Saturday, December 31, 2016

Food for thought

1.Congress spokesperson: GOI has appointed Viral Acharya as RBI Deputy Governor. He obtained 5th rank in IIT JEE in  1991. Why did GOI ignore the first four? Another case of unexplained supersession!

2. Nobel prize committee has received the nomination of Jayalalithaa for the Peace Prize. But there is a technical hitch. How can they overlook the claim of Chinnamma?

Thursday, December 29, 2016

Madras High Court wakes up

A Division Bench of the Madras HC consisting of Justices S.Vaidyanathan and V.Parthiban has noted that there is suspicion about the cause of Jayalalithaa's death in Apollo Hospital. The court has castigated the central government also for not coming clean about the treatment given to the former chief minister.

Justice Vaidyanathan has bemoaned that he also has doubts about the mysterious death. A petition was filed in the High Court when Jayalalithaa was supposedly alive demanding more information from the government. That petition was dismissed by the court. Is the court waking up when it is too late?

If the judge strongly feels that there are suspicious circumstances, the judge ought to have suo-moto ordered an investigation instead of waiting for a PIL. The court's response is too little, too late.

With both state and central governments anxious to bury the suspicions about the demise, it is very likely that the court will also soft pedal the issue. Even otherwise, this is a typical case of justice delayed, justice denied.

Saturday, December 24, 2016

AGMs and Board Meetings

I used to think that only shareholders' meetings are 'tamasha', but after reading minutes of Tata Sons Board Meeting sacking Cyrus Mistry, I have realised that board meetings are even more funny. It is shocking that directors rate the chairman's performance to be exemplary and within a few weeks decide to sack him even in the absence of any intervening adverse development. Most Independent Directors have shown themselves to be Ratan Tata's stooges.

Krishna Palepu, a professor at Harvard Business School, was an independent director in Satyam when the promoter, Ramalingam Raju, committed a major fraud. Apparently, the professor had no clue about Raju's shenanigans. Remarkably, the present dean of HBS, Nitin Nohria is an 'independent' director in Tata Sons Ltd. He has actively supported Ratan Tata's subterfuge. Nohria's guilt is graver than Palepu's.

Shareholders need to be careful in electing 'eminent' academics as independent directors. Is it possible that HBS would sack Nitin Nohria for his inappropriate role in Tata Sons? Is it time for HBS to prohibit its professors from becoming 'independent' directors? Isn't the reputation of HBS at stake?

Monday, December 19, 2016

Corruption in banks: Demonetisation

There were occasions earlier also to discuss corruption in banks. Post dated August 2, 2014 had this to say:

"S.K.Jain, Chairman and Managing Director of Syndicate Bank has been arrested on charges of corruption by CBI today (2nd August). The surprise is not that CBI has sensed bribery in Syndicate Bank. The shocking surprise is CBI's inability / unwillingness to identify corruption in so many other banks.

It is generally believed that the positions of Executive Directors and CMDs in public sector banks carry a price tag. Only those who pay a 'decent sum' to powers-that-be are promoted to such privileged positions. It is rationalised that such payments are recovered by charging speed-money from borrowers.

This is not to say that all top executives are mercenaries. A preponderant majority perhaps is. Venal politicians have an unhealthy say in bank appointments."

The entry of August 18, 2014 noted:

Writing in The Hindu, C.R.L.Narasimhan, a respected financial journalist makes the following observation:

"The usual way senior executives of government banks get into trouble is through the actions of their subordinates in which case it becomes a question of vicarious responsibility. It is likely that where the number one person actually instigated the action that leads to criminal behaviour on the part of one or more of his subordinates he will be clever enough to camouflage his own role.
That leads to the puzzling question as to why Mr. Jain was brazen enough to demand a bribe over the telephone (and that too the one which he normally uses). A person with even half the intelligence a CMD of a bank has (or presumed to have) would have a thousand other ways to ask and receive bribes if he wants to be corrupt.
It is also logical to think that the vice-chairman of a large corporate ‘negotiating’ a bribe with a senior executive of a nationalised bank would be more discreet."
The writer has subtly indicated that corrupt deals are normally transacted in a more recondite and esoteric manner so that the guilty will have easy escape routes. Those conversant with banking transactions tend to believe that corruption is very rampant.
Therefore, Narasimhan's conclusion that " However, their top executives certainly do not deserve to be tarred with the same brush just because of the alleged corrupt ways of one of them" strains our credulity.
It is more realistic to say that  honest bankers are not yet totally extinct."

The aftermath of demonetisation has brought to the fore the large-scale prevalence of bribery in banks (sadly, including the Reserve Bank of India). Axis Bank, in particular, has been shown to be extremely susceptible. There is no reason to hope that other banks are ethically more robust. Corruption in banks is rampant, endemic and disastrous. RBI and the government now have one more opportunity to test the corruption-index of various banks and to take remedial steps. However, if earlier experience is any indication, they will once again turn a nelson's eye to this toxin and carry on nevertheless.

