Time and again we have had problems in various companies. After every disaster in a company new rules are framed and the company law board expects that in future all companies should comply with the new set of rules. This goes on until somebody finds another loophole.
Isn't it strange that public limited companies which have board of directors some of whom are independent, manage to overlook the wrongdoings in a company and then try to escape being held guilty.
In the first place as Directors they are supposed to manage, direct the company in a right & proper way, then if the company fails to do so ,why are these same directors not held guilty. In many big companies they have a system of signing the code of conduct wherein it clearly mentions that the employee has to keep in mind the well being of the company and should not in any way do things which would harm the interests of the company. Why then are we reading about these mishaps in corporate world very often. Isn't it time to hold these Directors personally responsible for the wrong doings in a company where they are paid and are duty bound to serve the company and protect the interests of the stakeholders. One would be surprised to note that in a Housing Cooperative Society the Committee members are held responsible for any wrong doing even though the posts are honorary. Why then the Directors of Corporate world are spared from such accountability. Isnt it time for the Government, Company Law Board to make rules more stringent and make the Directors personally liable for any damages so that Corporate Governance is implemented strictly.
Isn't it strange that public limited companies which have board of directors some of whom are independent, manage to overlook the wrongdoings in a company and then try to escape being held guilty.
In the first place as Directors they are supposed to manage, direct the company in a right & proper way, then if the company fails to do so ,why are these same directors not held guilty. In many big companies they have a system of signing the code of conduct wherein it clearly mentions that the employee has to keep in mind the well being of the company and should not in any way do things which would harm the interests of the company. Why then are we reading about these mishaps in corporate world very often. Isn't it time to hold these Directors personally responsible for the wrong doings in a company where they are paid and are duty bound to serve the company and protect the interests of the stakeholders. One would be surprised to note that in a Housing Cooperative Society the Committee members are held responsible for any wrong doing even though the posts are honorary. Why then the Directors of Corporate world are spared from such accountability. Isnt it time for the Government, Company Law Board to make rules more stringent and make the Directors personally liable for any damages so that Corporate Governance is implemented strictly.
6 comments:
Hi Mr. Iyer,
This is Rakesh Mishra posting as anonymous. Sorry for that.
This indeed is a serious question you raised and merits utmost attention of the persons who are expected to do so. Alas! but how do expect any solution when it becomes a case of "Hunting with hound and running with hare". Results will obviously be a nil and the whole scam is gradually forgotten to the advantage of scamsters.
Hope and pray you are fine.
Bye
Rakesh
Rakesh,
Thanks for your comments.It reflects the sentiments of many of us in this country where huge scandals have not been solved and culprits go scot free.
Ananth Iyer.
Hello Mr. Iyer
Heartiest Congratulations on your new blog spot. Nice to read your articles on the current hot topics and issues. Hope the message reaches the concern authorities and adequate steps are taken to prevent all such scams in the interest of the society at large.
Do keep writing and hope to read many more articles from you.
Mohan Gajria
Dear Mohan,
Thanks for your comments.
It is our hope that things would get better in our country and such corporate scams are avoided in future.
Ananth Iyer.
Transparency and Integrity are indeed supremely important in order to build trust among employees, investors and citizens. And trust is the sole basis for all investment. Yet, our corporates seem to have forgotten this. Our Government too, it seems, has forgotten its own responsibility of upholding the law, thereby only exacerbating the public's overwhelming loss of faith in the complete Indian system.
Years of corruption and general complacency shown by Govt. authorities, combined with a lackluster judicial system has made it possible for scamsters and corrupt people (both in public and private office) to act with impunity.
Like you mentioned, if at all we wish to build India as a country with significant potential, then it is absolutely imperative for the Govt. to explicitly demonstrate its seriousness on enforcing corporate laws and ensuring an atmosphere conducive to private investment and shoring up of public trust.
The industry on its part must give up on its mantra of profits first and must always protect the truth. This must be done not only to avoid facing the law's arms, but as a measure of good faith in the Indian people and foreign investors.
But alas, all this may not materialize at all. After a few months of intense speculation, the media shall have found another issue to blow out of proportion and the Govt. would be occupied with one divisive vote-bank issue after another. May be, there is still hope for Ramalinga Raju, who might just about become enough of a non-issue in the months to come, that no-one would notice his quite departure. I fear this real possibility.
While I do believe that a scam as huge in terms of magnitude/ audacity of the Satyam case are far and few, it is a well known fact that a large number of companies regularly indulge in "creative accounting" to hide their blemishes/faults. This is very troubling for the common man, as his livelihood and source of employment is in jeopardy. All it would take is the revelation of a few more Satyams and the Indian economy's mightiness shall crumble like a tin-shack in a hurricane.
TRUST is tantamount. The moment foreign investors get a whiff that trouble is brewing on a massive scale in India's corporate sector (esp. the shining IT sector), they shall pull out their money like a pack of wolves. Investors are not socialists and they would not hesitate to withdraw their deposits of faith in India's success story, were they to come to know that the so-called success story is a cleverly crafted myth.
Dear Rajiv,
Your comments are great and you have clearly spelt the danger of foreign investors getting out of India unless we have tighter controls on the scamsters.
People holding responsible positions in the corporate world are supposed to be careful and ensure that the companies they govern are run in the interests of all the stakeholders.
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