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Mumbai, Jan. 11 “It is impossible for independent directors to go behind each and every statement made to the Board. An independent director depends on the certification of auditors, and a lot on CEO and CFO statements. For an independent director who is not employed full time by the company, it is very difficult to find out everything,” said Mr Deepak Parekh, Chairman of Housing Development Finance Corporation.

Talking to Business Line on Saturday, a day before his appointment on the board of troubled software company Satyam, he said the solution lies in putting checks and balances in place. Strong deterrents in the form of severe penalties are what Mr Parekh suggests.

“A chartered accountant making a false statement should be barred for life. A CFO’s qualifications taken away. In particular anyone giving certificates, like banks and auditors, should be penalised severely for false statements,” said Mr Parekh, who is among the most consulted advisors in the country and has been on various government and regulatory committees and advisory panels, and has also been as non-executive Chairman at several Indian and multinational firms.

Mr Parekh said he did not believe, however, that there could be several more cases like that of Satyam in the country: “There may be creative accounting… maybe with respect to 5, 10, or 20 per cent of the numbers.”

In the context of the alleged nexus between some company promoters and political leaders in the real estate and construction industry, Mr Parekh said: “Transparency is possible. In some places you see that. I was involved in the award of the Mundra Ultra Mega Power Project; and what I saw was totally transparent. All the bids were opened in public at the same time. Many times in the real estate sector too, when auctions happen, the bids are opened with all the parties looking on.

“Of course one must remember that infrastructure and construction orders can be very large and the agency that hands out many of these contracts are the State Governments. But there are systems and processes. But sure, if the motives of the contractor and that of the agency are predetermined, then there is very little that you can do.”

More Stories on : Corporate Governance | Economic Offences | Software | Satyam Computer Services Ltd

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