by Chen Li

    PARIS, Jan. 15 (Xinhua) -- In France, there is indeed a Club of100 that has been gathering the top French elites in the fields of business, politics and law in its Thursday lunch at legendary Paris restaurants in the past 97 years.

    However, as the 2008 financial crisis struck the global market, there are more calls for change of the highly concentrated elite economic governance.

    CLUB OF 100 AND REALITY

    The Club of 100 admission rule requires that only a member's death can make space for a new entry, which makes the club, officially dedicating only to gastronomy, an exclusive Petit Monde(small world) among all the world prestigious clubs.

    Coincidently, the 2009 edition of the Panorama of Corporate Governance in French Public Companies, jointly published recently by the world's leading consulting firm Ernst & Young and France Proxy, an independent French corporate governance consulting firm, pinpointed that a small group of around 100 executives are dominating the big French boardrooms.

    The French elite culture has seriously dented the independence of the boards and the required transparency for public companies, the report said.

    According the Panorama, a typical French board of directors and/or supervisors is concentrated with French elites who likely have a typical roadmap of being "graduated from Grand Ecoles -- served at French ministries -- entered the top level management of large French companies."

    Among CAC40 groups, in 90 percent of cases, a director is a man, with an average age of 58, resting on the same board for more than12 years in 15 percent of cases. He is convened seven to eight times a year for sessions lasting an average of two to three hours but may be absent once or twice a year, gaining average 55,000 euros (about 79,299 U.S. dollars) per director seat.

    Among SBF120 companies, with a combined market value of 796 billion euros (about 1.19 trillion U.S. dollars), power consolidation has been increased in 2009. Ninety-eight directors, or 22 percent of the total, hold 43 percent of the voting rights, representing "the biggest network of influence in French capitalism."

    Meanwhile, the French boardrooms cater only for less than 21 percent of foreigners when they hold 40 percent of the capital of CAC 40 groups and that international business now accounts for most of the growth in their turnover. Moreover, women hold less than 10 percent of the director seats.

    BAROQUE AIR IN FRENCH LEADING COMPANIES

    An early report published by the French daily Le Monde further illustrated this "baroque" air: as of Dec. 15, 2009, among 95 chief officers of CAC40 companies (including president/chairman, CEO, chairman of board of directors or supervisors), 80 were French and 15 foreigners.

    The majority of these French officers hold diplomas from 4 Grand Ecoles. Twenty-three are from the Ecole Polytechnique, which trains top engineers in France; 16 from Ecole Nationale Administration (ENA), which produces French politicians such as Chirac, de Villepin, Segolen Royal; six hold joint degrees from both Polytechnique and ENA; and 18 from HEC or ESSEC (top business schools), among which, six also hold joint degree from ENA.

    Accumulation of several directorships (five maximum according to current French law) and cross-boardroom nomination, which further glue the power concentration, are regular practices.

    A typical case is BNP Paribas. Four people, three bank executives and a still influential former leader, are distributed in other 12 boardrooms in the flagship companies.

    The bank president, Michel Pebereau, is also sitting on the board of the Total oil, aircraft manufacturer EADS, insurer Axa, the materials group Saint-Gobain and Lafarge cement.

    Its CEO, Baudouin Prot, is also for the utilities and service giant Veolia, and retail and luxury group PPR (Pinault-Printemps-Redoute, owning marks such as Gucci, YSL, Puma).

    Amaury de Seze, the former member of the executive board of Paribas, is holding seats at utility service group of Suez Environment and top French distributor Carrefour.

    Georges Chodron de Courcel, the deputy CEO of BNP Parisbas, sits on the board of the construction and telecommunication group Bouygues, the turbine and rail materials manufacturer Alstom, Fonciere financial and equity (FFP), and family holding company ofthe Peugeot Family, which holds 22 percent of PSA Peugeot-Citroen.

    If counting that Seze and Chodron de Courcel also sit on the board of the principal Belgian Group of Bruxelles Lambert (GBL), which is a shareholder of GDF Suez, Total, Lafarge, the group of wines and spirits Pernod Ricard and Suez Environment, there are not only 12, but 15 CAC 40 companies whose boards are under the influence of the banking group.

    Up to now, 65 percent of 281 big French companies have combined roles of chairman and CEO. Cases show that French CEO or chairman obviously experienced a cycle of splitting the roles in past years under the good practice call, and come back again with combined roles recently. More often, a retired CEO just directly passes to the role of chairman of the board of directors or supervisors.

    As a result, about 60 percent of the CAC40 companies have a board controlled by chief officers, and only 40 percent of companies are in hands of shareholders, among which institutional investors and family groups are the majority. Evidently, minority shareholders are just a piece of cake.

    EXCESSIVE POWER CONCENTRATION: FRENCH DISEASE

    This excessive power concentration makes France "arguably the last true royalty in Europe," said Daniel Lebegue, president of the French Institute of Directors (IFA), a 2,200-strong group for board members that advocates improving corporate governance.

    IFA so far made 40 recommendations regarding good practice, including maximum three directorships for one person.

    "It is necessary to spur an acceleration of changes in equity and renewal of advice, otherwise, changes should certainly be imposed by legislative or regulatory voice," warning Bruno Perin, Partner of the Ernst & Young.

    "French elite is an ancient regime," a French SME consultant willing to keep anonymous said, "before the Second World War, the French capitalism was controlled by 200 families and now it is even only by 100 fellows. It is undoubtedly a scandalous modernization."

    Bernard-Henri Levy, the French philosopher and social observer called the French elite culture "an old French disease."

    Most surprisingly, although everybody is crying for the recession, study shows neither the 2008 recession, nor the Code of Good Practice recommended by the Movement of the French Enterprises and the French Association of Private Enterprises in 2000, had much impact on changing corporate France.

    A slight global improvement in terms of board construction with special committees and of installation of independent directors might cheer up the governance activists, but a lack of means and resources available to governing bodies to carry out their missions dumps this improvement in vain.

    How long will this "homogenous and inbred" Petit Monde control the French political economy? Evidently, the reality that only 37 percent of studied companies have a level of governance "generally satisfactory", and that 35 percent of them get a result described as "very low", calls for a true good change.