The third tenet of ESG is that of Governance. This is often typified as an examination of the internal workings of a corporation and its impact on that company’s overall performance and public reputation.
This is where scandal is most likely to crop up, often suddenly and without warning, mainly because not enough attention is spent examining its roots.
And political and historical examples of the impact of scandals like this are not hard to find. One of the most prominent in Canadian history almost destroyed MacDonald while he was in office. Other events during his second tenure as Prime Minister have served to serious damage his legacy.
## Sir John A MacDonald – Father of Confederation
Though revered for his role as Father of Confederation in recent year Sir John A MacDonald has been criticized for his role in the creation of the Canadian residential school system. The recent discovery of mass unmarked graves at these schools has brought the horror of the residential school system. This has served to refocus our understanding of the efforts to destroy first nations’ social structure inherent in the system.
### The Pacific Scandal leads to MacDonald’s defeat as Prime Minister
In his own time, MacDonald suffered his greatest electoral defeat in a political crisis that became known as the Pacific Scandal. Revelations in 1873 about money that was funneled to the MacDonald’s Conservative party by a financial conglomerate seeking the opportunity to build a Canadian trans-continental railroad led to his government’s defeat and the arrival of Canada’s second Prime Minister, Alexander Mackenzie.
Money was channeled to his Conservative Party by financiers behind the development of the Canadian Pacific Railroad.
Essential to the creation of Canada as a trans continental nation, the Canadian Pacific Railway was a challenge to finance and build. MacDonald also claimed that the donations he and other Conservative politicians received were consistent with political donations of the time.
### MacDonald returns and completes the Canadian Pacific Railway
Although at the time MacDonald assumed his political career was over his time as Leader of the Opposition did not last very long.
Mackenzie’s Liberal government only lasted from until 1878. MacDonald remained as Prime Minister until his death in 1891. And during that second tenure, MacDonald was able to oversee the completion of the transcontinental railroad and drive in the final spike of the Esquimalt and Nanaimo Railroad on Vancouver Island in 1886.
### Our review of the Residential School System has brought MacDonald’s legacy in stark relief
After returning as Prime Minister MacDonald commissioned a review of American efforts to use the school system to assimilate its aboriginal population. The Report on Industrial Schools for Indians and Half Breeds led to the creation of the Canadian residential school system.
At the time the Canadian approach was considered more cooperative and friendlier than the American efforts at “Aggressive assimilation”. However, in 2015 the Truth and Reconciliation Commission concluded that the Canadian residential school system amounted to cultural genocide.
Even now, we are coming to terms with its effect on our First Nations citizens and the inherent role that both the Canadian government and churches played in it.
## The More Things Change the More They Stay the Same
Although it is fairly easy to find examples in history of politicians rocked by scandal, it is easy enough to find ongoing present day examples as well. Resignations in 2021 by the Governor General of Canada, Julie Payette and Governor Andrew Cuomo of New York are recent examples of that.
But a more relevant example for investors interested in political and corporate involvement in the environment was uncovered by the recent release of audio tapes detailing the efforts of Exxon connected lobbyists to influence American politicians and subvert American environmental change.(https://www.axios.com/exxon-lobbyists-caught-video-greenpeace-ceo-apology-b213d384-268f-4a2b-b00e-88b3f7f2a0aa.html)
When the story broke on British television, it prompted an immediate statement by the EXXON CEO denying that it was a reflection of Exxon’s position.
In a version of this story for an American audience I could touch on the events of the Teapot Scandal. This scandal was considered the worst scandal in American history before Watergate. It invloved the payment of bribes in exchange for unfettered and untendered access to government oil reserves in the aftermath of the First World War in the early 1920s. The parallels between these scandals are uncanny.