Ambani yacht ‘flounders’ on customs duty

A luxury yacht chartered by a subsidiary of the Reliance-Anil Dhirubhai Ambani Group (R-Adag) that was seized by Indian customs earlier this year will not be released until Rs28 crore customs duty is paid in full and a bank guarantee of an additional Rs15 crore is provided by the firm, a senior customs official said.

The luxury yacht named Tian, purportedly a gift for Tina Ambani from her husband, R-Adag promoter Anil Ambani, was seized in February by the central intelligence unit of the customs department in Mumbai following a probe that began in January. The customs official mentioned earlier, who declined to be identified because the matter has not yet been resolved, said the yacht had been seized “due to non-payment of duty. It was illegally brought to India and was used without paying duty.”
“Till now the department has received a draft of Rs25 crore from a representative of R-Adag,” the same official told Mint. “The investigation is still on and the department will release the yacht once the dues are recovered.” The department has also asked R-Adag to deposit a bank guarantee of Rs15 crore before it releases the yacht. The official said this was routine procedure pending a probe with the bank guarantee serving as collateral for any penalty that could be imposed.
The customs department has alleged that the yacht’s final destination according to its shipment papers was Colombo, Sri Lanka; it was to be unloaded at Mumbai from where it was to sail to Colombo.

According to the department’s investigation, the Tian was purchased in mid-2008 from an Italian yacht maker by Ammolite Holdings Ltd, a Channel Islands-based associate firm of Reliance Capital Ltd and brought to India on 31 October under a charter agreement with Reliance Transport and Travels Pvt. Ltd, an R-Adag company. The Channel Islands are located off the French coast of Normandy.
Reliance Transport and Travels later took permission from port authorities to park the yacht in Mumbai for a few days before it sailed to Colombo. The customs department has alleged that the yacht did not leave for Colombo for over three months and was instead being used in India without paying duty. Duty is usually paid at the destination—in this case, Colombo.

Another customs official familiar with the case and who also did not want to be identified alleged that Tina Ambani had taken the yacht to Goa during New Year celebrations. However, in its reply to the customs department, Reliance Transport and Travels has claimed that the yacht sailed to Goa to test a repaired generator in late December 2008 and returned on 2 January.

In response to Mint queries, an R-Adag spokesperson said: “We have already communicated our stance to the concerned authorities.”
The funds for the charter came from a Singapore-based firm, Gateway Net Trading Pte Ltd. Ammolite Holdings, according to the customs official mentioned in the first instance, is a small firm with “share capital of $100,000 (Rs50.4 lakh today),” while Gateway Net Trading is an associate firm of Reliance Communications Ltd, also an R-Adag company.
In a letter to the customs department dated 18 February 2009, Ammolite Holdings and Reliance Transport and Travels have denied evading customs duty. In the letter, which has been reviewed by Mint, Ammolite Holdings said: “The yacht was duly and validly brought into Indian waters in compliance with all laws and regulations with the permission of the customs department.”
Ammolite Holdings and Reliance Transport and Travels have also said the Rs25 crore paid was a voluntary deposit “to demonstrate bonafides and to avoid any unwarranted or unpleasant consequences”. The two firms have also requested the department to release the yacht and refund the money.
The yacht—a Custom Line 112 Next, 34m flying-bridge fibre glass vessel—has been valued at about Rs100 crore by customs authorities. A July 2008 report in this newspaper had estimated the price of the yacht at Rs200 crore.

source:http://www.livemint.com/2009/04/21234138/Ambani-yacht-8216flounders.html?h=B

Analysts express concern on R-Comm's accounting policies

It might turn out to be a good quarter in terms of subscriber additions for Reliance Communications, but when it comes to its consolidated profit and loss, analysts express concern on lack of clarity on its alleged below-the-line accounting policies. CNBC-TV18's Sajeet Manghat delves deeper.

