Let me tell you a scary fairy tale.
As you know, dragons are fierce fire breathing creatures which torment ordinary people like you and I. There are also ferocious dragon-eat-dragon fights. However a fact you mightn’t know about dragons is that they burn kerosene to make their hot odorous breaths, and they convert water in their bodies to make this kerosene. And now and again they temporarily lend water to their friends to help them make even more kerosene.
In this story, sometimes ordinary people, and rich people, place bets on which will be the best and fiercest dragons. To keep things fair for these punters (the people who place these bets), the dragons get regular check ups so that everyone knows how fit they are.
Anyway, about six months ago, a particularly nasty dragon is nearing his annual veterinary check up. However, he is short of kerosene, and is too weak to make much more. So, what does he do ? He borrows some water from some friendly dragons far far away, and then lends this water to one of his neighbourly dragon friends who lives beside him.
His friend however isn’t in too good a shape either. So his friend in turn passes the water to one of his babies, who is fit and healthy. The baby dragon produces some kerosene, and gives it all back to the horrible nasty dragon.
The nasty dragon then goes immediately for his annual check up, and the veterinarian is astonished: the nasty dragon is even fitter than he was last year, and has lots and lots and lots of kerosene. So the nasty dragon goes and tells all the punters the good news, and the punters say what a good nasty dragon he is.
But then his dragon friend goes and tells the sleepy Dragon Supervisor that his baby had produced some kerosene using water passed from the nasty dragon, and gave the kerosene back to the nasty dragon. However the sleepy Dragon Supervisor doesn’t seem to care that nasty dragon could no longer produce his own kerosene, and that he had to get one of his friend’s babies to do it with some borrowed water. Nor does he seem to care that the nasty dragon didn’t tell the punters that that was what had really happened. Nor does he seem to care that the dragons are working together rather than competing with each other in the dragon-eat-dragon fights.
At the same time that all this is going on, the Minister for Dragons is getting a bit concerned that all of his six dragons in his land are getting a bit out of shape. So he calls in an International Dragon Inspector and pays him to do an extensive investigation and then report back
The International Dragon Inspector duly does his work, and comes back with a 720 page report on the six dragons in the land. The particularly nasty dragon has 120 pages written about him. In those 120 pages, the International Dragon Inspector notes that nasty dragon isn’t as fit as he seems; that he didn’t really produce all that kerosene himself, and got his friend’s baby to do it for him. If the ordinary and rich punters ever found what really had happened, they might be very angry indeed.
The mandarins at the Minister for Dragons get the Inspector’s report. They note with alarm what the Inspector found out about what the nasty dragon and his dragon friend got up to, and tell the dozy Dragon Supervisor. But the dozy Dragon Supervisor says he already knew since the nasty dragon friend had already owned up about it, and he goes back to sleep.
The Minister for Dragons gets the report. However he finds 720 pages boring and doesn’t read it all. Even though he knows the nasty dragon is particularly horrible, he doesn’t bother reading all the 120 pages about the nasty dragon. His mandarins tell him he should read particular pages and paragraphs which they have underlined, but they don’t ask him to read all the bad stuff on the nasty dragon — even though they are alarmed by what nasty dragon and his friend got up to together and told the Dragon Supervisor so.
The Minister for Dragons later says he was told about all the risks and concerns arising from his six dragons, but deceiving the punters in the way in which the nasty dragon and his friend did so was not one of those risks.
In a way perhaps the Minister of Dragons isn’t really at fault here. After all, he really is a complete novice at looking after dragons, and only a few months ago used to have the job of looking after nice little children instead.
One day though, the national parliament and the national newspapers and the TV stations get to hear about what the nasty dragon and his friend got up to together. But even they don’t seem to be particularly worried that the ordinary and rich punters were deliberately deceived. Instead they get concerned that the Minister of Dragons is now going to give some of the dragons a big lake from which to drink loads and loads of water.
Meanwhile, the punters far far away, and the dragons far far away, get very concerned. They get very concerned about the nasty dragon and his friend and what else they perhaps might have got up to together. They get very concerned that the sleepy Dragon Supervisor doesn’t seem to care about punters being deceived. They get very concerned that the mandarins don’t share their worries with their own Minister. They get concerned that if deceiving them that the nasty dragon wasn’t as fit as he appeared, wasn’t sufficiently serious to be flagged as a risk in the report, then what what more serious risks could there possibly be ? And they get particularly concerned that the Minister of Dragons doesn’t seem to read reports which he himself asked for, and doesn’t seem worry too much about looking after the interests of the punters.
Then the Minister of Dragons calls in the stable staff of the nasty dragon’s friend and says: “Gee boys and girls, you people in particular have been very very naughty in allowing your dragon and its baby to change water into kerosene for the nasty dragon, and then give this kerosene back to the nasty dragon, so allowing the nasty dragon to deceive the punters. Don’t you think that you were all wrong ?”
I hope you liked my little fairy story.
I had the privilege and responsibility for many years of being CEO and Chairman of a publicly quoted company subject to the USA SEC and Nasdaq rules, including more recently Sarbanes-Oxley obligations. Governance and shareholder communication were always very high on the agenda.
I hope that things in real life are never the same as fairy stories, are they ?