#Infographic: Business leaders and CEOs are more accepted in India than ever before. Until the 1990s Indian politics was contemptuous of capitalism, calling it 'cut-throat', Indira Gandhi even referred to business leaders as 'dark and evil forces.' We have come a long way, with leading business CEOs and MDs celebrated in the news, and successful startup founders veiewed as something to aspire toward.
However CEOs don't have the immunity and protections India's politicians seem to have, and every now and then a high profile case has landed business leaders in prison (see infographic). Ramlinga Raju, the former CEO of Satyam Computers, was one of the most notorious, and he confessed to an accounting fraud to the tune of ?7,000 crore or $1.5 billion. Raju described how initial, small cover-ups in quarterly performance escalated over the years to truly large-scale fraud: "It was like riding a tiger, not knowing how to get off without being eaten."
Subrata Roy, the Chairman of Sahara, hit the headlines in equally dramatic fashion. His company Sahara India Pariwar ran full page ads for a savings schemes, promising high returns that drew a large number of investors, and that SEBI ruled to be illegal. Unable to return Rs.20,000 crore to the many small investors who had put in their money, Subrata Roy landed in jail, and remains in Tihar.
Jignesh Shah is another more recent case, in legal trouble now and arrested by the CBI for activities linked to the MCX and his own company, FTIL. Shah is likely to spend years in court fighting these cases. Another recent lesser-profile case involved the CEO and MD of Rathi Steel and Power. Pradeep and Udit Rathi participated in the allocation of coal blocks by the UPA government, and both the CEO and MD were convicted to three years in prison for 'misrepresentation' and exaggerating their company's capacity, in order to get coal blocks allocated to them.
But there have also been problems with overzealous prosecution. The detention ofAmway CEO William Scott Pickney for instance, due to a warrant issued by a district court in Andhra Pradesh, as well as the imprisonment in 2012 of Chetan Mahajan, head of an IIT coaching company, for a month in Bokaro jail after the firm's faculty quit and the parents of students handed him over to police, are examples where heads of companies were put in jail on flimsy pretexts. Pickney was in fact arrested twice in India, first in Kerala and then later in AP, due to a misreading of an 1978 Act that was put into place before direct selling. A warrant was also issued to the Sify Technologies CEO Kamal Nath for providing tech services to Amway.
Crony capitalism continues to be a problem in India - India ranks ninth in the world here - but better regulation and enforcement, thanks to the independence of regulators like SEBI and laws like the Companies Act, mean the environment have improved in recent years. In fact, in recent scams that have involved both government officials and companies, company officials are more likely to be prosecuted and brought to justice than the politicians who colluded with them. Transparency International
rankedIndian firms as the most transparent among all Emerging Markets, with Airtel gaining the top spot. Indian regulators have pushed more stringent laws in recent years, such as RBI's recent guidelines on disclosure and auction of stressed assets, and TRAI's rulings in favor of net neutrality. Hopefully these will help catch fraud and malpractice early, before they grow to the size of the Satyam and Sahara Parivar scams.
