In recent times, changes in corporate leadership have frequently hit the headlines not merely confined to financial dailies such cases have even claimed space in general newspapers as well.
The most recent case involves Binny Bansal who resigned as the Flipkart group Chief Executive Officer after an investigation into an alleged case of personal misconduct.
Walmart Inc. that has bought Flipkart claimed that Binny’s exit comes after an independent investigation done by it. The company also said that Binny has strongly denied the allegation. The case is just one instance of the churn in India’s corporate world.
In this article, we look at some of the prominent cases of exit by corporate leaders in India and the world. The causes behind the rising instances of churn in India’s corporate world range from personal misconduct to corruption and other cases.
Let’s take a look at some of the prominent cases-
- BINNY BANSAL over allegations of SEXUAL ASSAULT-
Earlier this week, Flipkart group CEO and Co-founder Binny Bansal resigned on charges of serious personal misconduct.
Walmart Inc. that bought 77% stakes in Flipkart earlier this year announced that Bansal was leaving the company after an independent probe into allegations of sexual assault, showing their zero-tolerance policy while Binny denied allegations and investigators could not find evidence of assault. The probe did reveal lapses in judgement.
The resignation of the top executive created a furor in the corporate world but this was not the only case where heads rolled over allegations of misconduct.
- CHANDA KOCHHAR over allegations of CONFLICT OF INTEREST-
The banking community in India received a shock on 4th of October this year when Chanda Kochhar, the CEO and MD of ICICI Bank resigned over allegations of conflict of interest.
This after a whistleblower alleged quid pro quo by Kochhar and her family with respect to a loan granted to Videocon group whose promoter Venugopal Dhoot had investments in New Poster Renewables owned by Chanda Kochhar’s husband Deepak Kochhar.
- USHA ANANTHSUBRAMANIAN over PNB fraud case-
In February, the banking sector was rocked by the Punjab National Bank fraud amounting to a massive fourteen thousand crore rupees involving Diamond Jeweller Neerav Modi and his associates caught in the net was Usha Ananthsubramanian, former CEO of Allahabad Bank. She was relieved of her position after her appear in a CBI chargesheet. She was the MD and CEO of PNB between August 2015 and May 2017, the period the scam occurred.
- ASHOK CHAWLA over Aircel-Maxis case-
Yes Bank’s Non-executive Chairman Ashok Chawla resigned on 14th November after being named in the CBI chargesheet in the Aircel-Maxis case. This after shareholder’s stakeholders and SEBI (Securities and Exchange Board of India) started questioning his continuance on the bank’s board even after facing corruption charges.
Chawla’s exit comes at a time when the bank is struggling to find a replacement for founder and CEO Raba Kapoor after the RBI refused to extend his tenure beyond January, 2019.
- CYRUS MISTRY over allegations-
Cyrus Mistry was sacked as the Chairman of Tata Sons in 2016 after a bitter public spat with the members of the board while Mistry alleged operation of minority shareholders and filed a petition under the Companies Act.
The board said that all operating companies except TCS (Tata Consultancy Services) were performing badly under Mistry’s leadership. However, In July this year the National Company Law Tribunal (NCLT) dismissed all charges made by Cyrus Mistry. The bench said Mistry was removed as the Chairman of Tata Sons because its shareholders had lost trust in him.
There are many surveys regarding misconducts in corporate sector which are exposing the corporate sector of India-
- EY GLOBAL FRAUD SURVEY 2018-
In as many as 50 corporate from India took part in EY Fraud Survey 2018.
According to the EY Global Fraud Survey 2018, many of the respondents interviewed reported widespread bribery and corruption in business. However, the percentage of respondents in India acknowledging the existence of these malpractices has come down from 70 % in 2012 to 40 % in 2018.
But what worrying is that these economic crimes take place even though most organisations has institutional framework on business ethics and compliance as well as code of conduct for employees.
- PwC’s Global Economic Crime Survey 2016-
The PwC’s Global Economic Crime Survey 2016 says that 94 % of the Indian respondents stated that their organisation had a clear code of conduct but only 15 % indicated that their leaders walked the talk. 24 % also said that communication on training on ethical behavior was unclear. Many instances of fraud, bribery and corruptions do not get reported for the fear of the retaliation. Many people don’t report the fraud out of the loyalty of the company and loyalty of their colleagues.
Across the world as well the corporate world has dominated media headlines-
- SIR MARTIN SORRELL over allegations of personal misconduct-
The world’s largest advertising and public relations company WPP’s founder and chief Sir Martin Sorrell resigned in April this year following an internal investigation into claims of possible misuse of assets and allegations of personal misconduct. According to an independent investigation conducted by WPP, Sorrell’s misconduct reportedly involved the misuse of company funds but not at a level material to the massive organisation.
WPP did not release any public details about what the allegations were or whether they are substantiated. While Sorrell denied any involvement. WPP decided to treat him as having retired after 33 years of service and he received 20 million pound as part of the exit.
- ELON MUSK over fraud charges-
In September, this year, Elon Musk stepped down as Tesla chairman and agreed to pay 20 million dollar penalty to settle for fraud charges brought by the US over his claims about taking the company private.
Musk had in a tweet said that he was considering taking Telsa private at 420 dollars a share and had secured funding.
US Securities and Exchange Commission charged Musk with misleading investors and ensuring market chaos that hurt.
The changes in India’s corporate leadership on various counts have focus attention on the challenges of enforcing ethical norms. Experts say this is glaring in areas with regard to policies on disclosure, personal relationships at workplace, transparency among founders, senior executives and investors.