Corporate Greed
Dr.Vimal Kumar Aggarwal
Management Consultant

Recent protests in America named “Occupy Wall Street” or for that matter in Spain named as “indignant” against corruption and greed in the corporate sector, now spreading to a major part of the world, be it America, Asia, Europe or Australia (82 other countries comprising of 951 cities) is an indication of the growing resentment of common man against the greed and corrupt policies of corporate sector. The major reason is the widening gap between have and have-nots due to it and the failure of successive governments to take effective steps in their respective countries. A small protest which started from New York has taken a giant leap and is threatening the world of its dire consequences.
It immediately reminds us of Anna Hazare’s recent movement for a strong Jan Lokpal bill against corruption and Baba Ramdev’s movement for bringing back black money stashed abroad gaining momentum so sharply in India and has quietly vindicated stand of so many people that corporate sector is also responsible for many of these ills. The collapse of big financial institutions like Lehman Brothers in America and many other such scandals in other countries leading to sub-prime crisis resulted in major recession in the recent years .Now, it is a well established fact that sub prime crisis was mainly due to the extreme greed of the corporate executives who in order to get huge pay packets running into millions US $ pushed all the prudent banking & lending norms to the wall. All of us are fully aware of the consequences of this which resulted in loss of jobs, poverty and crime. These are a few of the innumerous cases pointing towards greed and corruption in the corporate sector.
Taking the cases in India, Satyam case is a classical example of corporate greed. The company who was awarded Golden Peacock Award for Best Corporate Governance just few months before the infamous case appeared in the media. Is not it the irony that such a company has to face such a situation, merely because the promoters namely Raju Lingam and Brothers for their personal greed pushed one of the best respected companies till then to the brink shaking confidence of millions of investors, stakeholders and Government? Who is responsible for all this mess? Not only the promoters but others like Financial Auditors, regulatory bodies etc who were trusted with the job of protecting the interests of stakeholders but became a part of this sordid episode. The case also shows the greed of Financial Auditors who became part of the dirty nexus between the two, leaving common man thinking whom to trust.
The recent 2-G scam is another example of how corporate sector due to its greed did not hesitated to take to all means of corrupt practices to get the licenses. Role of so called Corporate Lobbyists in 2-G & many other scams which is under investigation is undoubtedly, part of corrupt practices followed by the corporate sector. Even if we look at the majority of bribes excepting day to day from common man, being given to Income Tax, Central Excise and to other govt. departments a large chunk comes from the corporate sector.
However, the so called greed does not have only the financial effects, but due to sudden mad race among the corporate to become number one in their respective field or in the world has many side effects. First and the most critical is disturbed life work balance due to extreme demands from the Companies to achieve ever growing targets resulting in high level of stress on the workforce. This stress is now a well-known fact and is severely impacting the health of the society. Not only health , the mad race is also pushing the crime graph up due to widening gap between haves and have not’s. Earlier, the salary gap between lowest and the highest paid staff in any company used to be somewhere between 10-12 times which has risen somewhat between 100- 200 times due to free hand for corporate sector in fixing salaries for Top Management. In the name of this freedom, majority of them have started taking huge pay packages including incentives, besides tax free dividends. Unfortunately, when things go wrong, then this normally affects the lower band of work force while top remained untouched. Retrenchments take in the form of casual workers, junior officers etc. which does not cost more than 10-15 % of the total manpower costs.
Now look at the capital markets. Companies are now free to fix their initial public offer share prices (IPO’s) instead of earlier Controller of Capital Issues (CCI) formula. We have seen that many times some of them in connivance with regulatory bodies, merchant bankers and some other partners took to malpractice and cause huge losses to common investors, who have no mean of verifying the genuineness. Volatility in the capital markets can also be partly attributed to the corrupt practices and greed of those sitting at higher positions in the corporate sector, like Raj Rathnam in USA along with his associates, who has been recently convicted of making huge money through insider trading as well as denting the reputation of one of the most respected Indian origin CEO again reflects on the ever increasing greed among the corporate executives. Even people like Harshad Mehta or Ketan Parikh who made huge financial losses and shaken the confidence is directly or indirectly related to the corporate sector.
However, despite the facts stated above, we cannot deny the rightful role corporate sector plays in the economic development of any country. It is also equally important to give them freedom for the smooth conduct and growth of their business. But, at the same time, corporate sector should voluntarily ensure to follow ethical practices beside strict implementation of regulatory norms for safeguarding interest of one and all and regulatory bodies should sternly deal with the guilty. Thus, there is a great need for all the concerned to sit together to find out the solutions to control this menace before it takes an ugly turn and leads to such situations like “Occupy Wall Street” or “Indignation” for that matter.