Companies Act to address graft issues: Moily

Written by Ronojoy Banerjee | Ronojoy Banerjee | New Delhi | Updated: Aug 25 2011, 03:18am hrs
To fight corruption in corporate board rooms, the ministry of corporate affairs could soon draw up a set of rules and regulations to check such malpractices. Corporate affairs minister Veerappa Moily told FE that while the government would not come out with a corporate version of the Jan Lokpal Bill, it could, however, address the issue within the ambit of the Companies Act.

The Companies Act provides for many things with regard to corporate governance. And if necessary, we can frame rules under the Act (to fight corruption). For this, one does not need another Lokpal, Moily said. The ministry had issued a set of voluntary guidelines on corporate governance earlier this year to nudge companies into making more disclosures and become more responsible to the social and environmental surroundings.

The need for a clear set of rules and regulations to fight corporate graft has been felt due to a spate of big marquee industry names being pulled up for misdemeanour in recent times. For instance, in the last six months several executives of leading telecom companies have found themselves languishing in jail in connection with the 2G spectrum scam case. This was followed up last month with a Lokayukta report indicting the largest mining company, NMDC, and leading steel maker JSW Steel in the case related to illegal mining in Karnataka.

If MCA draws up its own anti-corruption charter, it would be a first of its kind. The World Economic Forum has an anti-graft charter which has around 1,000 members globally. Out of these, while over 70 Indian companies have become members of this charter, only three Indian companies have become signatories to the charter - Bajaj Auto, Genpact and Godrej Industries.