Scandal jolts confidence of global investing community

Font Size

Print

Feedback

Email

Discuss

: of theirs.

Investment climate- The global turmoil already took its toll and now this will ensure that at least in the short and even in the medium term, global investors, who certainly have been taken for a ride in this case – Aberdeen is a case in point – will shy away from Indian companies.

Role model directors- In most companies – there are reputed professionals and role-model profiles who are retained as directors. Today, the effectiveness of such high profile people could also be questioned by various sections of stakeholders. The question is, who will be the real guardian of minority shareholders?

Private vs public ownership- The thought process coming up very strongly is how is there better corporate governance in public enterprises today, compared to private ones? Is there something more to learn from them and could there be regulatory changes to protect such fraud? The authorities have to sincerely think about it.

Retail & small shareholders- They are the people who will be most negatively impacted by all these developments and there should be concentrated efforts to protect them from such events and compensate them from the set of shareholders who have been benefited from such wrong doings.

Finally, it could be the opinion of a number of stakeholders in India Inc that the law must take its own course, but certainly in a way that the confidence comes back, and deterrent and swift punishment meted out to those who did it and who abetted it in a way that future recurrence is spontaneously controlled, if not eliminated.

The only silver lining in the entire episode could be that the world recognises that it is a single company that has encouraged such practice in India. If we could ensure this and it does not become a contagion like forex losses that came out as an epidemic, then corporate India and stakeholders should take this as a learning lesson, albeit expensive.