The Hindu Business Line : SAFETY of corporate governance

GOVERNANCE is tough to define. Transparency, accountability, fairness and responsibility are commonly referred to as the `four pillars' of corporate governance, writes K. R. Sampath in Law of Corporate Governance: Principles & Perspective, from Snow White (www.swpindia.com).

And he goes beyond these four, by proposing the SAFETY `mantra' — an acronym to encapsulate the principles of corporate governance, "supervision, accountability, fairness, ethical behaviour, transparency, and yield."

Sampath is confident that his mantra "will help in value addition to the owners, protect the interest of lenders, promote welfare of the employees, ensure satisfactory service to the customers and, not the least, add wealth to the nation."

The book discusses the law under each of the letters in the acronym, and plugs in extracts from the reports of committees in the sphere of corporate law reforms, from around the world. For instance, the chapter on `ethical behaviour' exposes readers to relevant inputs from Clause 49 of the Listing Agreement, the Cadbury Committee, the King Committee, the Sarabanes-Oxley Act, US SEC Rules, the Irani Committee and the Narayana Murthy Committee. There's an accompanying CD with most of these reports.

The concluding chapter argues for separate codes of corporate governance for private limited, Section 25, and public sector companies. "There appears to be some ambiguity in the legal backing to the disclosure norms given by SEBI under Clause 49 of the Listing Agreement," writes Sampath. "The dual Government control — one through the Companies Act and the other through SEBI — does create certain anomalies."

To achieve clarity and consistency, the author suggests the enforcement of different requirements of corporate governance through a single legislative Act. Useful addition to the professionals' shelf.

Responsive public service

THE `World Public Sector Report 2005' of the United Nations has been published by Academic Foundation (www.academicfoundation.com) as Unlocking the Human Potential for Public Sector Performance. The theme that jumps from the pages is `impartial, professional and responsive public service', and chapters are devoted to globalisation of public sector reform, human resource management, managing people as a strategic resource, and so on.

The discussion on promoting organisational learning points out how compliance can be `a virtue turned vice', especially when strict adherence to hierarchical authority can be at the cost of commitment to work at hand. "If staff are expected only to comply with rules and regulations, little or no incentive will exist for `thinking out of the box' or taking action when it comes to improvements to organisational processes or products."

The report has short essays on global experiences. Such as: pension reform for a sustainable future in Brazil, new challenges of old age in China, turning brain drain into brain gain in the Philippines, performance-related pay in Mauritius, rightsizing in Uruguay, leading by example in Namibia, and voluntary retirement scheme in India.

Don't miss the `technical summary', where you can see scatter plots of `quality against merit' in 121 countries, and `integrity against salary' in 45 countries. Important study.

BooksOfAccount@TheHindu.co.in