He had only recently taken over the Chairmanship of the IFRS Foundation in July of 2010. And he had already signified the way in which his enormous experience of the European financial and regulatory scene would have been brought to bear. In an interview I did with him just after he took over the chairmanship he said of the whole IFRS and IASB process: "This is an extraordinary success story", and then continued: "What is necessary is to continue it and consolidate it, but there are some big challenges ahead which have to be faced courageously and without any preconditions". That was where his future value lay.
He had been Chairman of the Trustees previously, back in 2005. He had just retired after a seven-year stint at the European Central Bank. And at that point he had decided that he was effectively retiring after 40 years of public service. He had been on the ECB Board since it had been founded in 1998. He had been Chairman of the CONSOB, the main Italian regulatory body. He had been Chairman of the Basel Committee on Banking Supervision. But this initial stint with the Trustees came to a sudden end when he was asked to become Minister of Economy and Finance in the Italian Government. His work as Minister across the next few years helped reduce the Government's deficit and put Italy into a better economic place for the global economic crisis that was to come.
But it was that initial period as Chairman of Trustees which opened his eyes to the nature of what the IASB was achieving. "When I took the Chair of the Trustees I discovered an institution that was, in many respects, a much more advanced experience in international co-operation than all those I had practised before. The Board is not composed of national officials spending most of their time in national institutions, meeting only three or four times a year like, for example, the IOSCO Technical Committee or the Basel Committee. The IASB operates as a full-time board", he said. And he drew another distinction. "The IASB is not acting under the direction of national bodies. It is structurally committed to the international profile of its activity. So it is not a negotiating body between national systems."
He talked in that interview of the changes which the IASB had already wrought. "Before the IASB there was no consistency and comparability of data", he said. "Now, ten years later, IFRSs are used by a growing number of companies in the majority of countries around the world. Even in the US — where IFRSs are not yet adopted for domestic issuers - the divergence in the standards is significantly less than it was ten years ago. An agreed method of comparison is an essential precondition for a well-functioning global economy, a more efficient allocation of capital, and greater protection for investors."
And in the same interview he made his position on the importance of governance very clear. "It is a formula invented by the creators of the IASB", he said, "This formula proved very effective." But he accepted that not everyone was going to agree, partly because it represented change. "It is somewhat removed from the traditions of some countries, particularly of the EU, where setting accounting standards used to be the prerogative of the legislature", he said. "The debates on issues of governance can be explained by the fact that the formula on which the organisation is based represents a big innovation on the European tradition. The innovation proved necessary because the EU had failed to develop the consensus required to create common accounting rules through the more traditional method of public legislation."
In the most recent interview I did with him, a matter of a few weeks ago, his enthusiasm for the task ahead was undiminished. He will be much missed in the years ahead.
Robert Bruce
December 2010