Monday, December 28, 2009

What are we upto?

Even the least patriotic among us would shed tears when we think about the present state of our nation. Gubernatorial gaffes, arbitrary exercise of political and police powers, practice of debased politics, reckless handling of international sports events, ministerial twittering contradicting government's policy and puisne judge's lament on CJI's powerlessness are but an expression of national depravity. Where are we heading? We do not know the destination. But we are sure we are heading in the wrong direction.

How can a Governor convert the hallowed Raj Bhavan into a place for sexcapades? The 86-year old Governor could not have been alone in this act of debauchery. How did this unsavoury development come to light? A procurer who was promised a mining licence was not delivered on the promise ! Many delivered promises which cause incalculable loss to the state exchequer and hence to the public remain secret.

A senior police officer molests a minor girl and ia awarded a suspended 6-month imprisonment after 19 years. In the meantime, he gets promoted as DGP and honourably retires! He and his goons in the government harass the family of the girl, cause her suicide after she is expelled from her school under police pressure and finally the judge becomes sympathetic to the age and agony of the police officer who faces the court proceedings for 19 years. Travesty of justice cannot be more bizarre.

It is true that there are no permanent enemies in politics. How does one respond to a national party coalescing with a regional party headed by a leader notorious for his corrupt ways and against whom there are / were charges of murder and other crimes? Pragmatism in politics cannot be limitless.

How can a cricket match be held on a pitch with rogue bounce threatening the life of players? What if someone had actually succumbed to injuries? This happens not in a distant town, but in the capital of the country!

When the Home ministry has decided to tighten the visa norms, does any minister in the same cabinet have a right to air his reservations in public? Ministers cannot enjoy such compulsive / addictive twittering while making a mockery of cabinet responsibility.

We can only sympathise with a High Court judge who rightly laments that the Chief Justice of India is only a serpent without fangs who has no authority to control wayward judges of higher judiciary.

Sunday, December 27, 2009

Compulsive Shopping

Vice-President (Finance) of Koss Corp, makers of head phones and similar accessories has misdirected company's funds to the extent of nearly 20 million dollars to her personal account with American Express. The company was tipped off by the alert American Express about unusually large transfers coming to her account from the company. Sujata "Sue" Sachdeva has confessed. Her husband is a paediatrician and the family's finances were ample.

This is not a run of the mill white collar misappropriation. She is supposed to be a victim of 'oniomania' or 'compulsive shopping syndrome' aka shopaholism. She spent the money on jewellery and apparel. She was very active in social activities and had been working with Koss Corp since 1992. Would American judiciary find her unpunishable because she is a victim of an apparently uncontrollable psychological disorder? This is also an interesting case from the perspective of operational risk management.


Mega-savant (the politically corrected version of 'idiot savant') is a person with prodigious capacity in one aspect of life, but miserably bereft in other aspects. Kim Peek who passed away recently was one such. He could read the left page of a book with the left eye and the right page with his right eye simultaneously. He would read say a 200-page book in double-quick time and remember every word in order. If you had misplaced the telephone directory, you could check his memory.

Scientists say that the left and right hemispheres of his brain were distinct and without any connection between the two. Contents of his brain differed from a common one. When he was an infant, a neurologist was supposed to have given up on him as non-social. The doctor was certain that the infant would pass away as infant. Kim Peek went on to live for 54 years and was an inspiration for the film 'Rain Man'.

Stephen Hawking is another wonder of nature (not a mega-savant though) who was given up by doctors long ago and who continues to amaze us with his brilliance. Such freaks of nature remind us that there are no limts to nature's variety. There ought to be limits to 'scientific hubris'.

Friday, December 25, 2009

Climate change politics

Rajendra K.Pachauri who is the chairperson of IPCC (Intergovernmental Panel on Climate Change) set up jointly by World Meteorological Organisation and United Nations Environment Programme has recently been rubbished by The Sunday Telegraph, a widely read newspaper in the U.K. He has been accused of being in conflict of interest in view of his being the Director General of TERI (The Energy and Resources Institute) which is receiving payments from many corporates which are utilising IPCC's services. TERI has demanded an unconditional apology from the newspaper for publishing a defamatory report.

Is it only muckraking or is The Telegraph trying to arrest a scam? The newspaper has also accused the Tata Group of benefitting from its association with TERI. The Telegraph report also makes a reference to the likely closure of a plant of Jaguar LandRover in England by the Tata Group.

If the conflict of interest is proven, IPCC will certainly disassociate itself from Dr.Pachauri. If this comes to pass, it will be a major blow to Indians' sense of governance. The climate change platform is already vertically split into the denialists and protagonists. The spectrum ranges from deniers, sceptics, warners to calamitists. Global warming or not, this issue is generating a lot of heat.

Sunday, December 20, 2009

Justice Dinakaran

This is in continuation of posts dated 15th and 25th September. It is unfortunate that the issue lingers on with no immediate solution in sight. There have ofcourse been a few twists and turns pockmarking the Indian judiciary a little more.

