January 07, 2009
The Satyam episode has marked a turning point in the landscape of corporate governance in India, with Ramalinga Raju’s confessional resignation today.
This follows closely on the heels of the resignation of its leading independent director: ISB’s Dr Ramohan Rao, who went to the extent of resigning various government appointments as well. Is that enough?
Quite clearly, the independent directors on Satyam’s board are equally responsible for the mess in the company. They have failed in their duties as required under the Companies Act, 1956.
More importantly their independence was compromised by hefty commissions on profits that they received. Apparently, they would turn a blind eye towards any misdemeanors, when ever managements pushed their personal agendas.
CUTS International, a leading economic policy research and advocacy group, demands from the Government that the company law should be amended immediately to curb the ability of independent directors to receive commissions on profits etc. Such a move will ensure that independent directors are not compromised and do their duty towards all shareholders. Furthermore, a full enquiry into the whole scandal needs to be done, so as to get to the bottom of the matter.
For more information, please contact:
Pradeep S. Mehta, Secretary General, CUTS, 9829013131; psm@cuts.org