Letters: The role of directors

This refers to the edit “Directors, again” (February 26). Having worked as an independent director in several companies, I can hardly agree with the conclusion of the edit. It minimises the role of independent directors mainly on the ground that at times they are not able to detect the mischief of CEOs. The matter is not exactly that simple.

I would like to distinguish between the two functions of independent directors. One is the detection of mischief, and the other is giving correct advice. Coming to the second one first, these directors contribute significantly to the running of their companies. There is a committee for audit which entirely consists of independent directors — the CEO and the chairman are not involved. Only the CFO and statutory external auditors are part of it. Any other officer can be called to come up with a reply to questions and asked to give a presentation. The accounts and the working of various units are closely examined and many supplementary details are called for and routinely supplied. In more than a decade, I have never seen such information being withheld. A lot of suggestions are worked out by the audit committee and then placed before the board of directors for discussion. These are also important matters and cannot be ignored or devalued just because independent directors are not able to detect frauds committed by CEOs and CFOs with the help of auditors.

One needs to understand that whether there’s a fraud or not, independent directors provide valuable advice necessary to run a business properly and profitably. Whether to spin off a part of the company or not is not a matter of fraud; to buy another company or not is not a matter of fraud. On these issues, independent directors contribute a precious lot and not a precious little.

Sukumar Mukhopadhyay, Delhi