Mr Ramadorai's fault, it would seem, was to have accepted the offer of chairmanship of Air Asia while holding office as chairman of a Government of India undertaking, the National Skill Development Corporation (NSDC). Critics have been severe on this supposed conflict of interest insisting that it is wrong for an individual to accept chairmanship of a private company while holding a post under the government. The argument is that the fiduciary responsibility cast on Mr Ramadorai is compromised by his acceptance of an assignment with a private group.
By this token, you must either be wholly with the government or wholly with the private sector. No combination of the two is permissible.
It is true that a government servant is not allowed to take any employment with some other body as long as he/she is in government service. To argue, however, that the post of chairman of a government company, especially one like the NSDC, which functions in a narrow, highly specialised field, is comparable with the post of, say, a secretary to the Government of India or a joint secretary in some ministry is surely stretching the argument a bit.
Typically, traditional government jobs in the secretariat or in attached or subordinate offices involve hands-on day-to-day functioning. They also involve familiarity with government rules and procedures and a clear understanding that decisions will be taken on the basis of an objective analysis of the facts and implications of a particular matter. There is an advisory element in that the different choices before the competent authority are examined and the likely results of a particular course of action are spelled out. There is also the responsibility to implement decisions taken on the basis of the analysis of the facts of each situation.
The role of the non-executive chairman of a government company, on the other hand, involves none of these things. Essentially, such a chairman presides over meetings of the board but his real USP is to lend his expertise and domain knowledge of the area in which the company functions to ensure that it is able to achieve its full potential. Since, in theory at any rate, the government is less familiar with the nuances of doing business, a non-executive chairman with a strong track record of running a professional company has a mentoring role to play. His guidance sets the benchmark against which the public sector undertakings (PSU) that he heads functions.
That this is not a meaningless abstraction is borne out by events that took place many years ago in Maharashtra before the era of coalition politics. When Maharashtra first experimented with PSUs in the late sixties and early seventies, then Chief Minister Vasantrao Naik was aware that he was entering uncharted territory. Government officers, he knew, could run the everyday business of these new ventures, but to inject a degree of dynamism and give them a vision and a strategy, some outside input would be needed.
With this end in view, experts from the private sector were invited to work with the government by accepting chairmanship of Maharashtra PSUs. Thus, Nityanand Wagle, who headed a large private company, was tasked with the responsibility of chairing SICOM (the State Industrial and Investment Corporation), the state's flagship venture for luring business to Maharashtra. Abbasaheb Garware, the doyen of Maharashtra's entrepreneurs, headed the State Finance Corporation. Prominent industrialists such as Arvind Mafatlal, Naval Tata and Madhav Apte headed Regional Development Corporations as non-executive chairmen with great distinction, while Ajit Kerkar of the Tata group became chairman of CIDCO, charged with the building of a new city, Navi Mumbai.
Did the induction of these worthies into state PSUs while they still held on to their posts in the private sector cause a major conflict of interest? There seems little to indicate that this is so. Instead, the corporations they chaired registered significant gains. It is probably fair to say that Maharashtra's sterling record in industrial development at that time owed a lot to the mentoring that prominent industrialists gave to these fledgling institutions. SICOM's role in attracting industries to backward areas of the state won kudos everywhere and the development of places such as Aurangabad, Chakan, Nasik and many others owed much to their dynamic style of functioning. State Transport (ST) buses ran to practically very village and it was no idle boast that wherever there was a road an ST bus would ply. CIDCO took up the development of Navi Mumbai in right earnest and regional development corporations spread their wings in hitherto undeveloped areas of the state.
Contrast this with what happens now. Coalition politics in Maharashtra ensures that the chairmanship of different state PSUs become plums of office to be divided according to political strength. Indeed, several PSUs remain headless for long periods of time, not because a person of merit cannot be found, but because the coalition partners are squabbling over who gets which job. Turf wars between different PSUs erupt not on questions of principle but on the basis of the political affiliation of the chairman of the warring companies. The idea that the head of the organisation provides guidance and leadership does not even arise. Instead, petty disputes over red-beaconed cars, larger office rooms and official status predominate.
If anyone believes that this state of affairs is confined to Maharashtra or perhaps to state governments, they are hugely mistaken. Political appointments to PSU boards and especially to the boards of nationalised banks are routine. Not long ago, the chairman of one public sector bank complained bitterly to the finance ministry that he was unable to function within the norms of financial propriety because one of the political appointees on his board repeatedly interfered with the process of evaluation of loan applications, canvassing cases that were not deemed credit worthy. The director concerned was ultimately removed but there are many CEOs who suffer such interference in patient silence.
The idea that holding a private sector assignment while chairing a PSU involves irreconcilable conflict of interest is inaccurate. Instead, we must encourage a greater movement between the two not by insisting that it must be a choice between a government undertaking or a private one, but by harnessing the skills that a successful industrialist can bring to the running of a government company even while he remains employed with his private concern. The country progresses when the two sides collaborate.
The writer is a former Secretary (Shipping) to the Government of India