Right noises on governance

by The Hindu Business Line, December 16, 2009.

The irony will not be lost on anyone. Exactly a year to the day that the first hint of trouble at Satyam Computer surfaced, the Government is celebrating ‘India Corporate Week’ to focus on corporate governance. The Government has planned events in association with apex industry bodies such as the CII, FICCI, Assocham, and the three professional accounting institutes. Welcome, as these events are, they are not in themselves adequate. In the year since the biggest corporate scam in Indian history surfaced, there is little to show by way of improved norms of governance. Neither have newer laws or regulations been introduced to tighten governance standards nor have the guilty been punished. Yes, Satyam Computer, the company, was rescued and given a fresh lease of life. But that is not something that furthers corporate governance. Save for some changes in disclosure requirements mandated by the stock market regulator, Securities and Exchange Board of India (SEBI), very little has been done to improve corporate governance standards in the country.

Some might say corporate governance is not something that can be monitored or guaranteed by the Government. It is for companies to adopt voluntarily. This argument is no more valid than the one that we don’t need criminal laws and Courts simply because murders and dacoities happen anyway. The result will be anarchy. While it is important to put laws in place, it is equally important that they are enforced. This is where the Government’s failure stands out. Though the main protagonists of la affaire Satyam are in jail, we are nowhere near their trial and conviction of those found guilty. The central investigating agency is yet to file its charge-sheet, even though it is almost a year since Mr Ramalinga Raju‘s confession. The Institute of Chartered Accountants of India (ICAI) has yet to get to the bottom of how the auditors certified patently false financial statements as true. Contrast this with the speed and alacrity with which US agencies pursued the conviction and sentencing of Bernard Madoff, whose $65-billion scam surfaced at almost the same time as Satyam…(continue reading)

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