Corporate governance has been in the Indian news headlines quite recently in connection with the scam perpetrated by Raju on Satyam shareholders and employees. Interestingly, Satyam was the recipient of numerous corporate governance awards. Just goes to prove that just because processes are in place, does not imply that the processes are being followed. The spirit of the law is more important than the letter of the law. But then India is a nation that loves it’s forms, it’s idiosyncratic processes and customs,it’s bureaucratic ways and any change is greeted with derision, disdain and shock. Processes are meant to be traditionalized, embedded into the culture of the company and not uprooted without a by your leave! Who minds it’s clutter?
For more laid-back news followers, Satyam was just another scandal in just another family-run business.Satyam despite all its protestations , was just that – a family-run business though it’s shares were listed on the Indian stock exchange and available via ADRs.The more engrossing and entertaining corporate scandal has been the IPL imbroglio and it’s many running installments in the Indian media rumor mill.
Now, the IPL has a governing council which is equivalent to a corporate board of directors. In theory, a board of directors is an independent body that oversees the management of the corporate body or entity. It is there to make sure that the right processes are adhered to, that due diligence is carried out while executing strategy and no hanky-panky or unethical acts are carried out by any of the top management honchos.
But in practice, this is easier said than done. Most corporate boards are appointed with inputs from the incumbent management and thus cronyism is the name of the game. The typical board is populated with members who thus tend to be hand-in-glove with top management. This seems to have been the case with the IPL governing council. Despite the presence of luminaries such as Ravi Shastri, Sunil Gavaskar and M A K Pataudi on the governing council, the BCCI finds itself facing a scandal of gargantuan proportions with conflict of interest and high-handedness tarnishing the fabric of IPL governance.