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TRUSTEES 'BUILD UP HEAD OF STEAM' ON GOVERNANCE

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Corporate governance issues are gaining momentum as trustees of all political persuasions push for more influence a...
Corporate governance issues are gaining momentum as trustees of all political persuasions push for more influence and a higher profile for local authorities, according to evidence compiled by Norfolk CC's investment department.

Trustees are reassessing their roles as public awareness has been raised by the Cadbury Code of conduct, escalating media coverage of directors' pay and the recent Greenbury Report into executive pay, Norfolk's survey found.

'Trustees quite rightly now see themselves as having another role other than just rubber stamping transactions undertaken by their fund managers,' said Brian Wigg, Norfolk loans and investments manager. 'The whole debate is politically driven and we will see more and more local authorities with firm corporate governance policies being put in place.'

Mr Wigg surveyed 47 county-based pension funds shortly after the furore over British Gas directors' pay. He found 'such a head of steam building up' among the 36 treasurers who responded that more questionnaires will be sent out later this month or early in October.

The strength of feeling expressed in most of the replies revealed corporate governance is 'a real growth area', he said. 'Papers on corporate governance are really taking over everything else to do with pension funds for councils.'

Most of the councils which use an external advisory service use the National Association of Pensions Funds, rather than PIRC, Mr Wigg said. The survey showed a greater use of PIRC among more left-wing authorities.

The replies also revealed that fund managers' discretion on voting was likely to change as trustees laid down guidelines.

Mr Wigg said Norfolk had revised its policy following a June trustee meeting. Now, whenever there is a vote on a 'contentious' issue the fund manager must refer to the local authority.

Issues deemed contentious include those which conflict with either Cadbury or Greenbury. If it is contentious in terms of Cadbury, managers are told to vote against it; otherwise it is discussed with the trustees.

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