Re-emergence of corporate scams shows governance standards are weak

In an unusually uploaded order late Friday, the Securities and Exchange Board of India said its investigation found that the former NSE boss was directed by a yogi or spiritual guru, and related to the exchange with him. had shared confidential information, and imposed a fine of Rs 3 crore. “The sharing of financial and business plans of NSE is not an unimaginable act, which may shake the very foundation of the stock exchange,” the regulatory order said. The appointment of Anand Subramaniam is another serious lapse. , has little or no experience in the financial sector and has professional qualifications for a senior position in NSE, which violates most of the norms. According to the SEBI order, it was “a grand conspiracy of money-making scheme” involving Ramakrishna and Subramaniam, along with an unknown guru.

In the second order – which perhaps did not get much attention with a fakir due to the “bizarre misconduct” of the former NSE CEO – SEBI said that Ambani, the promoter and chairman of Reliance Home Finance, had exceeded his remit by gross deviation of norms. By sanctioning loan in “In view of the conduct and propensity of the Company, indulging in such activities of diversion of funds and mis-presentation of books of accounts, falsification of financial statements resulting in non-disclosure of true and fair information to the public at large, and the Company In view of the collective misconduct displayed by the key managerial persons of U.S.A., there is an urgent need that the Company should be restrained from carrying out such abominable activities which are clearly visible in contravention of securities laws. Order. Ambani & Company Some of the other directors of the company have been banned from the markets for three months. In the past too, Ambani had come under regulator C. Rosshere on allegations of transferring funds from foreign borrowings to the stock market.

More worryingly, these two cases have over the years involved ABG Shipyard (now with the move of CBI), BharatPe, Infrastructure Leasing & Financial Services (IL&FS), ICICI Bank, violations and misuse of corporate governance in Punjab. is a series of. National Bank, Yes Bank, Dewan Housing Finance Corp Ltd (DHFL), Kingfisher Airlines and its promoter Vijay Mallya and many other defaulters. In almost all cases, company boards have been subject to weak oversight, conflicts of interest and ignoring governance norms. The other serious concern in many of these cases – notably ICICI Bank, IL&FS and now NSE – is the leadership lapses and ethical conduct of some of the well-known and larger-than-life professional CEOs who ran some of these firms. This further undermines the argument for a more professional CEO-led model of management and encouraging diversified shareholding than the much-anticipated promoter-driven company model.

Price destruction due to governance failures and consequent erosion of investor confidence or confidence has meant that there are only a handful of Indian companies that attract a governance premium in a universe of over 5,000 shares. It is a sad reflection on standards of corporate governance, including whistleblower policies and protections such as checks and balances, in addition to regulatory oversight. Equally, it is worrying to notice the business approach as usual on the part of all stakeholders and the government every time a corporate scam comes to the fore. A healthy and vibrant Corporate India is vital to the economy in generating employment and increasing income. That would mean influencing change in the Indian corporate boardroom, learning from the previous episodes. However, the experience has not been encouraging.

Ultimately the key to governance, as the SEBI expert committee once said, is a commitment to values ​​and ethical business conduct. This is something that cannot be made into law.