they have been released and my objection is not recorded.

I have asked for a meeting with the Chair, but am getting nervous that if I speak up strongly and threaten to resign, I will feel a backlash on my reputation and career prospects. After all, the Chair is in his seventies and is extremely well connected, and the CEO has won an industry Top African CEO award. What is your advice?

Sincerely,

Toki R.

Dear Toki R.,

Thank you for raising this issue with me. It is most unfortunate that people of the calibre you describe would resort to actions which are clearly illegal.

First of all, it is indeed worth having a one on one with the chairman to express your concerns and to highlight the fact that the proposed action would be regarded as a conspiracy to fix prices which is prohibited under the law.  Perhaps suggest that the company seek a confidential legal opinion on the issue? 

In addition, inform him that you are unhappy that your comments were disregarded during the board meeting and that despite your specific request, your objection was omitted from the minutes.  Let him that you will be writing a formal letter to the company secretary with a copy to him, demanding that the objection you made during the meeting (please re-state),  be taken down in the minutes.  This way, you have on record your objection irrespective of the fact that it is not in the minutes.  Please ensure that the company secretary acknowledges your letter. 

Secondly, If the company has a whistle blowing policy, and I imagine that it does since it is a publicly quoted company, this could be one way to deal with the matter, depending of course on who receives the complaints.  If it is not managed externally, it could be buried.   

I would also advise that you make a complaint (could be anonymous) to the Federal Competition and Consumer Protection Commission (FCCPC) requesting that it deploys its investigative powers under the Federal Competition and Consumer Protection Act (FCCPA) of 2019 Act to investigate the complaint.  Hopefully they will take the matter up and follow the process laid out for such matters.

If the issue is not resolved through either of the above avenues, it may be best for you to resign from the board, stating the reasons why.

I hope that you find this useful.  Please reach out to me should you need further advice.  Wishing you the best of courage.

Sincerely,

Abi