Sustaining Investor Confidence: CD seminar on corporate governance

As the opening session on a series of discussions on corporate governance, it was only appropriate that it that focus on the most effective framework needed for organisational decision making. KMPG CEO Russell Parera said that what was needed was a culture that encouraged debate and dissent, something one doesn’t always see on Indian boards as people tend to belong to the same inner circle.

Following up on that, Zia Mody, managing partner, AZB Partners added that if a person was on the board of a company as an independent director, he or she was expected to ask awkward questions, which rarely was the case. “However, that in itself cannot help prevent a fraud as directors could be given wrong information,” she added. Of course, it takes a lot more than just having standards in place. It’s also about how these are implemented. It would, for instance, be almost pointless to have a whistleblower policy in place, and link it directly with the CFO. The panel agreed that it was best to give authority to an independent director or board member when it came to matters of compliance and governance.

Lakshminarayana KR, chief strategy officer, Wipro added that a lot also depended on how much time the board members had, to devote to each company on whose board they served, and the amount of access provided by the company to the mid and lower level of employees so that directors could truly get a sense of what was happening. Joseph Massey, MD & CEO of the Multi Commodity Exchange had a relevant point to make. “Corporate governance has to be treated as a normal part of life when running a company-it’s just one more add-on.

The focus should be on running the business, corporate governance just gets inculcated,” he said. While shareholder activism in India has still to take off, this is partly also because companies are shielded from the reputational risk that class action lawsuits bring with them. Parera mentioned that as companies would increasingly grow aware of this, shareholder activism too would rise in a healthy way. As the session ended, all the panellists agreed that there was no such thing as too much disclosure and while no one wanted more regulation in the wake of the Satyam scandal, what was needed was better implementation of existing regulations.

Issues in the implementation of the Corporate Governance Code

The moderator - Ganesh Ramamurthy, director, governance risk and compliance services, KPMG India, set the ball for the second session rolling, by establishing that while the corporate governance norms in India are at par with the best in the world, ensuring that these norms are always implemented is where the trouble comes in. Commenting on the difficulty of implementing these norms, Stephen Matthias, partner, Kochhar & Co said that it was important to have all the corporate governance codes together to ensure better implementation rather than have the implementation governed by multiple bodies.

source:http://economictimes.indiatimes.com/Features/Corporate-Dossier/Seminar-on-Corporate-Governance-/articleshow/4591408.cms

Independent director, anyone?

Corporate governance has been the buzzword ever since the Satyam fraud came to light in January. Companies, consultants and regulators have waxed eloquent about this concept, but now they face a serious issue: Independent directors are leaving in droves. So what is to be done?

Directorsdatabase.com, a joint venture of Prime Database and Bombay Stock Exchange, reports that 265 independent directors have quit 211 company boards since January. This mass exodus has spooked the market regulator, the Securities and Exchange Board of India (Sebi), which has now sought counsel from one of its advisory panels.
This is a thorny issue, one compounded by last month’s controversy surrounding investment banker Nimesh Kampani. Andhra Pradesh authorities have charged Kampani for the failure of Nagarjuna Finance, a company on whose board he served as an independent director, to pay back depositors. In most business circles, this charge is now being seen as a travesty. True or false, the charge has rejuvenated the question about independent directors, although from a different angle.
Satyam showed independent directors, who knew nothing or did nothing about the company’s fraud, in negative light, and provoked a media and public backlash against such directors. The scandal prompted an important question for regulators: Are the rules and regulations governing directors too lax? Kampani’s story prompts the opposite question: Are some rules too harsh?

Regulators will have to think through these questions. While independent directors can’t be held liable for matters that don’t reach the company’s board, holding them accountable for issues under the board’s purview is fair game. A recent Prime Database report noted that 75% of independent directors are the promoters’ relatives or friends.

This makes mockery of Sebi’s 2005 Clause 49 that underscored corporate governance, and later mandated that independent directors comprise as much as 50% of a board.
But this doesn’t mean such directors are useless. The Satyam scandal may have exposed flaws, but its recovery has shown that decent hands at its helm, à la Kiran Karnik and Deepak Parekh, can make a real difference.

source:http://www.livemint.com/2009/05/27213010/Independent-director-anyone.html?h=B

Unified approach needed from cos, regulators on governance: KPMG

With corporate governance practices of Indian companies coming under scanner, global consultancy KPMG believes industry bodies such as Nasscom, CII and regulators such as SEBI should have a more unified approach for developing benchmarks in go od governance practices.

“The industry bodies such as CII, Nasscom and regulators such as SEBI should look at a more unified approach towards handling corporate mis-governance and at developing benchmarks in good governance practices,” KPMG Director (Governance Risk and Complian ce Services), Mr Ganesh Ramamurthy said.

According to a survey of KPMG on the state of corporate governance in India, majority of respondents believe that while corporate governance should be practiced through principle-based standards and moderate regulations, there is a need for stronger regu latory review and exemplary enforcement.

The survey said that Indian companies believe that the spirit and practice of governance regulations and practices need to be intertwined.

One of the key concerns related to corporate governance is risk management, with nearly three-fourth survey respondents saying these practices need to be improved.

“Indian companies have some way to go when it comes to risk management measures. Also important to consider is impact of changes to strategies and priorities on risk profile,” Mr Ramamurthy said. - PTI

source:http://www.thehindubusinessline.com/blnus/14121713.htm

Anil Ambani firm smuggled in yacht

The customs department has alleged that Anil Dhirubhai Ambani Group (ADAG) company Ammolite Holdings has violated the Customs Act by “smuggling in” a luxurious yacht, which is believed to be a gift by Anil to his wife.

“The imported luxury yacht ‘Tian’ was imported in contravention of Section 111(m) of the Customs Act, hence is liable for confiscation,” Assistant Commissioner of Customs SR Vichare stated in reply to a petition filed by Ammolite Holdings challenging seizure of the yacht.

The court has given time to ADAG until on Friday to reply to the allegation.

source:http://www.hindustantimes.com

BSES asked to refund bill

Pulling up BSES Yamuna for sending an unaccounted bill of Rs 1.5 lakh to a consumer, the state consumer commission has slapped a fine
of Rs 50,000 on the discom and also directed it to refund the bill amount to the complainant.

Sardarni Harbans Kaur, a resident of village Kishan Garh in Vasant Kunj, complained that her meter was burnt and rendered dysfunctional in a fire caused by a high tension wire that passed over her house on July 9, 1999. A non-defaulting customer since 1985, she lodged a report with the junior engineer of the department but nobody turned up to rectify the damage or restore electric load for two years.

Then she requested BSES to replace the meter but the discom slapped a bill of Rs 1,52,927 alleging power theft by the consumer for 2 years. On BSES' threat that an FIR will be lodged in case the bill was not paid, she paid 50% of the amount on the very day and the balance was deposited in two instalments.

However, BSES said that on receiving the complaint, the premises of the consumer was inspected on September 1, 1999 and it was found that the seal of the meter was tampered with. Therefore, a case of Fraudulent Abstraction of Energy was registered.

Rejecting the discom's plea, Justice Kapoor said: "On receiving the complaint, the discom should restore electricity immediately and ensure that necessary action is taken at the site. The burnt meter should be removed and tested to see the cause of the fire. A new meter should be provided within three days. Thereafter, a bill based on the estimated energy consumption pattern of 6 months prior to and 6 months after the period during which meter remained defective has to be raised."
source:http://timesofindia.indiatimes.com/articleshow/2929868.cms