PMI Bangalore Chapter

Editor’s Note February 2019

Editor’s Note

Dear Readers,

Ethics and Corporate Governance

Editor 2018

The recent revelations of the former Bank CEO case have several points of interest. The foremost of which is on Corporate Governance.  An outstanding example of a successful CEO; that this person was on top of the list of invitees for delegations, visiting dignitaries and corporate events.  Forbes recognized this person as one of the most powerful CEO in India. The ‘termination for cause’ by the board has been a sudden fall from grace.

This person started the career as a management trainee and went onto to be the CEO of a large Indian private sector bank. 

Early last year, this former CEO, opted for early retirement and with subsequent investigation, early retirement was overturned to a ‘termination for cause’. The difference is in claw back of bonuses, share options with no post-retirement benefits.

It started with an Investor making a complaint of quid pro quo benefit alleged to have been received from a loan to a corporate. Nothing much happened to this complaint. An internal investigation cleared the CEO; the board is on record asserting no involvement. Later a whistle blower raised a conflict of interest complaint in approving loans to the same corporate and more important marking impaired assets as good assets with an intention to show profits. An independent enquiry by a retired Supreme Court judge identified a serious breach of code of conduct. This triggered the slide and opened doors for further investigation.

Keeping the personalities apart, what does this tell us about corporate governance?   

  1.  Personal ethics are very important. Irrespective of position, everyone must understand and follow the code of conduct.   A committee cannot do   anything much if a CEO intrudes in making or influencing decisions even when all are cognizant of conflict of interest.
  1.  Falsifying profits is not a sound accounting practice. Enron and Satyam are two examples.
  2.  Ab-initio, disclosure of any conflict of interest is a must.
  3.  A quid pro quo arrangement will always surface when the relationship turns sour. In this case, the corporate account went bad and that’s when   the stuff hit the fan.
  4.  Personalities and business are separate, more so in a listed company.

Leading a project requires impeccable individual ethics and high professional caliber. Truth, however bitter, must be communicated to all stakeholders as early as possible and preferable in person; non-disclosure only increases risk.  Let us reaffirm our organization’s code of ethics and professional conduct

“Ethics is about making the best possible decisions concerning people, resources and the environment. Ethical choices diminishes risk, advance positive results, increase trust, determine long-term success and build reputations. Leadership is absolutely dependent on ethical choices.”

As practitioners of project management, we are committed to doing what is right and honorable.

Thanks and Best Wishes

Tanish Mathur, PMP, PMI-ACP