Even though Reliance Communications' quarterly additions brought cheer to the street, analysts are still grappling with the below the line accounting practice that R-Comm follows for its consolidated accounts. Over the last three quarters, analysts have been raising questions seeking clarity on the financial charges on its consolidated financials. The concern is the alleged mismatch in its financial charges in its standalone and consolidated numbers.

R-Comm's standalone results for the nine months ending December 2008 had a financial charge of Rs 937.91 crore. While in the consolidated statement, it posted net interest income of Rs 618.86 crore. A clear difference of Rs 1556.77 crore.

Which, according to analysts, means on a standalone basis the company has an interest cost of Rs 937.91 crore. On the consolidated profit and loss which includes its subsidiaries, it gained Rs 1556.77 crore, thereby reflecting a net interest income of Rs 618.86 crore.

Analysts are finding it difficult to understand how a company could earn interest income when its net debt rose by Rs 3400 crore to Rs 18,600 crore in Q3. In a conference call, transcript of which is available on the R-Comm website, analyst Vinay Jaising raised a query on the same issue, "Firstly on the balance sheet, we have seen that net debt increased by Rs 34 billion up to Rs 186 billion, despite that we have net finance income coming in at Rs 1.5 billion. Last quarter, we were explained that there could be some derivative gains and higher other income on account of cash in hand. If you can throw some light out there?"

Satish Seth, Vice-Chairman, R-Comm, responded saying, "The finance charges comprise of interest income and expense, foreign exchange gains and losses, including foreign exchange gains on bank balances and financial investments and amounts receivable from foreign subsidiaries. A composition of this is giving a net result of income."

Analyst Vijay Jaising further probed saying, "Just on that, I understood the break up. But when you have such high net debt, how do we get interest income?"

To which Satish Seth replied, "Primarily depends between the cost of debt and income on cash balances. That's one difference. Secondly, on the foreign exchange gains and financial investments, because part of the interest also gets capitalized because it's part of the capital work in progress."
Not Just Vinay Jaising, other telecom analysts and CNBC-TV18 have raised similar concerns. CNBC-TV18's repeated attempts since March 26 on the same issue and reconciliation between standalone and consolidated profit and loss have elicited no response from the company.

source: http://www.moneycontrol.com/india/news/cnbctv18comments/relaincecommunicationsaccounting/analystsexpressconcernrcommsaccountingpolicies/market/stocks/article/393658

The Key to Successful Corporate Social Responsibility in India

Corporate social responsibility is a topic of keen discourse around the world and India is no exception. However, it appears to us that prevalent CSR practices – the organization of blood donation camps, to cite just one example -- are symptomatic of a failure of corporate governance.

It is a sign of bad corporate governance when managers donate to causes that their companies are in no way better positioned to address than individuals are.

As trustees of corporate assets, are managers not exceeding their brief when they divert resources in this fashion and pursue personal passions with corporate resources?

Would it not be better to distribute profits among the shareholders and employees and leave it to their discretion, as individuals, to contribute to the causes that they deem fit?

Again, CSR is sometimes treated as being no different from image building. But such an approach is short-sighted and therefore not good corporate governance.

"Hypocritical window-dressing" – to use the famous phrase coined by Milton Friedman -- of this kind is soon found out and has not been shown to be very effective for image building.

But when the "CSR strategy" of a company gets merged with its competitive strategy so as to become indistinguishable from it, it is a sign of good corporate governance taking shape. There is no more a need for CSR as a stand-alone activity.

source: http://online.wsj.com/article/SB124019930116534151.html

CII announces new corporate governance code

Concerned over corporate governance issues post-Satyam fiasco, industry body Confederation of Indian Industry (CII) on Friday announced the formulation of new corporate governance code for corporate sector to bring more transparency and better governance.

