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LESSONS FROM THE FALLEN STARS

A defining feature of 2018, has been the downfall of powerful CEOs and promoters, due to their gross and criminal misdeeds being exposed and their carefully crafted reputation in tatters. They were exposed, not because of vigilance in the organisations they headed, or due to any action by the government, but were so either because their giant misdeeds could no longer be concealed, or because of action by a determined whistleblower. It started with the misconduct of Chanda Kochhar the CEO of ICICI Bank spilling out in the open, in March 2018, due to a dogged whistleblower, (apparently with the help of ICICI insiders) and she had to finally go, after having inflicted huge reputational risk on ICICI Bank.

The next ones exposed were Shikha Sharma of Axis Bank and Rana Kapoor of Yes Bank, both CEOs, for their malpractices which included serious manipulation of accounts and regulatory failures. They stubbornly stuck to their seats and were dethroned by the RBI. The giant shocker was the collapse of ILFS, where Ravi Parthasarathy and his gang of crooks blatantly ruined funds of over Rs. 1 lac crore and destabilised the entire banking/NBFC industry. If the exposure of misdeeds Dilp Shangvi the promoter of Sun Pharma,  who till then had a clean reputation, again due to an active whistleblower came as a huge surprise, then that of Naresh Goyal, the promoter of Jet Airways truly did not. Jet’s financials were never quite convincing.  We are not considering the shameful disclosure of criminal misdeeds of the promoters of the likes of Unitech, Amrapali, Religare etc. because they were never perceived to be role models. But these corporate honchos like Rana Kapoor etc. have been corporate icons, who ruled the roost and stood at podiums giving sermons to the ordinary sundry, whenever they carried away corporate rewards, founded on their bogus financial statements. All these fallen top guns are guilty of greed, avarice and unscrupulous pursuit of personal ambitions with the confidence that due to their position and power, the law of the land does not apply to them. But sadly their misdeeds grew too big for their boots and the very system that colluded with them so far, could no longer do so.

It is a matter of serious concern for India, that powerful CEOs are able to indulge in blatant/outrageous misconduct, with the confidence that they will get away, which many before have. These powerful errant CEOs have willing accomplices in the form of their independent directors, statutory auditors, key employees, rating agencies and regulators, who support their misdeeds/malpractices, also for their own personal greed and ambition.

The fact is that corporate malpractices and frauds are rampant due to the utter failure of checks and balances, both internal and external, on their CEOs. With the entire system colluding with them, it has been difficult to control these corporate delinquent top-dogs. There are many other Chanda Kochhars etc. who have not been exposed and the only way to cure India of this curse is harsh and immediate punishment to the wrongdoers. If Japan can jail Carlos Ghosn a global business icon, why can’t India jail its law violating corporate leaders too? Its time the ordinary shareholders and bankers, who are the prime victims of such corporate culprits, lobbied for meting out such harsh punishment.

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