Friday, December 16, 2016

A tamasha called 'AGM'

Some time ago, I saw a ‘Bottom Liners’ cartoon in The Hindu wherein a company’s Chairman is informing the shareholders , “I wanted to share some good news. Unfortunately I can’t seem to remember what it was.”   This triggered my desire to understand what typically goes on in the Annual General Meeting (AGM) of shareholders of a company. I attended a few AGMs and felt amply entertained.
AGM is a legal compulsion mainly for the purpose of approving audited financial statements, electing directors and appointing statutory auditors. In addition, it gives an opportunity to shareholders to get to know their company better. However, few shareholders are interested in attending the meeting save for the purpose of receiving sweet packets.

I found to my amazement that shareholders and chairpersons fall into easily noticeable stereotypes. The shareholders are classifiable into value-enhancers (or the thrifty ones), carping critics, paraphrasers (aka the filibusterers) and serial attendees.
 Chairpersons may be martinets, delegators, charmers or the nonchalant.

Value-enhancing shareholders: These thrifty shareholders are obsessed with the idea of maximising the benefits they derive from the company. They may have only five shares, but these five will be split in the names of five different members of the family. Thus they get five sweet packets. The value of these packets may be more than the quantum of dividends they get from the company. Some are so time-conscious that they leave immediately after sweets are obtained. Some others do not mind getting into the AGM hall with their big bags containing multiple sweet packets and dozing off for some time.
Carping critics: These fault-finders find the company’s annual report to be a cornucopia of information to criticize the company’s management. They mesmerize the meeting with their statistical analysis of company’s poor performance. Some of them double up as value-enhancers as noted above and they compare and contrast the market prices of sweets distributed by the instant company and other companies. There are shareholders who cavil at the choice of venue and timings of the meeting if company’s performance is not bad enough to warrant criticism. At the other extreme, there are ardent admirers of the company who praise the company for shareholder-friendliness if handsome dividends are declared and applaud the company for its emphasis on conservation of funds for growth if dividends are slashed.
Paraphrasers: These wearisome shareholders deal with the annual report para by para and figure by figure. In their desire to be comprehensive in analysis, these stodgy shareholders take the liberty of misinterpreting the figures that they don’t understand thereby causing consternation in the minds of Board members some of whom may be equally clueless about company’s performance. Some chairpersons patronize these paraphrasers because they ensure that the time available for meaningful discussion is thereby filibustered away.
Serial attendees: These are busy shareholders who have a series of AGMs to attend the same day. They do not want to deny their co-shareholders the benefit of their views. So, despite their hectic schedule, they exercise their right to speak in the AGM. Three minutes into their speech when they appear to be ready to zero in on a crucial issue, they regret their inability to continue their sagacious speech any further because they are in a hurry to attend another AGM.
Some shareholders exhibit a combination of these traits making the AGMs even more lively.

Chairpersons are an equally interesting lot. The martinet who enforces total discipline in the meeting will not brook any light-hearted comment from any shareholder. Any person pointing out some deficiency in company’s performance will be strictly warned that the company reserves the right to proceed against him for defamation. Whenever a shareholder indulges in a meandering talk or strays from inane and courteous utterings, the martinet-chairperson applies the guillotine immediately.
Delegators: If a shareholder asks an embarrassing question, the delegator-chairperson is only too quick to pass on the query to company’s secretary or some other official for their response. The chairperson proudly calls this abdication as empowerment of his officials. If the shareholder turns obstreperous, the chairman thanks him for his thoughtful remark and moves on to the next shareholder aspiring to talk.
Charmers: Charming chairmen take the sting out of any damaging remark by simply smiling it away. He is laconic in oral observations but liberal in facial expressions. Thorny shareholders will be requested by the chairman to grace his office with their presence over a cup of coffee. The charmers can disarm any disgruntled shareholder with ease.
The nonchalant chairman: Some seasoned chairmen don’t give two hoots what shareholders say. They believe that “every dog and every shareholder have their day, but every company and every chairman have their way.”
Of course, there are AGMs which are largely attended and where meaningful discussions do take place thanks to the presence of knowledgeable shareholders and responsive chair of the Board. But these are few and far between.

Tuesday, December 06, 2016


Behind every demise, there is a mystery. The mystique of 'Mannargudi mafia' is behind the life and death of Jayalalithaa.

The mafia has acted as the sole protector of Jayalalithaa particularly after the latter was admitted to the Apollo hospital in September. That no one was allowed to meet Jayalalithaa had added to the mystery.

Hypothetically, it is worth analysing if the passing away of the former chief minister could help the mafia in any way. As co-accused in the criminal case pending in the Supreme Court, the case against them abates with the death of the main accused. It is also rumoured that Jayalalithaa's properties are set to devolve to the mafia.

The grip of the mafia was so strong that even the priest attending the household ('VEDA NILAYAM') is from Mannargudi. Jayalalithaa alias Komalavalli would have preferred someone from Srirangam!

It is ironic that Cho has left his mortal coils so soon after Jayalalithaa's exit that one wonders if he would advise her in the other world also. What if someone from the mafia also is there?