Prime Minister Manmohan Singh inaugurated the India corporate week. In his opening speech, he requested corporate India to adopt ethical business practices, be role models for corporate governance and build a relationship of trust and transparency.
“We wish to provide a level playing field for private businesses, free from fear or favor. I am aware of the nervousness in some sections of the corporate sector arising out of the powers conferred upon Governmental authorities to tap phones for protecting national security and preventing tax evasion and money laundering. While these powers are needed in the world that we live in, they have to be exercised with utmost care and under well defined rules, procedures and mechanisms so that they are not misused”
“Finally, ethical and responsible behavior needs to become the cornerstone of corporate behavior, as indeed our national outlook. Ethics encompass a wide sphere of actions, economic, social and human, involving the consumer, labor, society at large and the government. Mahatma Gandhi repeatedly used to emphasize the importance of not only good ends but also of the use of fair means to attain them. It is the large companies that have to set the pace in this regard. The rest of the corporate sector will quickly follow as this becomes a national norm.
Our Corporate culture must be attuned to the universally accepted values of good governance – accountability, transparency, responsibility and responsiveness to stake holders. Our corporate endeavors have to be consonant with the demands of our eco system and the expectations of Indian democracy. The economic reforms of the last two decades have opened up many new opportunities. But just as over bearing controls stifle initiative; dogmatic adherence to extreme models of non-regulation can also be disruptive to sustainable growth. Ours is the middle path. We believe we must trust Corporate India as indeed you must trust us”.
Yesterday, Finance minister Pranab Mukherjee spoke at Institute of Company Secretaries in Delhi. He reiterated the need for corporate India to adopt good practices of corporate governance and business ethics. Given below is an excerpt of his speech from The Economic Times of India
“Ethics and governance are the two brakes which should self-activate before an enterprise succumbs to a vicious cycle of ambition, greed and complacency.”
“Companies need to embed good governance as part of their business strategy to achieve their core objectives.”
The finance minister said there were fine examples in India of companies which have followed corporate governance practices long before they were mandated. He said the debate over corporate governance had moved from the effects of bad governance on minority shareholders to the effect on all stakeholders. “A company needs to balance the interests of different stakeholders,” he said. “The current focus on the role of the boards and their independent directors is the result of corporate failure and corporate governance scandals in many parts of the world,” Mukherjee said.
The minister said the subprime crisis in the US took place despite the stringent Sarbanes Oxley Act, which had set improved standards for all US public company boards, managements and public accounting firms. He said the US experience shows it is difficult to legislate against bad corporate decisions unless all the stakeholders are willing partners.
He said the current recession in the western world was triggered by mispricing of risk which led to excessive leverage and high prices of a wide range of assets.
Government and political leaders are finally acknowledging the need to reduce corruption. They are consistently giving the message to build a healthy corporate culture by adopting sound corporate governance practices. Let us see whether these statements are made to salvage their reputations or some real action follows. The heat is on due to the 2G Telecom Scam and release of Niira Radia tapes. If political leaders wish to clean up their images, the people identified in the scams will have to face judicial charges. The government may not be able to turn the tide in its favor by just making the right speeches. Do you think the political leaders will be able to walk the talk?