Chairman of CII special task force Naresh Chandra, while announcing the corporate governance norms, said that large and heavily publicised corporate frauds often provoke legislative and regulatory action, Satyam being the latest example.
However, for preventing such scandals, laws should be better managed and strengthened rather than imposing further regulations, he said while speaking at the annual summit of the industry body.

“The code would assist companies to take a voluntary step beyond the stated letter of law,” he said.

Present on the occasion, J J Irani, director Tata Sons, said that independent directors need to work with the management to prevent such happenings. Also, third party auditors can also play an important role in probing such frauds.
The companies should strengthen their corporate governance and separate the role of chief executive officer and chairman, which will bring in greater transparency, he said, adding that the internal audit system of the company should be made robust and as independent as possible.

source: http://www.livemint.com/

The fundamentals of corporate governance

The Satyam issue is a good opportunity to harvest rich insights into the fundamentals of corporate governance. In discussions on governance, one question that doesn’t normally get the attention it merits is: on whose behalf is the company governed? Whose company is it, really?

The top-of-the-mind response is that a company is governed on behalf of the shareholders.

The course of events at Satyam throws up enough doubts about this answer. First, there has been such a massive dumping of shares and change of ownership, that only a small percentage of those who held Satyam shares in November are shareholders today.

Second, it would be incorrect to think the government appointed an independent board only to protect the interests of shareholders, most of whom have bought shares relatively recently at a throw-away price.

Among the various stakeholders of any company, the shareholders tend to be the least loyal — selling their holdings at the first sign of trouble. It would be more appropriate to view shareholders as suppliers of money and liquidity rather than as owners. It is clear that the company is not governed only for the benefit of the shareholders.

Is the company then governed on behalf of the employees? Protecting the jobs and interests of the 53,000 employees at Satyam was clearly one driver for the quick government intervention.

However, providing employment cannot be the primary purpose of any organisation. As an example, suppose half of Satyam’s customers decide to cancel their contracts, will the Satyam board still continue employing all the staff?

So the company is not governed on behalf of its employees. How about the customers? Satyam has an impressive roster of international customers. The need to continue servicing large international clients as well as protect India’s IT reputation must have played a role in the government’s decision to act fast. Just as with employees, it is possible to build a case that a company does not exist purely for the benefit of the customers.

Whose company is it then? One view that has taken root of late is the concept of a stakeholder — a term encompassing the shareholders, customers, employees, suppliers and the society at large. It could be argued that the company is governed on behalf of all stakeholders.

While this idea holds some appeal, it fails on two counts. First, what happens if the interests of various stakeholders are in conflict? Second, there is a constant churn of shareholders, employees, customers and suppliers.

The nature of the company’s business constantly changes —requiring new employees as well as servicing new customers. When the composition of stakeholders is constantly evolving, how do the ‘governors’ actually decide the best interest of each of these stakeholders?

The only idea that appeals to me is that the company does not really belong to anyone. You govern the company for the company’s own benefit. This is justified based on a pure statutory position that the company is a distinct legal entity, independent of any shareholder or any other stakeholder (a principle established by the House of Lords in the famous case of Solomon vs Solomon & Company in 1897).

Arie de Geus in his book The Living Company takes this idea further. He is of the view that the only powerful way of looking at a company is as a ‘living organism’, an organism with its own destiny much the same as any living person.

The role of governance, then, is one of stewarding the company to achieve its full potential. This is quite similar to a parent guiding and shaping his or her children to be the best they can be in their chosen field of endeavour.

Borrowing these powerful ideas, the answer to the question ‘Whose company is it anyway’ is: no one’s. A company is a unique and distinct individual with its own DNA and destiny. The role of governance, according to me, is three-fold:
l Ensuring the long-term health and viability of the company;
l Stewarding the company to fulfil its potential and to become as great as it can be; and
l Adherence to the highest standards of ethics, statutory compliance and social responsibility

Governments function effectively by distributing power. Most evolved democracies distribute power between the legislature, the executive and the judiciary. Further, an independent press (the fourth estate) is critical to keep these institutions honest and functioning effectively. While this may impair speed and efficiency, it seems to be the most effective mechanism for running countries thus far.

