Bank jobs for boys

UPA spin doctors can argue there's nothing illegal or even unusual in appointing ruling party fellow travellers as independent directors in public sector banks. But as reports in this paper make it clear, these party appointees have not simply sat and enjoyed the normal perks of office. They have batted for themselves and for for those they have wanted to bestow favours upon. This is a dreadful travesty of the concept of independent directors. It is particularly indefensible given that this government has passionately argued that the way forward in public sector reform is internal improvement and not increasing private capital injection. True, this is not a practice restricted to either banks or the Congress. This newspaper had reported during the NDA's regime cases of party appointees in PSUs. But 'they did it too' is not a defence.

Second, it should be remembered that bank independent directors are supposed to, among other things, look out for interests of minority shareholders. Most public sector banks are listed and the minority shareholders include individuals, mutual funds, and domestic and foreign institutional investors. Is there any evidence the party nominees in bank boards have spoken out for these stakeholders? Is there any evidence that the independent directors have checked that banks are following proper risk norms, that they are seeking to give shareholders value for money? Politicians may find these questions abstruse or, worse, irrelevant. They are anything but — they are related to fundamental questions of corporate governance.

The Irani committee had argued for major reform in the way independent directors should be appointed. The problem is that the philosophy that informs the recommendation goes against the philosophy of politics: when in power reward the boys. As long as governments can appoint favourites, they will. So there's little practical point in advocating change within the current system. Changing the system itself is the answer. But that, in the context of public sector organisation, cannot even be mentioned in the current political set-up.

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