Why not CGR Index for Nations?

We have often read & heard of Corporate Social responsibility, a form of mandate set by companies to make a difference to its surroundings. Its basically a clarion call of their conscience emphasizing that they deserve to give back something to the society in which they operate. It is generally seen that companies that are well known, having respected brands and quality managements generally emphasize their CSR activities well & document their contributions in their Annual reports. Why don’t countries take a leaf from here & develop such yardsticks of their own? After all they are also entities operating in a larger microcosm of global society and responsible towards it. Indian scriptures have always emphasized this thinking in the timeless verses Vasudaiva Kutumbakam (the world is one family) & Sarve Janaha Sukhino Bhavantu (well being of Human race). So why not a Country Global responsibility (CGR)?

The urgency of such a thought stems from the turmoil that the world is facing today due to the enormous fissures created by Economic, Social & Political turmoil in a truly globalised world. Lets take the classic case of Kyoto protocol, a global call on reducing emissions that is impacting global warming. It called for countries to show responsibility (of a global kind) and to take steps & measures to reduce their carbon footprint. But alas, many countries bickered and eventually dithered on their commitments blaming each other eventually displaying just an ordinary human trait (“Most species are individually stupid but collectively smart. Humans are the opposite, they are collectively stupid but individually smart” -Edward Wilson). Even the US of A, supposed to be a lone superpower and Global leader made vain attempts to block & impede progress at the event prompting a small nation representative to remark “ If you cant be a leader (and set example) then step aside”

A country that has been a trendsetter in this respect & that i admire has been Norway , the "Land of the Midnight Sun", a small Scandinavian country of 4.7 Million people that displays remarkable alacrity and collective conscience in this respect. It is the only nation in the world that gives away 1% of its GDP as foreign aid and spends substantially on the protection of rain forests. The country has resolved towards making its Oil & Gas sector as efficient & environmentally friendly as possible. It is also probably the only country whose emissaries are respected for their apolitical & neutral standing and are generally in the forefront of arbitration/mediation in conflict ridden zones. It is also a remarkable coincidence that this country ranked highest of all countries in human development index from 2001 to 2006, and was ranked second as of 2008 (behind Iceland). It was also rated the most peaceful country in the world in a 2007 survey by Global Peace Index

SlugDog Millionaire

Last week the hammer went down on the player auctioning for the 2nd season of IPL and with another round of Tamasha set to begin soon, I am left wondering at the distance I am maintaining in my mind from this form of ‘fantasy’ cricket. Looking at the auctions brought in a kind of revulsions & disgust, a niggling feeling of unease at how the game has been commercialized, pure Bollywood ishtyle. Cricket Atyachaar I said to myself as I cut through a sneery swathe of following questions in my mind looking for weary answers

Where is the Passion in this form of game? Cricket is religion in this country & its proponents reigning Gods right? And is one magic formula where our million mutinies gets temporarily absolved in oneness with the Blue brigade when they fight the marauding Aussies or motivated Pakis. Can the same be even remotely replicated here in IPL? Agreed, its packaged for entertainment but why in the name of Almighty should I show allegiance to some funny sounding city based team? After team India I can only identify with team Karnataka , yaah with that ‘Soil ke Phool’ feeling (duh).But with Jack Kallis , Kevin Peterson & ilk , and holding Royal Challenger flag? Naah...i’d rather take it as some offbeat advertisement and endorsement for Mr.Mallya & his tipple.

What were the Bollywood film heroines doing there at the auctions? Maybe to keep the glamour quotient off the field, remember that there are firang (Redkin) cheerleaders to take care in the field. But what the heck , are they not doing the same thing what Mandira did to anchoring & commentary during World Cup? Who cares as along as the eye balls are rolling in.

What about economics, is there anything called recession here? I read somewhere that it was the only asset class (for investors in IPL teams) where one could have got 100% returns in the past one year. Maybe that’s what prompted Raj kundra to pump around $16 million in Rajasthan Royals, prompted by all the calculators on valuation & RoI that JP Morgan & KPMG would have churned out. With million dollar babies (read players) around ,will the average cricket fan beat his recession blues to watch the celebrity slambang talent with price tag glitter remains to be seen.

What will happen to the real art & craft of the game? I mean the one suited for the original longer version of the game. T20 seems to be the ‘in-thing’, with its testosterone influenced plot, and IPL has taken it further by placing it on a commercial easel with a heady mix of glamour and money. Actual Cricket is dead & buried, long live Cricket!

My UP Travail

The road to entrepreneurship can be fascinating & can carry to strange places & environment. This is probably my after thoughts after visiting UP capital Lucknow in the first week of January. The capital city, once the epicentre of Nawabi culture, today carries the burden of the decadence it has fallen into, one short visit to the city puts to rest any doubt that one may be carrying of the popular perception of this Hindi heartland, Bollywood & popular perception notwithstanding . It is rather a sad reflection of its political upheaval & its unintended consequences, a general pointer to the condition of the state and the leadership it has been churning. I am not taking a connoisseur’s view here but ruminating on the gap that still exists between modern & backward India. The first thing that strikes you when u enter the city is not the unplanned growth & shabbiness but the unruly crowds who have very little or no sympathy to civic Law. The ride thru the city can be nerve racking (like the one 007 Roger Moore gets in an auto driven by Vijay Amritraj in the 1983 flick Octopussy), the relentless honking of every kind of driver on the road create a huge din , there is no such thing like a lane discipline & everybody is everywhere. This was a scene right in front of the state secretariat! The traffic cops do man some junctions but are a helpless lot because nobody follows them. I was told that they are building a new Lucknow as the old city was dilapidated & crumbling. Now that was an understatement in my first hand experience

