Companies, like everyone else, must come clean
Nov 16 2012
Transparency and accountability cannot be limited to governments
Every corporate leader worth his salt has been harping on this day in and day out, since early the 1990s, when the then finance minister and present prime minister Manmohan Singh first launched his economic reform measures. A lot of water has flown down the Ganga since then.
Be they exporters, industry captains, lobbyists, brokers, market participants or lay investors, almost everyone has been demanding transparency and accountability on part of governments, both at the centre and in the states.
Not many can object to such demands, especially when little has moved forward in the past three years in the form of policy directions, until, of course, new announcements were made in the past two months to lift investor sentiments.
Thankfully, after the long hiatus, the government has begun to dismantle more controls on foreign investments, opening up the lucrative retail sector to foreign giants. Foreign airlines have been allowed to buy into domestic carriers, and it has become easier for foreign investors to park money in Indian instruments.
There has been growing consensus on reforms, dismantling state structures, allowing more freedom for companies to operate, while our nearest and largest neighbour China has a long way to go in democratising its political appointments, policymaking and the way in which local companies and markets operate.
When there is consensus on making life easier for our businesses and investors, there is also growing necessity to dismantle the opaque working of our companies, both local and multinational corporations. A case in point came up the other day when Vodafone India managing director and chief executive Marten Pieters claimed that the company’s India operations were in losses. But then, he remained unwilling to share the figures for his India operations, whether on a quarterly, half-yearly or even annual basis.
Neither was he willing to answer, either in the affirmative or otherwise, queries on whether Vodafone, with its huge Indian customer base of 150 million, would eventually get listed on Indian bourses. It is difficult to fathom the reasons for such opacity in disclosing information that must necessarily be of public interest in India, even though Pieters never hesitated from launching an eloquent discourse on every TV channel on what the Indian government must do or desist from with regard to spectrum auctions and the perceived regulatory hurdles in the telecom sector.
Nobody can deny the need for elected governments running on taxpayers’ money to be transparent. But then, nobody must deny the need for companies, such as Vodafone, that engage hundreds of millions of customers daily to compulsorily disclose information in shareholder and customer interest. My case is not to single out one company. Vodafone is illustrative for driving home a point. What’s true of Vodafone is true of most multinationals operating out of India.On any given day, newspapers, including this one, get requests for up to two dozen interviews from diverse companies or their paid public relations outfits, pushing corporate points of view. Barring a handful, a majority of these companies sporting big names and global brands, refuse to share revenues, operating margins or the volumes they sell in India. They are also unwilling to disclose the taxes they pay or profits they earn. For that matter, they are even silent on royalties paid to their principals abroad.
A recent study by not-for-profit organisation, Transparency International, has tracked over 105 of the largest multinational corporations that control $11 trillion in wealth, and touch lives of people in almost 100 countries they operate in. The study highlights how opaque these companies, especially from the US and Europe, are about sharing countrywise dealings.
Let’s imagine for a moment that our biggest telecom operator Bharti Airtel does not disclose its region-wise or country specific financial performance every quarter. Or, the company fails to report before Sebi how much it has earned or lost from its African operations of Zain Telecom that it acquired in July 2010 for $10.7 billion. Can Bharti escape regulatory reprisal?
The point here is not only about Vodafone or Bharti. It’s about their CEOs making a fuss about transparency in public administration and delivery of state services, when they themselves are opaque about their corporate doings in India. There have also been situations when CEOs have demanded transparency in the workings of large NGOs that are big brands by themselves. All this is legit, provided the companies that such CEOs manage, are willing to comply with the same requirements.
Transparency and accountability cannot be limited to governments and non-profits alone, though they must certainly be made accountable. Perhaps, it’s time that companies and their chief executives too come clean on their own dealings as well.