Also, please read the next blog below titled “Indian Economy- At the right place under wrong circumstances” that talked about the accounting fraud much earlier than the Satyam Fiasco.
Also check the blog that i wrote on 27th Dec 2008. http://rajendrasays.blogspot.com/2008/12/economy-in-severe-recession-government.html
World Center for Corporate Governance , U.K .
Institute of Directors
Wish you a great 2009.
While i was the Hon. Director at IOD , i had clearly cautioned IOD, that the companies that are getting the award for corporate governance from IOD could be the next Enron’s of the world and i had cautioned Gen.Ahluwalia categorically even quoting some of the recipients
Having said this , i must re-iterate that IOD must be careful in giving out the award to companies who really deserve it after proper scrutiny and due diligence .
I had written earlier on my blog ,much before the Satyam fraud came to light. I ,must emphasize again , that more corporate frauds can’t be ruled out. Though, after this Satyam Fiasco , corporates will be more vigilant before they resort to this route.
After leaving Reliance almost two years ago , i had taken a course in Corporate governance from Kellogg Business School ,USA and decided to pursue independent board positions as my full time professions , much before people focussed on this board positions as a full time profession. Earlier , it was considered as a retired Executives parking slot,. While i took on this lead in India , a lot many people were shocked that i gave up a cushy job in Reliance and decided to pursue independent directorships as my profession. Trust me , i have been very strict with my companies for compliance and disclosures . I clearly insist and minute my issues in the board meetings so that compliance and disclosures are not dealt with lightly ( i can show some of the minutes where i have requested the board members to furnish me the quarterly compliance certificate ). If i find that the companies are not willing or are shying away. I move out of the board and mention the same in my resignations. I did that in the MNC – Medicine Shoppe . Today , we see it on the verge of closure and whatever i wrote to the board members while resigning from the board has happened . I could see that the company was not managed well and there were discrepancies in what the management was presenting to the board every quarter . I could foresee a downfall good two years back and wrote to the board and moved on as i believed that board and the management were not driving the company well.. This is despite the fact, that Medicine Shoppe Intl is a part of the fortune 20 , Cardinal Health, it was the fastest growing retail chain in India and a pioneer in pharmacy retail, adding to this ,the the investors were highly regarded PE players in the country .The country not just needs a strong law and strict guidelines to have independent directors but also the independence of directors . Independent directors and independence of directors is equally important This is not as easy as i write , as i have the experience of a dozen companies and i can understand it well from the independent directors standpoint .This has to be done by SEBI and the government without any further delay. Today, most of the independent directors are chosen from the level of comfort of promoters with the individual . In India , corporate governance is as big an issue as in the US . Only difference that , in USA you have punishments and in India you can get away with ‘ Contacts’ and ‘Payouts’.
This is what i wrote in my blog much before Satyam fiasco came to light http://rajendrasays.blogspot.com/2008/12/economy-in-severe-recession-government.html
“The government should be vigilant on big business houses for accounting and reporting in case they are listed, or we might see a fraud and failure like Enron or WorldCom. This is a step to avoid ‘financial terrorism’ . Some business houses ‘control’ many politicians and this is an area of big concern. We have created unequal wealth in the form of strong and gigantic business houses who are iconic Any wrong doing in such a big business houses would be like a corporate suicide and will severely impact the market scenario. I don’t rule out ‘accounting manipulations’ or ‘jugglery’ in these ‘tough times’ to keep the image and reputation intact for such big business houses”
You might like the entire blog at https://rajendragupta.wordpress.com/
It is high time that IOD reconsiders the Corporate governance award model to people who just give up the “award fee” , it must have the options of picking up people besides these applicants. Thus people like Satyam would easily get this award and no wonder that these business houses will pay any amount to get these awards and fool the investors. Seeing the current list of recipients of IOD awards. I am scared that more such names may come to light ! There is more pain in the corporate world in these turbulent times – Just wait to watch
Also, please work on the corporate governance day on 3rd Feb to create the awareness amongst people
All the best ,
Rajendra Pratap Gupta
Cell : + 91- 9323109456
+ 91- 9867300045
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