The Ex-factor

In November, there was a rush by minis-tries to speed up the appointment of independent directors in public sector undertakings, or PSUs, under their wings. The reason: they were being goaded by the government to quickly fill the vacancies in PSU boards so that it could push ahead with its stake sale in some of them.

That was not surprising. The decision for a stake sale in any company must be approved by its full board, half of which should comprise independent directors, as per the Securities and Exchange Board of India norms. In fact, one of the reasons why Oil and Natural Gas Corporation had to put off its follow-on public offer to offload the government’s five per cent stake in November was because it did not have a full board.

What came as a surprise, though, were the names recommended to the Cabinet for approval. For instance, the petroleum ministry’s list of appointees to the boards of various oil and gas PSUs read like a Who’s Who of India’s recently retired bureaucrats. It included Gopal Krishna Pillai, Shyam Saran, Sushma Nath, Vivek Mehrotra, P.V. Bhide, and Rajendra Pal Singh, former secretaries in the ministries of home, external affairs, finance, and minority affairs, and the departments of revenue and of industrial promotion and policy, respectively. Others in the list were O.P. Bhatt, A.C. Mahajan and A.K. Khandelwal, former chiefs of State Bank of India, Canara Bank and Bank of Baroda, respectively, as well as former Reserve Bank of India deputy governor Shyamala Gopinath, management guru G. Raghuram andIIM Ahmedabad Director S.K. Barua.

Justifying these appointments, a petroleum ministry official says: “All of them bring in so much experience. These are big companies that are expanding abroad to ensure energy security for the country. Certainly they would benefit from big names as their directors.” Officials at the ministry also cite a shortage of suitably experienced people who are willing to join, as a reason for appointing bureaucrats. Ever since the Satyam scam, which put the role of independent directors under the scanner, people have been reluctant to take up such posts in the absence of their liabilities being defined in the Companies Act.

A section of officials, however, believes that most bureaucrats who manage to get themselves appointed to plum posts after retirement do so by virtue of their clout in the corridors of power, rather than any expertise. “Nowadays, most bureaucrats start lobbying for such plum posts even before they retire,” says an official from department of personnel and training.

The reason the latest appointments have come as a surprise is, perhaps, their sheer number. Or else, bureaucrats landing key posts after retirement is a fairly routine affair.