While Prime Minister Manmohan Singh will address chief executives of all public sector units (PSUs) on Thursday, Cabinet secretary KM Chandrasekhar is learnt to have called for a performance review of PSUs? independent directors.
The move comes in the wake of a report by the Comptroller and Auditor General of India, which found most independent directors don?t even review PSUs? accounts and audit reports. ?There is a need to take the feedback on independent directors? performance. They are not performing their task properly. There should be a universal code of conduct for all directors to check such occurrences,” a senior government official told FE .
In its report tabled in Parliament in July, the CAG had pulled up over two dozen PSUs for failing to meet Securities and Exchange Board of India (Sebi) norms related to the performance of independent directors. Sebi norms require that the audit committee of a listed firm should have atleast two-third members as independent directors. Half of the board should be formed by independent directors half of the board should be formed by independent directors, if the chairman is executive. According to the CAG?s findings, nine PSUs? audit committees met less than four times in 2007-08, in violation of Clause 49 of the Listing Agreement. These include Bharat Heavy Electricals Limited, Power Finance Corporation and Power Grid Corporation of India.
The audit committees of Oil and Natural Gas Corporation, Hindustan Petroleum Corporation, National Aluminium Company and Andrew Yule & Company failed to review anti-fraud and anti-corruption policies and procedures of the company to reduce the possibility of fraud.
The CAG also found that the audit committee of Hindustan Organic Chemicals Limited did not review the internal audit reports in any of its meetings during the year. The committee could not even evaluate the quarterly financial statement for the quarter ended December 2007.
Hindustan Cables Limited?s audit committee could not prepare the quarterly financial statements, while that of Shipping Corporation of India did not consider a performance audit report.
