Financial Daily from THE HINDU group of publications
Saturday, Mar 12, 2005
Industry & Economy
Corporate - Corporate Governance
Education, code of conduct to beat corruption stressed
Kolkata , March 11
CORRUPTION is one of the worst enemies of democracy, as it takes away from the poor the most. And one of the ways in which the menace can be tackled is through education and a code of conduct.
Making a presentation on `Good governance for better government and business', at an interactive session organised by the Indo-American Chamber of Commerce, (IACC), Eastern India Council, here on Thursday, Mr Robert A. Cerasoli, former member of the House of Representatives, United States Government and International authority on `Ethics', said "corruption takes place because it is allowed to happen."
Incidentally, Mr Cersaoli is the recipient of several international awards for his work on the Ethics front, including that of "Fraud Fighter of the Year", from the Association of Fraud Examiners, USA.
Drawing from his experience in public service, especially as Inspector-General (IG) at Massachussets and also as former chairman of the US Ethics Committee, Mr Cerasoli said the mantra of the office of IGs in the US was to detect "fraud, waste and abuse."
Drawing a parallel between corporate governance practices in both business and government, he said, "While business operates on profit basis, governments operated on a cost basis."
Explaining modern concepts such as `oversight in governance' and `performance evaluation', he said the US too has had its share of corruption, which are of the sophisticated variety. The IGs in US, he pointed out, need to develop different tools to counter the menace of corporate corruption.
Pointing out that the Indian situation vis-à-vis corruption in high places was not quite dissimilar to that in the US, he said. Privatisation of public enterprises was an interesting concept, wherein the need to protect the interests of the people was of paramount importance.
Stressing on "ethical relativism", he said corruption, like beauty, was in the eyes of the beholder.
Providing an insight on prevailing corporate governance practices, Dr Abhijit Sen, past national president of IACC, said the situation with regard to Indian companies was different from the international companies in as much as Indian companies are dominated by the promoter groups, whereas global corporates are totally managed by professionals.
He said the oversight mechanism with regard to corporate governance here cannot function quite so freely, because, "the form is there, but no substance".
Independent directors in Indian companies still need to be truly independent, he pointed out. Citing the new emerging international concepts globally, he said both corporate and performance governance have now been overtaken by enterprise governance, adding fresh fodder to the studies being carried out now by many management scholars in Harvard Business School.
Suggesting that strategy was still the key to performance guarantees in corporates worldwide, Dr Sen said a clear oversight mechanism, to prevent corporate frauds, was still not in sight even in the West.
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