deepali pant joshi : nism conference on ethics and corporate governance speech by dr deepali pant joshi, executive director of the reserve bank of india, at the national institute of securities markets conference on ethics and corporate governance, kolkata, 11 december 2013. * * * introduction at the outset, let me congratulate the organisers for this topical choice of subject, one which concerns us all. i thank director, national institute of securities markets, dr sandip ghose and the institute of company secretaries for having me here and my dear friend, prashant saran, for that brilliant opening address, which quite sets the tone for this panel. que custodiet ipso custodes? who will guard the guards? over the last two decades, corporate governance has attracted a great deal of public interest, it is now widely appreciated that this is critical for the economic health of corporations and of larger society. the headlines of newspapers of the past few years in particular, portray a dismal story of lack of corporate ethics : satyam, enron, falling stock markets, corporate failures, dubious accounting practices, abuses of corporate power, criminal investigations reflect that the entire economic system on which investment returns depend is showing signs of infirmity and stress that have undermined investor confidence. almost as if checks and balances that should protect our interests are pushed to one side, driven by the overwhelming need to move fast in relentless pursuit of profits. notably some failures were the result of fraudulent accounting and other illegal practices, others were just bad governance. company boards or old boy ’ s clubs? company boards often deteriorate to being a cosy club, friends of the boss, who just met to rubber stamp his decisions. i read the economist ( of 7th december ) on flight, and the turn of phrase ( on page 67 ) was interesting. critics have compared directors to “ parsley on fish ”, decorative but ineffectual ; or honorary colonels, ornamental in parade but fairly useless in battle ”. ralph nader calls them “ cuckolds ” who are always the last to know when managers have erred. the corporate scandals of the early 2000s forced boards to take a more active role. the sarbanes - oxley act of 2002 and the new york stock exchange ’ s new rules in 2003 obliged directors to take more responsibility for preventing fraud and self - dealing. this led to a big increase in the quality of boards. but it also

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