Hyderabad, 26 August 2009. At a two day conference that concluded in Hyderabad this weekend it was claimed that the excesses of subprime that led to market meltdown could have been curbed had companies appointed more women on their boards. Almost 200 experts who assembled for the National Conference on Corporate Governance held in Hyderabad on 21 and 22 August and inaugurated by Mr Salman Khursheed, Minister for corporate affairs, questioned the role of independent directors.
In his keynote address to the Conference, Madhav Mehra , president of the World Council for Corporte Governance asserted that no lessons had been drawn from the collapses of ENRON and Worldcom 7 years ago. In Dec 2001 when Enron was on the verge of collapse the audit committee comprising only of independent directors and chaired by Robert Jaedicke, Dean Stanford Business School, did not challenge a single transaction because of the cozy ties with management. On 16 December, 2008, the resolution of buying promoter’s sinking property companies by Satyam was passed by a board that had majority of independent directors including Krishna Palepu, Ross Graham Walker Professor at Harvard Business School and an authority on making boards effective. For this we don’t need iconic independent directors who strike deep holes in company pockets as it is difficult to make them understand something when their remunerations depend on not understanding it. Independent directors are required to hold powerful management and the board to account. This required independence of mind and ability to offer contrarian views – a job that women could perform meritoriously in the boardroom and in a way that could disrupt the existing cosiness and groupthink.”
Mehra noted that significantly all three whistle blowers – Sharron Watkins (Enron), Cynthia Cooper (WorldCom) and Coleen Rowley (FBI) were women. It can be safely argued that more women on boards could have prevented the mayhem that caused the meltdown.