So what are the parallels to corporate governance? In the case of Satyam, there was an undue concentration of power with the founders, disproportionate to their low shareholding. The board was far less independent than required.

The core issue, clearly, is balance of power. While individual leadership is a key ingredient of success, visionary leaders know how to enrol a larger team, not just within the company but also in the form of independent board members and advisors, to distribute power and empower their companies to grow independent of themselves.

They understand institutions can be built only if they become more important than their leaders. How then do we achieve balance of power within a corporate context? I see a clear parallel between the pillars of government — the legislature, executive and judiciary — and their corporate equivalents for good governance.

The board of the company is, in effect, the legislature. The board’s primary responsibility is to steward the company to achieve its full potential. While, in theory, the board is elected by the shareholders, its job goes beyond catering to only the shareholders. The board balances the needs of the shareholders, employees, customers, vendors and partners, and society at large.

This is similar to our expectation of an elected representative, say an MP. While the MP may have been elected from a specific constituency and a specific party, his responsibility goes beyond those constituencies to the country as a whole. Just as the legislature makes laws to govern a country and its people, the board lays down policies that govern the way the company is run.

The management of the company is obviously the executive branch, similar in role and function to that arm of the government. Working under the broad policy, vision and direction of the board, the management team is accountable for meeting the mutually agreed upon goals and objectives, in line with the ethics and values of the company.

While the legislature has a more broad-based structure ideal for policy making, the management team has to be more hierarchical and result-focused to ensure efficient execution. It is this separation that helps a company cater to the larger good while retaining execution disciplines.

The role of the judiciary is to interpret the laws laid down by the legislature and apply them to specific disputes. Currently this function is discharged by the board itself on internal company issues, and by the regulatory bodies and the courts when they relate to the laws of the land.

As an example, if the company has disputes relating to income tax, the appellate authorities and the tribunals form the first level of judiciary, with the high courts and Supreme Court stepping in if the issues cannot be resolved.

In my view, the judicial role of the board is not as well-developed and is often at the root of many corporate governance failures. One possible approach is to strengthen the corporate governance committee and ensure its charter includes a systematic review of company performance on all fronts across stakeholders.

Given the size and complexities of today’s corporations, it may even be worthwhile, under the relevant legislation, to turn over the judicial role of the board to another body — the judicial board.

The governance committee can play the role of an independent press by taking a proactive approach in seeking stakeholder feedback, facilitated by external agencies. This goes beyond the whistleblower policies envisaged by today’s governance guidelines.

The Satyam episode has allowed us to look at the fundamental aspects of corporate governance: on whose behalf the company is governed, and how we can distribute power to ensure the longevity and effectiveness of the institution.

source:http://economictimes.indiatimes.com/Opinion/The-fundamentals-of-corporate-governance/articleshow/4269150.cms

ICAI to set up ratings system for corporate governance

The Institute of Chartered Accountants of India (ICAI) is planning to set up a rating system for corporate governance for listed and unlisted entities. It is aiming to bring in internationally best practices and new code of conduct. The apex statutory body of CAs, established under the Chartered Accountants Act, 1949, is in the process of forming a high-power committee to shape the model code of conduct. The proposed group will consist of 7-9 members from various fields, besides CAs.

ICAI is the world’s second-largest accountants’ body with membership base of 1.50 lakh professionals and 4.50 lakh students. The institute intends to take an aggressive stand after the Satyam Computer Services promoters and auditors were accused of misconduct. The new code of conduct would be primarily for its members who will implement it in their respective organisations and among clients. However, it will make an attempt to get recognition from regulators and authorities like Sebi, RBI and Irda, among others.

“Under different regulations, we have an existing framework for corporate governance. However, industry is following it for compliance purpose only and not in true spirit,” ICAI president Uttam Agarwal told ET. He added that the institute would conduct awareness programmes for its members, industry and even regulators.

