Ministerial row hits hiring of independent PSU directors

NEW DELHI: Several blue chip public sector listed companies are yet to appoint the required number of independent directors to their board as required by Clause 49 of the listing agreement with Sebi. The companies include ONGC, IOC, Gail, BPCL and HPCL.

These companies have not been able to appoint people in order to have half of their board constituted by non-official directors. Interestingly, Sebi has taken no action even though the process has been delayed by eleven months. The delay on the appointment of non-official directors has cropped up, as the concerned administrative ministries including the Department of Personnel and Training (DoPT) and Public Enterprises Selection Board (PESB) have often not seen eye to eye on the selection of candidates.

Recently, eight names were proposed for filling up of independent director positions in ONGC but only four names got the approval, after the file shuttled between the concerned ministries for quite some time. While three names have been rejected by DoPT, one has been rejected by the minister for petroleum and natural gas Murli Deora.

The remaining four names have been sent to the Department of Public enterprises (DPE) which will place them for approval of the selection committee under the Public Enterprises Selection Board. The final list sent to the department of public enterprises (DPE) includes the names of TERI DG RK Pachauri, CMD IFCI VP Singh, Bakul Dholakia of IIM-A and IRCA managing director PK Chaudhari.

However, the DoPT has rejected the nominations of Rajat Gupta who is an adviser on the board of Harvard Business School, IIM-C director Shekhar Chaudhari and Atul Sharma, ex professor Indian Statistical Institute. The minister for petroleum and natural gas has rejected the name of former Gail CMD Vineet Nayyar.

Concerned at the delay, the minister for heavy industries and public enterpirses had recently written to the various administrative ministries to speed up the process of appointing independent directors. This is the second reminder, as DPE had written to the ministries once before in ’05 asking them to comply. It is also expected that Sebi may crack the whip soon, to make the companies actually appoint the requisite number of independent directors.