NSE affair: board lapses

In an earlier post, I had referred to the lapses on the part of the board of NSE. What precisely were these lapses? 

One, the Board was alerted to the irregularities in the appointment of the Anand Subramanian as Chief Strategic Adviser  and, subsequently, as Group Operating Officer. The matter was discussed by the Board and a decision was to taken to remove the person but the discussions were not minuted, citing confidentiality and sensitivity of the matter. This was a shabby attempt at a cover-up.

Two, the board had earlier delegated substantial powers to Subramanian when he was designated consultant and without looking into his suitability for being delegated substantial powers.

Three, the Board came to know that Chitra Ramkrishna, the MD, had shared confidential information with an outsider. They, nevertheless, allowed Ramkrishna to resign citing personal reasons, gave her a generous severance package and recorded a glowing appreciation of her services. 

Four, the Board failed to respond quickly enough to various queries sent by SEBI. 

In short, the Board seemed interested more in protecting Ramkrishna than in protecting the institution.

M Damodaran, former SEBI Chief, documents    some of these lapses. So does Hemindra Hazari  who also provides a list of the board members at the time these decisions were taken.

The NSE board was as distinguished as a board might be. How did such a distinguished board allow such an appalling state of affairs to continue for so long? 

Well, I have long contended that the effectiveness of a board has little to do with the presence of luminaries. Quite the contrary: the effectiveness of a board is inversely proportional to the luminaries present on it. That is because most luminaries think that, having lent their names to the board, they have done their jobs. They cannot be troubled with the nitty-gritty of things, such as going through the agenda papers, raising tough questions and getting matters rigorously minuted.

Better to have competent persons  with the right credentials who fall short of being luminaries. There is a better chance, then, that governance will happen.