It is learnt that ICAI is eyeing to tap the large section of industrial and financial houses that are not covered under the Clause 49 of the Listing Agreement to the Indian stock exchanges. The decisions regarding setting up a group for new code of conduct and rating system were taken during the recent meet of members of committee on corporate governance in Delhi. Mr Agarwal, who also heads the six-member special committee to look into the Satyam fiasco and role of auditors, also attended the meet.

“We already have different regulatory frameworks in place to ensure good corporate governance. However, we intend to keep pace with the changing time and have a better code of conduct in place. ICAI, being the apex body for CAs, can play an important role in ensuring good governance,” said ICAI’s committee on corporate governance chairman Pankaj Jain. He added that ICAI is already working closely with the Union ministry of corporate affairs’ National Foundation for Corporate Governance.

source: http://economictimes.indiatimes.com

ICSI panel to work on corporate governance norms

The Institute of Company Secretaries of India (ICSI) has formed a seven-member committee to look into ways to strengthen corporate governance norms in the aftermath of the Satyam scandal.

The ICSI Council, in its recent meeting, deliberated the matter in detail and constituted a core group consisting seven members to go into the issues arising out of the Satyam episode and suggest steps to strengthen the governance framework amongst corporates as well as changes in the legal policy framework regulating the corporates and professionals," its president Datla Hanumanta Raju said.

ICSI has also been assisting the government in its investigation into the Satyam scam and has sought answers from the scam-hit IT major's company secretary, asking him to furnish details related to adherence of corporate governance norms. "We have received a report from the company, but have sought more details," Raju said. ICSI had asked Satyam's company secretary to furnish the company's balance sheet
, annual report and corporate governance reports for the last few years.

ICSI's core group would look into a host of issues related to corporate governance compliance. "The primary area being looked into would be related to disclosure and transparency made in terms of board processes and agenda papers. Also, the core group would look into the role of independent directors and how they can be an effective tool against such frauds," ICSI CEO NK Jain said. Related-party transactions would also be an area on which the ICSI core group would deliberate, he added.

"The idea is to identify inherent weakness in the system and suggest ways to plug loopholes," he said. ICSI has also been training independent directors on how they should act as effective checks against any malpractice in a company. "This is certainly our core area. ICSI has already trained directors of LIC who are on the boards of various companies. Also, we are doing a similar program for directors of PNB

source: http://timesofindia.indiatimes.com

Rel Infra under ED scanner

India Inc. is going through tough economic conditions. The best strategy to survive and grow in these challenging times is to follow best industry practices. But to great dismay to India Inc. recently the minister of state for finance, Mr Pawan kumar Bansal, informed the Lok Sabha that Anil Ambani-led Reliance Infrastructure Ltd. had contravened the Foreign Exchange management Act (FEMA) and ECB guidelines in respect of two ECB transactions- one relating to ECB of $360 million in July 2006 and other of ECB of $150 million. This despicable action from ADAG has created repels in the corporate world. The government should learn from this corporate cheatings and should come up with full proof regulations to prevent this kind of cheatings.

The Anil Ambani-promoted Reliance Infrastructure (Rel Infra) violated overseas borrowing and foreign exchange rules by investing funds raised abroad in the domestic capital market, Minister of State for Finance Pawan Kumar Bansal said in Parliament today.

In a written response, Bansal said the Enforcement Directorate (ED) was now examining the violation for necessary action.

Bansal said the violation related to overseas borrowings of around $360 million by Rel Infra (then Reliance Energy) in July 2006. The company in April 2007 brought $300 million into India and invested it in debt mutual funds. It then remitted $500 million, including the “proceeds of the $300 million brought into India” in March 2008 to invest in an overseas subsidiary.

