While adopting the present model of Corporate Governance there was discussions over it suitability for a country like India. The reason is as simple as that, we were copying western model of corporate governance. We never bothered to observe the external debate world over on the various models of corporate governance.
Professor Jayant Rama Varma of IIM Bangalore had extensively commented on the unsuitability of the Western Code of Corporate Governance in his well researched paper on the subject titled 'Corporate Governance in India: Disciplining the dominant shareholder'. Jayant Rama Varma did research on 1997.
He argued that the issues involving corporate governance problems in India are different, requiring different solutions.
According to him, the governance issue in the Anglo-Saxon world aims essentially at disciplining the management which has ceased to be effectively accountable to the owners. But in India the problem is different. Here it is of disciplining the dominant shareholder and protecting the minority shareholders.
Even many public sector units that failed to appoint independent directors and breached some of the code of corporate governance, were vindicated by the Securities and Exchange Board of India. This was because of the pressure from the respective ministries.
Satyam is a company which had won Golden Peacock Global Award for excellence in Corporate Governance. This company was named the winner by the World Council for Corporate Governance as recently as in September 2008! This is after approving the false balance sheet presented in the Board of Directors.
The Satyam story poses a big question over the credibility of auditors in general, as PricewaterhouseCoopers was auditor of the company. The bankers to Satyam included Bank of Baroda, BNP Paribas, ICICI, HDFC, Citi Bank, HSBC. Even after placing false account details in its balance sheet no bank came out and asked details about that.
Satyam was also being accused by the World Bank for bribing its employees to get certain contracts awarded in the company's favour.
I feel that bribing is done by almost all companies in different levels. But why key observers like SEBI or Vigilance department is not taking it up in relevant times. These high moral concepts are discussed and acted up on only when there is a crisis. Years ago Infosys settled a case against the company and an employee by another employee Reka Maximovitch. Infosys went for out of court settlement. Infosys would have let the law to take its own course.
How do an investor relay up on these awards or balance sheets while considering investment in a well known company. It is SEBI and the finance ministry