History of Corporate Governance

History
The war of 1914 -18 led to the total governmental regulation and control of economic life in nearly all Western countries. 1914-18- Great World War 1. Before that, North America and Europe were ruled by laissez-faire ( French word for an environment in which transactions between private parties are free from state intervention, including restrictive regulations, taxes, tariffs and enforced monopolies.)
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laissez-faire
An economic theory from the 18th century that is strongly opposed to any government intervention in business affairs. People who support a laissez faire system are against minimum wages, duties, and any other trade restrictions.

laissez-faire
Assumed that the individual who pursues his own desires contributes most successfully to society as a whole. Argued that a society's economic well-being and progress are assured when individuals freely apply their capital and labor without state intervention.

The War in Brief

The war was fought by two main power blocks: the Entente Powers, or 'Allies' comprised of the Russia, France, Britain (and later US) and their allies on one side and the Central Powers of Germany, Austro-Hungary, Turkey and their allies on the other. Italy later joined the Entente.

The War in Brief

1914 Germany invades Belgium. Britain declares war on Germany. Japan joins the Allied forces. War spreads to the seas. 1915 Women take up men's jobs. London attacked from the air by German Zeppelins (airships). 1916 A million casualties in ten months. At sea the Battle of Jutland takes place. Armed uprisings in Dublin: the Irish Republic is proclaimed.

French Navy

The War in Brief

1917 German Army retreats to the Hindenburg Line. United States joins the war and assists the Allies. Tank, submarine and gas warfare intensifies. Royal family change their surname to Windsor to appear more British. 1918 Germany launches major offensive. Allies launch successful counter-offensives. Armistice signed on November 11, ending the war at 11am. In Britain, a coalition government is elected and women over 30 succeed in gaining the vote.

Second World War

After the Second World War, the government rules and regulations became stricter.

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The Indian Perspective

1600-1947- the British rule the Mughal Dynasty had a firm grip on the subcontinent British East Indies Company gained the right to set up trading posts along the coast of India. Trading posts grew into major cities such as Madras, Bombay, and Calcutta

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The Indian Perspective

Over the next 250 years the British found themselves more and more in the role of conquerors and governors than traders.

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History of India
Decline of the Mughal Empire Suffered from weak and corrupt government. Religious clashes. Direct control over India in 1858 .

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History of India
Britain ruled about 60% of Indian directly and the other 40% indirectly through native princes who followed British policies. British continued developing India's infrastructure Disrupted the traditional culture and economy of India.

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History of India
There were large gaps between the higher ranking British and lower ranking Indians that carried over to society in general. Indians were getting tired of their secondclass status and worked increasingly for independence.

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Independence
The Indian National Congress, founded in 1885, led the independence movement. Power grew in the twentieth century, it agitated increasingly for complete independence. In 1920, a new leader, Mohandas Gandhi emerged as the voice of the Indian National Congress.
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Independence
At the end of World War II, Britain promised independence for India. Clashes between the Hindus and Muslims. In 1947 Britain left India. The region divided between Hindu India and Muslim Pakistan in the Northwest that also controlled a separate territory, Bangla Desh, in the Northeast.
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During the British Rule

The period of the East India Co., the first century of the British rule destroyed all the indigenous industries. Destroyed Indias export market. Prohibition or very high tariff barrier on Indian products ( cotton and silk goods). Indian silk goods imported into Britain (20% duty) and British silk goods imported in India (3.5% duty).
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During the British Rule

Indian subcontinent received goods from Britain. East India Co., had a vested interest in maintaining existing industries in India. British traders secured a market for British goods in India. Raw materials from India and finished goods from Britain.
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During the British Rule

British had an advantage of technology. Indian industries could not compete. Deliberate policy to discourage flow of Indian goods to the west. The first open emphasis on the need for a conscious industrial policy to be pursued by the government was made by the report of the Famine Commission in 1880.
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The Famine
More than thirty million famine related deaths occurred in British India between 1870 and 1910. Central India was the worst victim of these famines.

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Growth of Large Scale Industries

The first attempt at encouraging the growth of large scale industries took place around 1900. The Madras government started surveying the industrial possibilities, assisting private enterprises, improving technical education. Received encouragement from Lord Curzon, who set up an Imperial Commerce and Industry Department in 1905.
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Technical Training
Indian Institute of Science at Bangalore, and the Victoria Jubilee Technical Institute, Bombay initiated by Lord Curzon for technical education.

Lord Curzon

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Technical Training

the Victoria Jubilee Technical Institute

Indian Institute of Science at Bangalore

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Corporate Governance History

Joint stock companies by 1913-14. Activities proposed to be brought under government control. Rejected by the British.

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Industrial Policy After 1914

More progressive policy after 1st World War. Munitions Board set up. Control the purchase and manufacture of munitions of war.

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Indian Industrial Commission

Appointed in 1916. Proposed that the government play an active part in industrial development. 1. Improved departmental organization. 2. Improve technical training. 3. Reorganizing staff in the industries. 4. Technical and financial aid to the industry.
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Second World War

Better corporate governance policies. More number of joint stock companies. Malpractices and illegal activities.

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Corporate Governance in India

Whistleblower A whistleblower is an employee, former employee, or member of an organization, especially a business or government agency, who reports misconduct to people or entities that have the power and presumed willingness to take corrective action Termed internal when an employee airs his complaint internally and 'external when an employee blows the whistle outside the organization. e.g. to media or a regulatory body.
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Origin of the term whistleblower

From the practice of English bobbies who would blow their whistle when they noticed the commission of a crime. The blowing of the whistle would alert both law enforcement officers and the general public of danger.

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Famous whistleblowers Cynthia Coopers

An internal auditor and consultant who is best known for being the whistleblower who exposed massive accounting fraud at WorldCom in 2002. A native of Clinton, Mississippi, Cooper worked as the Vice President of Internal Audit at WorldCom (telecom co.). After conducting a thorough investigation in secret, she informed the audit committee of WorldCom's board that the company had covered up $3.8 billion in losses through phony (false) bookkeeping. At the time, this was the largest incident of accounting fraud in U.S. history.
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Satyendra Kumar Dubey

Project director at the National Highways Authority of India (NHAI). Accused employer in letter to the then Prime Minister Atal Behari Vajpayee. Was assassinated in Gaya, Bihar. For fighting corruption in the Golden Quadrilateral (Delhi, Mumbai, Chennai and Kolkata highway) construction project.
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Regulations for Whistle Blowers

The company may establish a mechanism for employees to report to the management concerns about unethical behavior, actual or suspected fraud or violation of the companys code of conduct or ethics policy.

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Whistleblower policy-Purpose
May lead to incorrect financial reporting Are not in line with applicable company policy May be detrimental to the image of the organization Violate the accepted values of the organization Are unlawful Amount to serious improper conduct (including any kind of harassment)
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