In addition, Rel Infra had availed of $150 million through the approval route and the amount was brought into India in November 2006. Here, too, the government said the company was using a portion of the proceeds in fixed deposits and debt mutual funds.

A Rel Infra spokesperson said, “As legally advised, there’s no Fema violation.” The company also said it had not received any notice from any agency so far on the issue.

The minister said the external commercial borrowing rules in force at that time required funds raised overseas to be kept outside India until they were actually needed and these couldn’t be used to invest in the capital market.

In August 2008 the Reserve Bank of India had imposed a penalty of Rs 125 crore on the company as compounding fees for parking its foreign loan proceeds in the country. However, the company in its third quarter report said its application "for compounding had been deemed by RBI as never to have been made, subsequent to withdrawal of the compounding application. Accordingly, there is no liability in respect of the compounding fee of Rs 125 crore specified by RBI."

The government today informed Parliament that Rel Infra did not pay the penalty and submitted a revised application in August 2008, seeking "compounding of the contraventions involved in both the ECBs of $360 million and $150 million".

The compounding application was found to be not in order and was returned to Rel Infra on September 30, 2008.

The ADAG company was, thereafter, given an option to make separate applications for compounding the contraventions, for which it did not approach RBI, said Bansal in his reply . Subsequently, the central bank referred the case to the Directorate of Enforcement on November 7, 2008.

source: http://www.business-standard.com/india/news/rel-infra-under-ed-scanner/00/30/349498/

Better implementation key to audit reform

In response to my previous column, a highly respected professional accountant, who was actively involved in the auditing profession for decades and who now sits on the boards of many companies as an independent director, wrote to me, “If auditors never (or let us be charitable and say almost never) discover fraud because an audit is not meant to do so, how should we redesign the audit so that those who read the reports obtain a greater degree of comfort? And I believe we should not aim at the analysts etc who have their own way of judging things but also keep in mind the proverbial and judicial ‘man in the street.” This is an important observation and every one of us who has an interest in corporate governance needs to ponder over it.

Audit has a long history. Over a period of more than 200 years, it has served members of Joint Stock Companies quite well on the whole, notwithstanding instances of audit failure. The concept of audit was in existence even when auditors, as we know them now, did not exist as a separate profession. All through it was believed that detection of fraud is not the aim of audit.

The auditor’s task is to provide a reasonable assurance that financial statements provide a true and fair view. He/she collects and verifies evidence with ‘scepticism’ but does not adopt the approach of a detective. Audit is not investigation. The auditor is not supposed to be a forensic expert. It is with this perception that audit tools and techniques and auditing standards have been developed over the years.

Audit techniques today are quite different from those in use even three decades ago. Auditors use cost-effective techniques that are adequate to form a judgement on whether financial statements provide a true and fair view. If we give the auditor the additional responsibility of detecting fraud, the cost of audit will go up very significantly.

The cost will have to be borne by the society in general and shareholders in particular. Therefore, the debate should focus on whether the benefits from that extension of auditor’s responsibility will exceed the incremental cost. In making the assessment we must keep in mind that audit failures are infrequent and generally regulators all over the globe have confidence in the profession.

Without carefully analysing costs and benefits, we may inappropriately widen the scope of audit and change the audit objective. The immediate need is to strengthen the system of audit and the institutions on which the auditor relies for planning and programming its audit.

There should be some agency, independent of The Institute of Chartered Accountants of India (ICAI) to audit the auditors. The decision of the Securities and Exchange Board of India (Sebi) to peer review the audit of listed companies might fulfil the present void in the system.

However, peer review will be effective only if the reviewer is selected on merit, is paid reasonable compensation, and if Sebi is empowered to impose sanctions on errant auditors and on the audit firm of which such auditors are partners or employees. ICAI already has a system of peer review. But we do not know whether the system is effective or not. ICAI should make public the outcome of peer review which is in place for more than five years.

