From paan ki dukaan to paper formalities, epithets galore for corp gov lapses

'Coterie' and personal 'fiefdoms' were among the interesting usages by SFIO in its report on irregularities at IL&FS.

New Delhi: Paan ki dukaan, elephant in the room and paper formalities -- the epithets greeting investors are growing in numbers as many a corporates battle governance trials.

Armed with stringent norms and stomach for strict action, authorities have stepped up their vigil in recent months, keeping erring entities on their toes.

Whether it is the hard landing of the parent of country's largest airline IndiGo with a co-founder alleging serious governance lapses or the IL&FS fiasco, the situations have thrown up catchy phrases from individuals as well as regulators.

IndiGo co-founder and billionaire Rakesh Gangwal's 'paan ki dukaan' (betel shop) jibe seems to have caught the imagination of even co-founder Rahul Bhatia's camp.

Both have built InterGlobe Aviation, the parent of IndiGo, which has a market share of 49 per cent.

As he came out in the public against Bhatia alleging corporate governance issues, Gangwal mentioned that events go "far beyond just poor governance and even a "paan ki dukaan would have handled these matters with more grace".

Refuting the allegations, Bhatia's InterGlobe Enterprises (IGE) group said 'paan ki dukaan' has apparently done well.

"Coterie" and "personal fiefdoms" were among the interesting usages by the Serious Fraud Investigation Office (SFIO) in its report on the irregularities at IL&FS Financial Services (IFIN).

The probe agency charged the erstwhile top management of IL&FS group's financial services subsidiary IFIN with forming a coterie with its auditors and independent directors to defraud the company while running the business as their personal fiefdom.

As multiple probes as well as resolution process are progressing in the matter of IL&FS, which has a debt burden of more than Rs 94,000 crore, the role of many stakeholders, especially auditors, have come under intense regulatory lens.

Summing up the situation, a senior government official in May said the group's auditors have many questions to answer prima-facie as they are supposed to act as "gatekeepers" and detect widespread irregularities.

"We are not expecting an auditor to detect a needle in a haystack, but if an elephant is in a room they ought to find it. That is the issue," Corporate Affairs Secretary Injeti Srinivas said.

Subsequently, the corporate affairs ministry has sought strict against the erring auditors.

In its 70,000 page complaint against Bhushan Steel filed in July, the SFIO cited "extreme misuse" of corporate governance structure for siphoning off funds, hoodwink lenders and investors.

According to the probe agency, promoters ran the listed company more like a proprietorship concern, reducing corporate governance requirements to "paper formalities", sources had said, reflecting deep-rooted lapses.

With more entities across sectors coming under the regulatory scanner, the list of epithets might be on the rise even as watchdogs hope better governance ways to prevail.

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