Only the capital city I am told receives regular electric supply, in Northern & western UP one would be lucky to receive a couple hrs of electric supply. Now that seemed a scary thought in the biting cold weather that was in the state during my visit , the morning local paper said that about 60 people had died due to a dry cold winds that swept the state in the last 2 days. One could see people living in menial conditions draped themselves with anything available, plastic sheets left over from the Buddh market, used political banners with Mayawati peeping out etc. I met a senior Babu ( Bureaucrat)in the state’s vast machinery whose first reaction to my Business proposal was as follows
Aap yehan kuch nahin kar payenge
(आप यहाँ कुछ नहीं कर पाएंगे – you cannot do anything out here)
Yehen ka system jante nahin hain
यहाँ का सिस्टेम जानते नहीं हैं - you do not know the system here)
Aap Bangalore ke swasth mahoul se aaye hein aur aap ka koshis yehan bekar hai
आप बंगलोर के स्वस्थ माहौल से आये हैं और आप का कोशिश यहाँ बेकार है - you have come from a clean environment like Bangalore and your efforts will be in vain )

In some ways he said the truth , the system he spoke was all prevalent , you could only feel it but difficult to comprehend fully. The murkiness & intrigue was characteristic of this system and I realised that after 2 days of interacting with different people. I met a top ranking minister in the Behenji’s Govt who lived in an environment that was in stark contrast to the general surrounding. His residence was a sprawling one with neatly whitewashed buildings, clean surroundings , not so polite orderlies & a bunch of tow’y bureaucrats and other political favour seekers . This was in stark contrast to the general surroundings in the city. The minister for a change was in coloured clothing & sports shoes. I had hired a auto (and my chauffeur turned out to be a guy named Prem) for a couple of hours for the two day business visit & he turned out far more pleasant & friendly than his counterparts in Bangalore. He has given me his mobile & I have promised to call him if I ever were to visit Lucknow again.

ASatyam : Auditors or Spin doctors?

This is what I was left wondering after reading an article published in Business Today, circa March 2008 that I accidentally stumbled upon while clearing my book shelf recently. This was about an interview with Samuel A.DiPiazza Jr , World Wide CEO of Price Water House Coopers (PwC), a full 9 months before Satyam blew up in their face . The CEO in his characteristic style , answered to what could be termed as prophetic questions, on what would unfold later, and I am revisiting that conversation in this blogpiece just to put that perspective in hindsight. Makes very interesting reading & Here’s how it goes (ad verbatim)

Q:Is there still too much that firms like PWC do in terms of services to one client – you’re doing auditing , you are doing tax advisory and you’re also doing consulting for them. Wouldn’t there be some sort of conflict that gets built into this kind of model?
A: I simply don’t accept that. There’ve been considerable number of academic studies that have shown that where we have engaged with a client in a broader set of activities, the likelihood of audit failure is much lower because we have deeper understanding of the company (sic). Another piece of that is when we audit, we don’t just use accounts. Our auditing process requires tax people, it requires actuaries, it requires technology people – all different type of skills.If you were to take one of these audit firms & say ‘you only do audits’, we would have a very difficult time attracting those kinds of talents and the quality of audits go down
Q. Earlier you’d mentioned that businesses would continue to make mistakes. No one has issues with mistakes that happen due to bad strategy. But what happened in Japan with one of your clients in 2006 was cheating and that affected PwC very badly. So, have companies actually learnt and are they keen on being clean?
A. I think the vast, vast majority of companies have always had a commitment to being clean, to do the right thing, before Enron, and after Enron. But I also believe that you operate in a world where if people want to break the rules, if they feel personal pressure or greed, they’ll try to break the rules. And you need processes and activities to keep that from happening. And whenever we feel that one of our people has done something wrong—not just made a mistake, but something morally illegal—we take very harsh action, and our situation in Japan shows that. We, effectively, shut that firm down. It cost us hundreds of millions of dollars of business, but we didn’t blink.
Q. But do you think it’s possible for auditors to prevent fraud?
A. Actually, I think auditors prevent fraud every day because we are the eyes and ears of industry. We come to the table with an independent point of view. We test, question, and we challenge. CEOs encourage us to do this. So, there’s no question in my mind that the entire audit profession has, over the years, prevented fraud. We find often, during the course of a year, people pushing that envelope. And most of the time it’s not visible, it’s not public because it’s fixed before it ever becomes a factor. People are fired, and it’s very quiet and that’s the job we have.
Q. In some sense, you’re not just the eyes and ears of the industry, but also the conscience of the client.
A. Yes, and boards… you asked about change. Today, CEOs and supervisory boards are deeply into what we do. So, it’s not “we and they”, we’re in this with the boards and with the management. Reputational damage done through financial mis-statement is huge and no one wants their name connected to that. No board member, no supervisory board member and no CEO. Sometimes, the pressures they put create that incentive in their company and they have to understand that they can only push so far before people might go too far.

In an interview earlier in 2003 in the same Magazine, DiPiazza while making a case against Auditors being consultants has echoed “Actually, you do not need a consulting project to corrupt you. The audit fee is large enough to corrupt you if you aren't a person of integrity.”

He is the author of the book ‘Building Public trust: The future of corporate reporting’ , which for all you know may be being read & reviewed by Ramalinga Raju in his downtown prison in Hyderabad.