A few weeks ago, The Wall Street Journal reported that two former directors of Theranos – the embattled blood testing company – “did not follow up on public allegations that…the firm was relying on standard technology rather than its much-hyped proprietary device for most tests”.

The report states that the two board members in question – a former admiral and Secretary of State, respectively – were on the Theranos board when concerns about the company’s device were aired publicly.  However, they seem to have believed that it wasn’t their job to ask questions, at least not in the absence of some sort of proof that the concerns were valid.  The former admiral said he “did not have the information that would tell me that it’s true or not true”; the former Secretary of State said that “it didn’t occur to” him to ask questions, adding “[s]ince I didn’t know, I didn’t have anything to look into”.

Huh?  I know I’m a governance nerd, but am I the only one astonished that neither of these directors seems to have understood that one of the basic obligations of a board member is the duty of care — in this case, including a duty of reasonable inquiry?  What would be the point of having a board that doesn’t bother to ask questions until someone has proven, or perhaps at least provided probable cause to believe, that a problem exists?

Fifteen years ago, the U.S. Senate conducted hearings on the collapse of Enron, and my recollection is that when its former board members were asked about all the disclosures in Enron’s draft proxy statement about related party transactions and special purpose entities and CFO Fastow’s participation, the response was “it was pretty complicated” – or words to that effect.  The only conclusion one can draw from statements like this is that the directors didn’t really understand what they were seeing and decided that it was best not to ask questions.

Maybe both cases are examples of directors not wanting to be perceived as disloyal.  Or maybe they feared that other directors would think them stupid for asking dumb questions.  I’m also willing to accept that there may be another side to the story (though none was ever brought to light in the case of Enron).  However, until that other side comes out, I’m inclined to think that if it walks and quacks like a duck, it is a duck.  And in this case, the ducks seem a lot like those three monkeys that see no evil, hear no evil, speak no evil.