Two weeks ago, Business Standard reported a case in which a bunch of independent directors had rewarded themselves with handsome hikes, which earned them annual remuneration up to 10 times that of their predecessors. These were people who retired from responsible positions in the government and regulatory organisations.
Ironically, they had been assigned to clean the mess left by their predecessors, themselves retired regulators and bureaucrats.
A report in an online portal mentioned how the chairman of a bank had flouted rules to lend to a group of companies whose board he had joined after retirement.
A retired regulator was put atop a structure being used as a cover by a large corporate group to perpetrate blatant injustice on investors. An email received in response to a query for this piece said the retired regulator “was doing investors grave disservice”.
To top it, a group of investors duped by a South-based company has alleged that it was lured to invest in the company’s schemes because it had “eminent” people on it board of directors. These were people who retired from top posts in public sector financial institutions.
If one goes deeper, it isn’t difficult to create a laundry list of such instances. There are various instances of former regulators who are now with the intermediaries they once regulated and are peddling advice to circumvent the very regulations they helped draft.
Though there might be retired officials who have done their job well and added considerable value, the increasing number of black sheep is simply too large to ignore.
With the Securities and Exchange Board of India’s cap on the number of independent directorships, the demand for such people is only likely to increase.
It is true that in several cases, these retirees are prisoners to the promoter’s will. As independent directors, a position they often occupy, they might be risking various perks if they ask too many uncomfortable questions or don’t dance to the tune of promoters.
Though various regulatory organisations and arms of the government have different sets of service rules, there is no clarity on who follows what, what the level of compliance of these rules is and who is monitoring these. Some organisations have a six-month gardening leave. That is too short.
It is time the government and public institutions take a comprehensive look at the framework of rules that govern the conduct of people retiring from services. There should be restrictions on the usage of the names of their former organisations in their profiles, especially when they join a competitor. Also, there should be firm restrictions on the pay applicable for the first five years, with a possible relaxation clause for subsequent years. If they flout these, they should be deprived of post-retirement benefits.
Leaving it to conscience is unlikely to work. Laying down norms would.