Justice Dinakaran has decided not to sit on the judicial Bench. It is not known whether this is his own decision or imposed perhaps from the Supreme Court. However, he continues to attend to his administrative functions. This appears a bit incongruous. Justice D.V.Shylendra Kumar (if a little odd humour is not out of place, he is by no means 'shy' as his actions mentioned here evidence) was disturbed by this and advised the Registrar General of the High Court to announce a meeting of all brother judges to debate the propriety. The Registrar General placed this advice to the Chief Justice Dinakaran for his disposal. Justice Dinakaran suo moto dropped the matter then and there.

Justice DVS Kumar wondered how the Chief Justice could decide on an issue involving himself. He has made public his disapproval and has added for good measure "grace, propriety and good conduct are definitely not the strong points of our Chief Justice". Since Justice Kumar had indicated the time for the meeting to all judges, the meeting did take place. Only 5 judges out of 37 attended the meeting. It is not yet known what transpired during the discussions.

An impeachment motion against Justice Dinakaran has been admitted in the Rajya Sabha. It is likely to be defeated since some political parties will abstain. There are demands that Justice Dinakaran must be given an opportunity to defend himself. One does not know why he is not defending himself apart from making a general statement that events will prove his innocence.

The whole episode shows that the Supreme Court is directionless. If Dinakaran is innocent, who will compensate him for all the mud thrown at him? If he is guilty, is there any hope for the system that allows such people to thrive? Will we ever know the truth?

The Copenhagen Discord

COP15 has at last come to an end. COP stands for Conference of Parties and not Copenhagen. This is the 15th UN Climate Change Conference. According to estimates proferred jointly by the UN and Deloitte, this event (or non-event?) generated 46200 tonnes of carbon-di-oxide. This is what about 0.6 million Ethiopians produce in a year! What did this meet achieve?

There is a non-binding statement of non-quantified intentions. President Obama has again proved that he is more articulate than George Bush. Following comments which have appeared in the media express deep disappointment:

Tuvalu's chief negotiator Ian Fry :"It looks like we are being offered 30 pieces of silver to betray our people and sell our future". (Tuvalu is the third least populated sovereign state in the world. It is a collection of islands in the Pacific ocean. Global warming and consequent rise in sea level will sink this nation without a trace.)

Greenpeace says,"The deal is not ambitious, not legally binding and likely to put the world on a path to atleast a 3 degree Celsius temperature rise. The Indian government's attitude to climate change this year showed that it is willing to shoulder responsibility and be a global player on climate action. The prime minister had gone to Copenhagen from a position of strength only to squander it to a near-farcical accord and a weak outcome. He failed India and the world when he let the U.S. and developed countries off the hook." Very strong words indeed.

Tuesday, December 15, 2009

HUL's new year gift to its parent company

Hindustan Unilever's Board approved on 15th December a trademark license agreement with its parent the Unilever which provides for payment of trademark royalty at the rate of 1% of net sales on specific brands, where Unilever owns the trademark and HUL is the license user. This is effective from 1st January, 2010, verily a new year gift to Unilever. HUL Board goes on to record that this is within the Government of India guidelines for payment of royalty. This assertion is superfluous since the company has no right to violate GOI guidelines anyway.

The company's Board is perhaps within its rights in approving this arrangement. But there is no clarity on what will be its impact on HUL's financials. Only one thing is clear. Return on sales will drop by 1%
This agreement is a related-party transaction and therefore merits full disclosure on its details and implications. HUL's Board has a fiduciary duty to protect HUL's interest. Lack of transparency casts doubt on the Board's discharge of this duty. Even if law does not require reference to shareholders on a crucial item like this, one expects "well-governed" companies like HUL to take the permission of its shareholders for paying royalty to its parent company.

Sunday, December 13, 2009

American bank-lending follows India's

The economic meltdown has effected a sea-change in the way American banks look at home refinancing. Prior to 2007, refinancing of home loans was a routine annual ritual. Borrowers gained in the form of additional loan amounts and sometimes by way of reduction in interest rates also. All this has changed now and American banks are now a chastened lot. Have a glance at the New York Times article given below. Indian banks have traditionally been cagey about takeover of accounts from other banks, which is what refinancing is all about. Only now the US banks have become alive to the risks in refinancing.

Wednesday, December 02, 2009

The CAT snafu

Maladministration of the ongoing Common Admission Test for entry into IIMs and other business schools is a big blow to the reputation of IIMs, particularly IIM Ahmedabad. One may argue that the computer-based test is administered by Prometric assisted by NIIT and therefore IIMs are not to blame. But it is not so. After all, Prometric and NIIT are only acting as agents of IIMs and therefore the blame for serious hiccups falls on IIMs.

One may empathise with IIMA in response to the CAT convener, Prof.Deodhar's repeated use of the word 'empathy' for the CAT applicants. However, playing ducks and drakes with an exam that is taken seriously by more than 2 lac students is unpardonable. It is now manifest that the test is being conducted without proper prior preparations. Rescheduling the test for the disappointed applicants does not salvage the situation in full. It is incomprehensible how IIMA decided to conduct only computer-based test when it could not have been fully convinced about availability of foolproof hardware and software.

Who is accountable for this fiasco? Obviously it is IIM. What should it do now? At a minimum, it must conduct a written CAT for all the applicants at its cost. Otherwise, the weightage in the computer-based mishandled test would be language-10%, quant-10%, logic-10% and LUCK-70% This incident proves that just one mishap is enough to tear to shreds the reputation built over years.