Past reputations should not matter when one is seized of the present. Japanese auto major Nissan has shown the world just that by sacking its chairman Carlos Ghosn for alleged improprieties that came to light through a whistleblower. Ghosn is accused of understating his income to the Japanese stock exchange besides self-aggrandizement at company’s expense.
In India, stories of corporate loot are legion. Vijay Mallya, the fugitive hiding in London and waiting for the extradition court’s order, once said with a sneer that why should the media and commentators bother about his lavish lifestyle including his famous and splendid yacht parties when his shareholders do not. There are apologists galore too for him and his lavish lifestyle.
Kalanithi Maran and Dayanidhi Maran are in the dock over the alleged hijacking of BSNL’s telecom properties and lines so as to feed the gargantuan information and program needs of the channel at state expense.
More recently, former ICICI Bank CEO Chanda Kochhar, who was hailed for breaking the glass ceiling, courted infamy by being privy to a Rs 3,500 crore loan to the Videocon Group whose promoter Venugopal Dhoot entered into a business arrangement with Chanda’s husband Deepak Kocchar and allegedly transferred a part of the loan to the venture. The board of directors of ICICI attracted flak for remaining silent for months together before showing her the door. The Indian company law requires an interested director to step out of the board and its committee meetings when a matter directly or indirectly impinging on the fortunes of a director is about to be debated and voted upon. That is often practised more in breach than in compliance but when all hell breaks out the company is left red-faced.
Indeed, the Indian corporate world offers salacious tidbits about the losses blithely inflicted on companies and the government by influential company promoters. Private jets of corporate honchos and company promoters is talked in awe by the shareholders and the commentariat but precious little has been done in India to rein in corporate extravaganza on this score.
Apart from the generous indulgence and pampering of company promoters by supine shareholders with the formidable proxy advisory firms losing no sleep over them, the company law itself opens its purse strings rather liberally and needlessly, some would say, by allowing them a salary of 5 percent of the profits which often works out to scandalous amounts. And their salary outstrips the average salary by 1000 times as was the case with Infosys CEO Vishal Sikka.
Winner takes it all in Indian patois is jo jeetha wohi sikander. The Indian psyche fawns at the winners as reflected in the company law that mistakenly believes that it is the CEO and his vision that is responsible for all its profits.
Promoters taking their wives and other members of families on junkets while being on business tours is the stuff of Indian corporate legend. The Indian income tax Act has sometimes tried to assert itself by saying that the family members’ travel bill must be added to the taxable income of the honcho or promoter but the income tax tribunals and courts have come to their rescue on the ground that sometimes genial wives smoothen the way for fruitful negotiations with their benign presence!
We need to do a lot to rein in CEO and honcho greed. But as it is the company law and the SEBI regulations on corporate governance do not go far enough. Disclosure to shareholders and approval by the remuneration committee is deemed enough. The Japanese action should give the corporate world including the Indian government a wake-up call. It is not as if only private sector companies are guilty of spoiling their honchos and promoters. The public sector companies too come handy for politicians to indulge their passions and desire for extravagance.
(The author is a senior columnist and tweets @smurlidharan)
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Updated Date: Nov 23, 2018 16:52:57 IST