SEBI should appoint independent directors on boards: Lawyer

MUMBAI: Market regulator SEBI should be empowered to appoint independent directors on the company boards in the light of the Satyam scam, a senior Supreme Court lawyer said on Tuesday.

"Independent directors on a company's board should be appointed by SEBI. This will be the only way to bring some confidence in the companies," H P Ranin told a seminar organised by Investors Grievances Forum (IGF) here.

The independent directors, so appointed, should be directly accountable to the SEBI, the senior counsel said.

The market watchdog should also have a panel of independent directors selected from listed companies, he said.

Despite having a strong team of professionals in the finance and auditing division, Satyam Computer could not prevent gross irregularities in its balance sheet, Ranin noted.

Ranin further said the Satyam episode was a wake up call for the corporate sector. "It is unfortunate the fraud was not detected by any agency but through the confessional statement of (founder Chairman) B Ramalinga Raju."

"Even one of the best auditing firms in the world (PriceWaterhouseCoopers) or the board of directors could not detect the fraud, which went on for seven years," he said.

IGF has filed a PIL filed in the Bombay High Court seeking appointment of a committee to make the regulatory process more effective and protect small investors in the aftermath of the Satyam scam.