Rotation of auditors may be an option to improve the quality of audit. Unfortunately the choice before companies is limited. For example, if a company wants to appoint one of the firms with international exposure, the choice is limited to the Big Four and a few Indian firms.

In India, there are not many firms big enough to invest in required technology and human resources, limiting the choice for a company that wants to appoint a big Indian firm. In this environment mandatory rotation of auditors might result in just the swapping of audit projects among the few big firms.

This will defeat the purpose of rotation of auditors. If the aim is to bring a new perspective, rotation of the lead partner will give the desired result without incurring additional cost that might arise from rotation of auditors.

Auditors, to a great extent, rely on the work of the internal auditor. Therefore, it is important to protect the independence of the internal auditor and to improve the quality of internal audit. It has been reported in the press that Sebi is contemplating framing external agencies to examine the work of internal auditors.

Currently, under the Companies Auditor’s Report Order (CARO) of 2003, the external auditor is supposed to report whether the company has an internal audit system commensurate with its size and nature of business. Therefore, there is already a system for review of the work of the internal auditor. The system might not have worked well.

The possible reason might be that auditors have benchmarked the audit function in a company with the prevalent practice which reflects poor appreciation of the potential of internal audit function by companies. It is now well accepted that the internal auditor’s independence is affected adversely if the chief of the internal audit function does not enjoy the status of a functional head (on a par , for e.g., with the finance director).

But, in most companies the chief of the internal audit function is placed at a level lower than the functional heads in the organisation hierarchy. Similarly, in most companies, the scope of internal audit does not include ‘management audit’. All these shows the lack of appreciation by Indian companies of the potential of internal audit.

Therefore, review of internal audit by an external agency will not serve any purpose unless internal audit standards are issued and those standards are made applicable to all listed companies by law. ICAI is now issuing internal audit standards. Sebi should explore the possibility of making those standards applicable to listed companies.

New laws cannot by themselves improve the independence and quality of internal audit. The present structure of corporate governance, if implemented correctly, is adequate to protect the independence of the internal audit and to improve the quality of audit.

Clause 49 requires the audit committee to review internal audit reports relating to internal control weaknesses and to review the appointment, removal and terms of remuneration of the chief internal auditor. Therefore, it is the responsibility of the audit committee that the company adopts the best practice to strengthen the internal control system. If the system of audit committee has not worked well, there is no guarantee that the new system will work any better.

Perhaps, the need of the moment is not to bring new rules and regulations. Rather, the need is to enhance the compliance of extant rules and rules and regulation and to strengthen the existing institutions. New rules and regulations should be brought in only after due deliberation involving a system analysis of costs and benefits rather than a knee-jerk reaction to the Satyam case, which is better seen as an aberration.

source:http://www.business-standard.com/india/news/better-implementation-key-to-audit-reform/00/27/349147/

Post-Satyam, SEBI calls for better corporate governance

The financial market regulator Thursday said corporate India had to be more transparent with shareholders and ensure corporate governance in the post Satyam scenario

“Two actions which are being regarded by SEBI are: to require all listed companies to obtain peer audit done, and in case of pledging of promoter shareholding, to make this price sensitive information available to all other shareholders,” said Securities and Exchange Board of India (SEBI) chairman C.B. Bhave here.

"We have to recognise that the issue of corporate governance is a journey, which has to be constantly examined and continuous efforts are necessary to make it fruitful," he said.

Bhave was speaking at a conference on corporate governance organised by the Confederation of Indian Industry (CII) in association with the ministry of corporate affairs and the National Foundation for Corporate Governance.

He said that after the revelation of the Satyam fraud, SEBI was actively considering introducing rules to ensure more rigorous audit and disclosures, such as having external agencies to conduct internet audit and rotational auditors.

He said SEBI could also consider a "whistleblower policy", under which employees of a company can report any wrongdoing to the firm's whistleblower committee without informing their supervisors or revealing their identities.

source: http://economictimes.indiatimes.com/