Canadian research firm Veritas Investment Research’s reports hit companies where it hurts most. With back-to-back Veritas reports questioning practices of different companies, the word ‘corporate governance’ has attained ‘nirvana’. After DLF, Kingfisher and RCom, Indiabulls group is the latest victim of ‘corporate governance bashing,’ as people are calling it.
In an exclusive e-mail interview to Business Line , Neeraj Monga, Executive Vice-President of Veritas, spoke about the corporate governance practices in India.
Indiabulls has responded in an immature and unprofessional manner. By creating a fictional criminal case against us, Indiabulls has proven to be the corporate governance nightmare that our report said it is. It has indulged in slander by accusing me personally of demanding money. I quote from its BSE filing, “Neeraj Monga has demanded money through his personal email and if monies are given in time he will hold back the report.” Indiabulls will be unable to prove this in a court of law, and will have to pay significant damages for reputational and economic harm.
To the extent there is an inadvertent error in our report, we will correct it. But the manner in which Indiabulls has treated our research and responded to it illustrates utter contempt for genuine debate and engagement. Moreover, instead of addressing the issues raised in our report, it has managed to sidetrack the entire issue and convert it into a boxing match in the media.
What is the ‘inadvertent error in your report’ on Indiabulls?
The possible error relates to equity ownership dilution at the time of IIDL-IBPOW merger.
What do you think of Indiabulls’ full-page advertisements?
The advertisement is unnecessarily confusing the public without answering the questions we raised. The fact it cannot point to another factual error, implies Indiabulls is making an attempt to distort our report. Everything in that advertisement is the company’s opinion
Do you think it is easier for a firm based overseas to come out with such reports rather than an India-based firm?
Perhaps it is true. The fact that a management team has been able to convert an intellectual exercise into a criminal act through financial or other muscle suggests that in spite of India portraying itself as an investment-friendly and law-abiding jurisdiction, it is run as a fiefdom of the powerful. Debate is the essence of democracy.
How many Indian companies have been following high corporate governance standards?
Many have excellent governance. Our next report will highlight one such company.
What ethical standards do you or your firm follow?
We are working hard every day to write the best possible research. We don’t cheat anyone and nor do we fleece anyone. Our track record on Indian equities has been spot on so far.
RCOM’s IPO in Singapore failed. UB Holdings and Kingfisher are effectively and very publicly bankrupt. DLF has not managed to de-leverage its balance-sheet for more than a year.