Will the truly independent director please stand up?

SEVERAL years ago, the chairman of a multi-billion-dollar enterprise said to me: "Let's face it - there is no such thing as a totally and truly independent director."

That remark put the brakes on the discussion about the independence of a particular director on the board.

On reflection, he was, in a sense, right, of course. Independence, after all, is a state of mind. Who is to really know what is (and what could be) in the mind of a director when a decision is being made?

Tests of blood and money

Instead, the regulations seek to develop yardsticks of director independence that are based largely on arguable relationships of blood and money.

Thus, Guideline 2.3 of the Code of Corporate Governance says a director is independent when he or she "has no relationship with the company, its related corporations, its 10 per cent shareholders or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the director's independent business judge…