The most astounding aspect of the governance controversy at Coforge is not who did what, or even why. It is that the governance architecture of a large listed company could apparently permit one or two individuals — even if they happened to be the chairman and the head of the Nomination and Remuneration Committee (NRC) — to determine whether material findings from a board peer-review exercise reached the full board. Companies conduct board evaluations precisely to ensure that directors, including the chairman, are subjected to scrutiny. If the person being evaluated can influence whether an unfavourable assessment is seen by fellow directors, the safeguard becomes almost meaningless. It is the corporate equivalent of a schoolchild intercepting a poor report card before it reaches his parents. A credible system cannot depend on an individual voluntarily transmitting information that may reflect adversely on him. It must make suppression or selective circulation of such information structurally difficult.
That is why the Coforge episode should not be reduced to a judgement only on OP Bhatt. The more important question is how such discretion was available to any individual in the first place. Sound governance assumes that people have conflicts, biases, and incentives, irrespective of their reputation or intentions. Board evaluations should therefore have an automatic information trail, with the complete report going simultaneously to designated independent directors or the entire board. There should be additional safeguards when the evaluation concerns the chairman or NRC chair. No chairman should have a de facto veto over what fellow directors learn about his evaluation; nor should a committee chair decide unilaterally which findings merit circulation. When governance depends upon the discretion of the person it is supposed to oversee, it ceases to be governance and becomes trust.
There is a broader lesson for Indian boardrooms, where governance too often risks becoming synonymous with having distinguished names around the table. Impressive résumés cannot substitute for institutional checks. Boards need to ask some uncomfortable questions after Coforge. Who receives the raw findings of an evaluation? Can management, the chairman, or a committee head edit, summarise, or withhold them? Who ensures that adverse observations concerning the chairman reach independent directors? Is there an audit trail? Shareholder signals matter too. Bhatt’s proposed reappointment did not obtain the required 75% shareholder approval at Coforge’s August annual general meeting. Such dissent should not be dismissed as an inconvenient voting outcome; it is information a board must examine seriously.
Coforge deserves credit for subjecting the matter to an internal governance review and subsequently widening its examination of governance processes. But Indian boards should not wait for a controversy to fix an obvious design flaw. Board evaluations may rightly be confidential from outsiders, but not from directors legally and fiduciarily responsible for governing the company. Nor should strong operating performance provide comfort when governance machinery malfunctions: financial performance and governance quality are separate tests. The enduring lesson from Coforge is larger than any chairman, director, or company. Governance is not demonstrated by codes, committees, and annual evaluation exercises, but by whether uncomfortable information can travel through an organisation without being stopped by the people whom it makes uncomfortable. If a listed company’s governance framework leaves room for the corporate equivalent of hiding the report card, the bigger problem is not merely who hid it. It is that the system allowed it to be hidden at all.