The Hindu Business Line : Appointment of politicians on PSU boards<br>Only professional directors can add value, says SCOPE

While there has been some opposition from political parties other than the Congress, the Standing Conference of Public Enterprises (SCOPE), an association of public sector companies, today joined the fray by saying that only professionally qualified independent directors could add value to the functioning of a company.

SCOPE, which is the representative body of the Chairman-cum-Managing Directors (CMDs) of all Central and State public enterprises, banks, and other institutions, said that the organisation is of the opinion that only professionally competent persons can have adequate appreciation of the complex financial matters that directors deal with.

The Director-General of SCOPE, Dr S.M. Dewan, told Business Line: "It is absolutely necessary to have professionally competent people because it is the independent directors who would be heading the board's audit, risk management, and strategic planning committees. Therefore, it is necessary for these persons to have relevant technical and managerial expertise and appreciation of commercial aspects."

Meanwhile, the Department of Public Enterprises (DPE) is understood to have rejected the Petroleum Ministry's recommendations for appointment as independent directors on boards of public sector oil firms, saying that the candidates did not fulfil the eligibility criteria.

The Ministry had sent in the names of a number of Congress politicians and ex-MPs and MLAs to be nominated as directors on board of oil PSUs, which kicked off the controversy.

As per the present guidelines, only senior bureaucrats who have served not less than 10 years as Joint Secretary or above, or University professors, technocrats, institute heads, and corporate leaders, can be appointed as independent directors on PSU boards.

SCOPE, however, is not averse to the idea of having politicians on PSU boards.

"Being a politician is not a disqualification that would bar a person from joining a PSU board if he has the necessary professional competencies for taking up such responsibilities," Mr Dewan said.

"These public sector companies are going to compete in the world. So, the independent directors must have the capability to add value to the decision making process of the company and add value to corporate governance," he added.

"Otherwise, if you are looking for good governance without competent independent directors, then the whole thing will come for a question mark."

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