EDITORIAL PAGE — Driving directors away

If Ontario has any doubts about where its proposed labor laws will lead, its legislators have only to look across the country at Westar Mining in British Columbia.

Both provinces are making it impossible for company directors to responsibly oversee the affairs of their companies. Directors are concerned, and understandably so, that they’ll be left holding the bag for something over which they have no control.

In British Columbia the rules of the game have become so skewed against company owners that Westar now finds itself without a legitimate board of directors. No one is willing to sit on the board for fear of being personally liable for millions of dollars in severance pay to employees if the company fails.

Ontario’s labor legislation would take it along that same course. Ontario’s NDP government, like British Columbia’s, is so anxious to appease its labor power base that it has lost its perspective on these issues. Companies and their owners should be compelled by law to act responsibly, but holding directors solely responsible is not justified. Unless there is outright fraud, responsibility for corporate shortcomings are shared by several parties, and should be shouldered by all of them.

Directors may have failed at Westar to improve productivity so that the company could survive, but the union’s collective agreement is certainly as much at fault.

At Westar, directors may be personally liable for severance pay. In Ontario, as the Matachewan Consolidated Mines case shows, the directors are already personally liable for environmental claims, and they will soon have their hands tied regarding labor relations if proposed legislation goes through. Before accepting the responsibility to guide a company’s fortunes, directors have to ask themselves: “Is it worth the risk?” Unfortunately, with governments and labor lined up against them, waiting to find a scapegoat when things go wrong, the most capable people are increasingly likely to say “No.”