Board policies, conduct at issue as Hackensack CEO resigns

A successful and highly regarded hospital CEO has resigned amidst a “federal corruption trial that raised questions about the hospital and his leadership,” according to the June 4 issue of the Hackensack Chronicle. John Ferguson, president and CEO of Hackensack University Medical Center (HUMC) in New Jersey for 23 years, drew national recognition for the hospital’s quality and financial performance.

However, in April former State Sen. Joseph Coniglio was found guilty on six federal corruption charges stemming from his employment as a $5,000-a-month consultant for the hospital. Coniglio was convicted for using his political influence to steer millions of dollars in state grants toward HUMC while employed by the hospital. At the trial, several hospital officials testified, under grant of immunity, that they were pressured to hire Coniglio by “notable members of the hospital’s boards.” Mr. Ferguson has not been charged with any wrongdoing.

However, said the Chronicle, the HUMC board has retained two New York City law firms to review the hospital’s governance policies. After Coniglio’s conviction, The Record published an article that explored the political links of various board members and their business connections to HUMC.

This sad story, still unfolding, should be a reminder to boards that governance ethics, particularly conflicts of interests, are in the spotlight. The old rules that tolerated some back-scratching no longer apply. Boards need to have, and more important, enforce rigorous conflict of interest policies. An audit committee composed of only independent directors, with no material conflicts, should review every disclosed conflict and take appropriate steps to see that the board’s fiduciary duty of loyalty is upheld.

(For more on addressing conflicts of interest, go to this story in Great Boards.)

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