CRACKS IN THE BSE BOARD ROOM

By Ruma Dubey

A rift in the Board of Bombay Stock Exchange was unheard of till now. Boardroom battles were meant only for the companies listed on the BSE and to now see some cracks emerging in the till-now-rock-solid Board of BSE sent all eyebrows up. Why now? Maybe there has been a basic change in the structure of the orgnisation now –it is no longer an association run by brokers, it is now a full fledged profit making organisation, like any other company. Where there is money and profit involved, battles are bound to be waged and BSE is just a victim of this law of life.

It all started on 16^th June 2008 when Shekhar Datta, the non-executive Chairman of BSE and Mr.Jamshyd M Godrej, a shareholder director on the BSE sent in their letters of resignation. Two major directors giving in their papers was not small news. It indicated that there was something seriously amiss in the BSE. Shekhar Datta and J.Godrej are men with a high credible standing in Corporate India and when they show their dissent, there surely has to be something going on.

The reason for their resignation is stated to do with issues pertaining to micro-management of the BSE. They have voiced that there is too much interference of the Board in day-to-day management of the BSE and it has been phrased very smartly as issues pertaining to “ empowerment of professional management”. Mr.Datta and Mr.Godrej felt that the board should act as a guiding force rather than getting into the day-to-day management of the institution.

Any boardroom battle is serious as the ramifications are serious. But a battle in the Boardroom of BSE is all the more worrying as it conveys that things are not right in the same institution that allows trading in the listed companies. When there is discord between the parents itself, isn’t there a cause for concern?

If one may recollect, the entire Board of the BSE was revamped in the wake of the Ketan Parekh scam and the dot-com bubble. After these two “scams” rocked the country, the Govt had barred stock exchanges from inducting a majority of broker members to the governing boards of the stock exchanges and that is why today, we see a more professional Board, not like the earlier Board which comprised of only the brokers or trading members. A professional Board means there is a check on the activities of the BSE Board and ensures that there is transparency, no insider trading and basically curtail any hanky panky business which otherwise the trading members Board could have indulged in. But now, with the professionals themselves saying that they are dissatisfied, raises serious doubts once again. Does this mean that there are activities of concern happening in the BSE Board over which the professionally inducted directors have no control? And is it this lack of professionalism, which forced the two directors to quit? Is corporate governance the issue? Professional members with no claws, just a bark?

The underlying issue behind the resignation of the two directors should be scrutinized carefully. If Shekhar Datta and Mr.Godrej say they have an issue, it is serious business and we hope that there is enough transparency in the system to bring to light the real reason to the fore and not just some hogwash statements covering up the true reason.
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