India Inc wary of director’s post
If you are being wooed to become a director or non-executive chairman of a company, think twice. That is the alarm bell that has been ringing since the judgement in the Bhopal case came out last week.
The Satyam scam was the first warning bell as directors on the erstwhile Satyam Computers board found themselves holding the wrong end of the stick when its founder Mr Ramalinga Raju confessed to fudging the accounts to the tune of Rs 8,000 crore.
Most of India Inc today feels that the Bhopal judgement is the second wakeup call for those taking up decorative positions like non-executive chairman or independent directors.
In the Bhopal case, Mr Keshub Mahindra, the then chairman of Union Carbide India, and Mr Vijay Gokhale, the managing director, were given two-year imprisonment. There are rumours that Mr Mahindra may now resign his directorships from most companies including his own. The ministry of corporate affairs is said to be looking into this issue.
Mr Rahul Bajaj, the chairman of the Bajaj group sees the judgement as a “reminder that one should not accept directorships and if one does then one should not be ignorant of the ramifications.”
Corporate India is already extremely wary about taking on directorships as there have been cases in recent times where people like Mr Nimesh Kampani of J.M. Financial, one of the most respected names in the financial sector, was implicated in a fraud case only because he was one of the directors on Nagarjuna Finance at the time when the fraud was committed.
Ms Zia Mody, a hotshot corporate lawyer, says that the situation (reference to the prison term for Mr Keshub Mahindra) is “very alarming” to which Mr Dinesh Kanabar, deputy CEO and chairman of KPMG adds that “very alarming is an understatement.”
Corporate lawyer, Mr S.Somashekar, of J. Sagar and Associates says there will be a heightened awareness and alertness among directors.
Mr Nishith Desai of Nishith Desai Associates says it’s a tough time for directors as they pay hefty premiums for directors and officers insurance policies but the insurance companies don’t pay immediately against law suits. Maybe the IRDA should look into this, he said.
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