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Last updated: January 27, 2006 11:25 am

Mike Rake: More trust needed in business

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Mike Rake, chairman of KPMG and a Davos veteran, will be filing daily reports throughout the week.

Mr Rake became chairman of KPMG International in 2002 and has been one of the leading campaigners for a progressive and pragmatic legislative response to the collapse of Enron. He is closely involved with the Britain in Europe campaign, is a member of the Confederation of British Industry President’s Committee and is also Chairman of Business in the Community.

JANUARY 27

As I mentioned in an earlier blog, one of the best reasons for coming to Davos is the chance to meet other global business leaders.

One such gathering yesterday was of the Transatlantic Business Dialogue (TABD), a group of senior executives who work to reduce trade barriers between the US and Europe.

The TABD was really invigorated by Niall Fitzgerald when he was at Unilever. The baton has now been taken up by the TABD’s two new co-chairmen, Chuck Prince of Citigroup and BA’s Martin Broughton, with support from the likes of EU trade commissioner Peter Mandelson.

I’m glad to report progress is being made to create barrier-free trade across the North Atlantic, especially in areas such as intellectual property, capital markets and regulation. This in turn will promote economic growth and create jobs.

Then it was off to a lunch for business leaders hosted by President Pervez Musharraf of Pakistan. It was a real eye-opener. Musharraf has overseen with impressive determination a reform programme that has led to high economic growth rates, a lower budget deficit and increased foreign direct investment while dealing with the aftermath of the recent earthquake. His grasp of the issues was very impressive.

A series of one-on-one meetings followed before I went off to four evening receptions and a dinner. The sacrifices I have to make!

By far the best gig I attended was hosted by one of the world’s major consulting companies, which, if it ever wanted to, could surely make as much money from throwing great parties as from advising companies!

On a more serious note, this morning I’m speaking at a session on corporate citizenship – a subject very close to my heart.

I believe it is essential that companies understand the business (and moral) case for corporate social responsibility (CSR).

It is vital that companies take a longer term view by encouraging a corporate culture that understands the importance of integrity and trust and its responsibility towards the communities in which it works.

Of course, this also includes sustainable business practices with regards to the environment.

This approach isn’t just an exercise in public relations. Increasingly, people want to work for, and customers want to buy products and services from companies who embrace CSR.

But enough of my hobby-horses. As I prepare to leave a snowy Davos, here are some final thoughts.

I remain concerned about the low levels of trust that the public have in business. We still have a lot to prove.

And on a more personal level, I’m disappointed that I never managed to make it on to the ski slopes.

But whisper it quietly, this year I have both enjoyed and benefited from being in Davos.

I hope you have enjoyed and benefited from this blog, too.

JANUARY 26

So the World Economic Forum finally got under way and for me it kicked off with my debut appearance at the International Business Council.

As I mentioned yesterday this is an influential group of business leaders who advise the World Economic Forum.

It’s a private, behind-closed-doors session so you’ll appreciate there is a limit to what I can say. However, I can exclusively reveal that the briefings - from the likes of vice-premier of China Zeng Peiyan, US Secretary of Homeland Security Michael Chertoff and French finance minister Thierry Breton - were very interesting and thought-provoking!

The annual meeting itself opened with speeches from Davos founder Klaus Schwab and the new German chancellor, Angela Merkel. She gave a lengthy expose on the opportunities and threats posed by globalisation and the need for sound public finances in her own country. Without fiscal reform, she argued, future generations of Germans would be robbed of the chance to invest, innovate and be creative.

Hence ‘The Creative Imperative’, the theme of this year’s annual meeting. Thanks to Frau Merkel I’m now beginning to understand what it means!

Then there was just enough time to get changed for KPMG’s annual dinner in the Belvedere Hotel. Our guest speaker this year was William Donaldson, chairman of the Securities and Exchange Commission, the US stock market regulator, between 2003 and 2005.

Bill spoke about the ongoing need to restore public trust in business in the wake of recent corporate scandals. He also provided an update on how the reforms introduced under his leadership of the SEC, including enhanced focus on corporate governance and ethics, are working.

He was a big draw, which is probably why two-thirds of our invitees actually turned up, which is pretty good for Davos I’m told!

There is enormous competition here between participants to get people to go to the numerous events, cocktail parties and dinners that are held every evening. It makes me feel tired just thinking about it and I wonder how I am going to make it through the week!

Still, Davos has got off to a great start, and already I am feeling much better informed.

JANUARY 25

Well, I finally arrived in Davos yesterday and so far it’s been fantastic. The sun is shining, the snow is deep and – for the time being at least – there are very few people around.

After a busy day of successful KPMG meetings, I went to recover in the best restaurant in Klosters, the neighbouring ski resort.

Today we’ll start dealing with the world’s problems – or at least that’s the plan. The theme of this year’s World Economic Forum is ‘The Creative Imperative’. I’m not entirely sure what it is but I hope to find out over the next few days - and how it will benefit mankind.

I go to Davos every year in order to gauge the mood of the key players whose decisions shape the lives of every person on the planet.

There are so many sessions to attend. The trick, I’ve discovered, is to be well-organised and to make the effort to get the most out of what’s on offer.

Hopefully I’ll find time to network, to make new friends and to renew some old Davos acquaintances. That includes meeting some of the many journalists here, invariably in a bar somewhere.

It is also important to listen and learn. There are lots of interesting briefings lined up and as chairman of Business in the Community in the UK, I’m particularly keen to get involved in the debate on corporate social responsibility - I’ll be speaking on this issue at a session on Friday.

I’m also looking forward to my first meeting of the International Business Council, a private group of key business leaders who provide a sounding board for the WEF.

I remain concerned that Davos has become a bit unwieldy.

In many ways that’s because it’s been a victim of its own success. Every year it gets bigger and as a result it becomes harder to get around. And yet, here I am again, voting with my feet and eagerly anticipating the next couple of days with an open mind.

With such a hectic schedule in store it remains to be seen whether I’ll get the chance to test the ski slopes!

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