Government Blocking Corporate Governance In Psus: Ramakrishna

Disinvestment Commission chairman G V Ramakrishna yesterday rued the absence of corporate governance among public sector units (PSUs) and said the governments current approach to share-shedding had failed to correct it.

Delivering a lecture on corporate governance in Chennai, under the aegis of the South Indian Chamber of Commerce and Industry and the newly formed Catalyst Trust, Ramakrishna said the PSUs were embroiled in an unhappy state of affairs, as far as their governance was concerned.

However, the Centre was merely disinvesting its stake in the public sector companies, without giving any board-level representation to the non-government shareholders, he said.

 

Unless the government inducts non-government representatives as directors of PSUs, the nation will look upon those companies only as government companies, and investors will not have confidence in them.

He observed that such broad-basing of PSU boards would help them bag better price for their shares during subsequent divestment rounds. There is no reason why PSUs cant have corporate governance. But the government must be willing to take steps. As of now, a great deal remains to be done, Ramakrishna remarked.

Ramakrishna asked the government to induct professional experts on the boards of PSUs, to provide the professional finish to decisions taken by the undertakings.

He said that chief executive officers of a few PSUs had written to the government seeking appointment of professional directors to help them make more informed decisions. The government had, however, turned a blind eye.

The divestment panel chief pointed out that of the 39 state enterprises in which the centre had divested its holdings, not a single one had non-governmental representation on its board and all of them still suffered from the negative attributes of a government-owned company.

Governance was so poor in some PSUs that the disinvestment commission, in its three reports, had suggested that the government sell a majority of its stake in them, just to inculcate corporate governance. Stressing the need for training people to be professional directors on boards, he said this would help them ask the right questions at meetings, study the financial health of their company and plan for the future.