Comptroller and Auditor-General of India Vinod Rai was right in describing the Satyam scam of 2009 as a defining event in India’s corporate history. The scam exposed the immense possibilities of corruption a corporate body can indulge in. As admitted by Satyam chief Ramalinga Raju, the company falsified its accounts to the tune of millions of dollars and when the Satyam bubble burst, thousands of shareholders of the company were badly hit. It was against this none-too-pleasing backdrop that the CAG argued at the 11th All India Lokayukta Conference on Saturday that the private sector should not be exempted from the purview of Lokayukta-like institutions.
Corruption has become endemic and no institution is free from it. Yet, anti-corruption agencies like the Lokayukta and systems like the Right to Information have jurisdiction only over government and public sector agencies. This dichotomy is because of the presumption that since government institutions dealt with public money they had to be publicly accountable. In the case of the private sector, it was presumed that the shareholders were capable of ensuring that the companies were on the right track. Since 1991 there has been a sea change in the character of the corporates. The government itself began encouraging the common man to invest in the share market while public sector companies, like the Life Insurance Corporation, are major players in the stock market.
Theoretically, the corporates manage their affairs with the permission and knowledge of their shareholders but the fact is that the ordinary shareholders have no clue about the goings-on in the companies they supposedly own or manage. In the United States and Europe there are institutional mechanisms to protect the interests of non-controlling shareholders. While accessing public funds, corporates will have to subject themselves to greater probity. In other words, all the anti-corruption laws should be made applicable to the private sector, for corruption is no longer the monopoly of those in the government alone. Accountability and transparency should, in fact, be considered the twin-engines of economic growth.