CARGILL

The Recipe for Contaminated Beef? Shoddy Governance

The management of XL Foods Inc., which has been in the news for causing the biggest beef recall in Canadian history, has not figured out the most important issue is how the company governs food safety. Neither XL foods or its parent company appear to have any independent directors, who are essential to ensuring internal management does not cut corners. No one likes to be controlled, least of which entrepreneurial employees. However, ask yourself if defective internal controls are worth the price, in terms of reputation and financial loss. It can indeed be a run on the bank if consumers don't have confidence, and it can get worse unless governance checks are put in place.