Independent Directors Of Telecom PSUs Will Lose Perquisites Soon

New Delhi, Aug 30: | Updated: Aug 31 2003, 05:30am hrs
Independent directors and government nominees on board of directors of companies beware! Those belonging to the telecom ministry will soon have to give up their perks, courtesy a directive from the heavy industries and public enterprises ministry.

If the directive is taken seriously, independent directors and government nominees on the boards of Mahanagar Telephone Nigam, Bharat Sanchar Nigam, Telecom Consultancy India, and Indian Telephone Industries will no longer get air-conditioners, air-conditioned DLY cars, computers, fax machines, charges on hiring part-time computer operators, stenographers from public sector enterprises, and reimbursements of electricity charges, furniture, furnishings, including curtains and carpets.

The heavy industries and public enterprises ministry which has nominal control over this issue has advised the department of telecom to immediately ask the concerned public sector units (PSUs) to withdraw these facilities provided to the independent/government nominee directors, lest it sets a precedent for other state-run units.

This is an excellent step, says chief economist at the Confederation of Indian Industry Omkar Goswami. Perquisites are for whole-time employees. How can a part time director (read independent) be entitled to perks for attending four-five meetings. I am on the board of Infosys, Dr Reddys; and all one is entitled to is a sitting fee. Where do ACs, computers and furnishings come from Nowhere in the world are part-time directors given perks, Dr Goswami complains.

And what do independent directors on the boards of state-run telecom companies have to say I dont know, I have to talk to the chairman and managing director, is all Monika Arora, an independent director on the MTNL board, has to say. Ms Arora later called back FE with an impressive response: The government has come out with this guideline to reduce expenditure. Any effort to reduce expenditure is welcome. The government should formulate an overall policy on expenditure control.

These perks form a small part of expenditure. The government has bigger expenditure....you know, on renovation of buildings, vehicles, transportation, she offers.

And how many board meetings has she attended anyway Not many, but whenever there are meetings, I go, Ms Arora replies.

So, where does she stand on the recent issues like unified licensing and the telecom dispute settlement appellate tribunal ruling on wireless-in local loop I cant hear you properly, she says and then switches off the phone.

(It may be recalled that there was a furore after The Indian Express brought to light how former telecom minister Pramod Mahajan had anointed Ms Arora on the MTNL board on the ground that she was a bright young girl).

Economist Jagdish Shettigar, another independent director on the MTNL board, is more combative. What about the hidden perks given to government officials and ministers he counters. The PSUs are made to pay for even their furnishings.

Mr Shettigar feels that withdrawal of perquisites is a welcome feature since the government has accepted changes in company law for raising the sitting fee for independent directors from Rs 5,000 to Rs 20,000. For the record, he, however, feels that appointments of independent directors on PSU boards should not be discretion-based. There should be sector-specific guidelines, the BJP appointee avers.

Ambassador Naresh Chandra, who was also a former Cabinet Secretary and governor, as also authored the reports on corporate governance, company-auditor relationship and role of independent directors, lauds the new move. DPE (department of public enterprises) has taken a correct step because these perquisites create a perception of excesses and lead to public criticism.

Mr Chandra wants to flag the fact that DPE must come up with an adequate defence mechanism before independent directors in arbitration proceedings. DPE has been a bit relaxed on this count. Independent directors can get legal notices from courts regarding issues in which they have no role.

Other than telecom, the directive will be applicable to other Central PSUs as well which are under different administrative ministries. Thats the theoretical bit. In practice, PSUs deny they give undue perks anyway. If you believe schedule A biggies like National Thermal Power Corporation, Bharat Heavy Electricals, and National Hydroelectric Power Corporation, no undue perquisites are being given. All that independent directors are entitled to a is sitting fee of Rs 5,000 per meeting, air fare, and lodging for the meetings.

A similar claim is made by oil sector PSUs like IndianOil, Bharat Petroleum and Hindustan Petroleum.

As for the civil aviation undertakings Air-India, Indian Airlines, and Airports Authority of India there are no independent directors anyway. The three mega-corporations run via truncated boards, all comprising serving bureaucrats and technocrats. The perks available to them for board meetings include a humble ambassador car, and an air ticket on companys cost. The accommodation is officially standard double-bed room. But a past parliamentarian, for instance, extended this to presidential suites. We write off whatever the expense is. Its a small price to pay to keep them happy and avoid trouble, explains an aviation official.