Getting away with murder (literally)

Looks like nothing much has changed in Indian Corporate circles. During the 1980's, Public limited companies were run like personal fiefdoms by owners who barely owned 5-7% of the stock. They use to manufacture a majority through leveraging Government institutional shareholders like UTI, LIC etc. The classic case of Swaraj Paul trying to take over Escorts from the Nandas comes to mind. Nanda's saved the day by using their political clout with the then Congress government, who instructed the Institutional investors to side with him, much to the chagrin of many small share holders and Swaraj Paul.

More than quarter of a century later, we have the Satyam computers saga.The Chairman Ramalingam Raju tried to invest almost all the cash reserves of the company in his son's Real estate business, Matyas- which is Satyam spelt backwards. in violation of the AOA of the company and the purpose for which the Company was established in the first place. Issues like conflict of interest, Corporate ethics, transparency were thrown to the wind.

The irony is that recently Satyam management had bagged the Golden Peacock Global Award for excellence in corporate governance. Even more ironical is the presence of the so called independent directors on Satyam’s board. Two of them are from leading B-schools, and one purportedly a Corporate Governance specialist.The amount involved in the transaction was $ 1.6 billion and even the major shareholders were kept in the dark. The transaction going ahead would have meant shareholders money going into the hands of the Raju family. This is not acceptable under any circumstances.

The so called 'Independant' Directors are actually the cronies of Satyam Chairman. That one is the Dean of Indian School of Business, and actually chaired the meeting of the Board that cleared the transaction and the other who is a Harvard Professor (sic) but a long time advisor of Raju, makes the whole concept of independance of these directors (who are supposed to give impartial advice) questionable. Ironically, Dr.Palepu, the Harvard guys research work and writings have been on making 'Corporate Governance more effective' (sic). So much for hypocracy.

Already the current generation of students scoff at business ethics. But if instances like the above are allowed to go unpunished, then we will witness a chaotic, unscrupulous scenario in the corporate world.

Though it is unfair to compare our Corporate world with the underworld. But the ethics and code of conduct in the underworld is much more stringent. Admitted, they do despicable business, but they honour integrity, honesty, no breach of promises and verbal agreements. If they break the code of conduct, then the retribution in the underworld is swift. They will 'bore' you to death. Only thing is that the 'boring' will be done using a .32 calibre bullet.

Maybe something like this needs to be practiced in the Corporate world. Our educated economic thugs are getting away with murder (literally)