MUMBAI, JULY 4: With many companies (mostly finance companies) downing shutters, small investors are venting their anger on the high-profile directors of these companies which gave enormous credibility to the companies and helped them raise funds. Former bureaucrats, army officials and corporate chairmen have indiscriminately joined companies which are now missing, thus blocking funds of thousands of investors.Investors say it is high time the government comes out with some legislation entrusting more responsibility to the non-executive directors, if the company fails to honour its commitments. The board of CRB, Prudential Capital and Mumbai-based real estate firm, Lok Group, are few of the companies which have used the names of its directors to entice investors.Former army chief, Field Marshal Sam Manekshaw, who was a director in Calcutta-based Prudential Capital, has been already sentenced by a lower court for three months for his non-performance to address the problems of the investors as a companydirector. Russi Mody, former chairman and managing director of Tata Steel, was a director in the Lok group which has failed in meeting its commitments towards its buyers who have booked apartments. Mody has since resigned from the company.In fact, a Ernakulam magistrate has issued a non-bailable arrest warrant against the Union Minister for Environment and Forest, Suresh Prabhu, Nandan Gadgil and Brij Bhushan Nagpal in their capacity as directors of Western India Financial Services Ltd as they failed to respond to the repeated summons issued by the court in a cheque dishonour case.The company had accepted a 90-day deposit of Rs 2 lakh from the complainant, K Joseph of Kochi, on August 20, 1996, through the Ernakulam branch of the company on the promise that it would be returned with interest on the expiry of the term. Two post-dated cheques issued by the company bounced on the grounds of insufficiency of funds in the company's account.Company lawyers say the directors of the company have ancritical role to play in the larger interests of the shareholders and clients. But in the recent years due to the proximity between the management and directors, the latter have failed in their duty as independent observers.Company directors not only get fees for attending board meetings, they get various other favours from the company for supporting them both inside and outside the boardrooms. While Field Marshal Mankeshaw helped Prudential to raise funds from gullible investors who are now running pillars to post get their money back, Mody's name was used by Lok to get bank and FI funds.Besides Manekshaw, Lt General Dipender Singh, Air Marshal Suri and former IPS officer Vijay Karan were also on the board of Prudential Capital.During the primary market boom, well-known bankers rotated their directorships as soon as any company went public. ``As a person is allowed only 20 directorships by law, they resigned from the company which went public and hopped on to join the board of another company whichwas launching a public issue. This led to many small investors losing money as these directors disappeared soon after the issue,'' said a investor.As the non-executive directors have a limited role to play and only their names are used by the company to get credibility, they tend to ignore even their legitimate duties, say corporate analysts.Multinational companies based in India, however, have more executive directors as they have kept the deadwood away from the company's board. Till date, not a single big Indian corporate has taken a step to induct shareholders or union members as directors both vital to the company's survival.Shareholders of Indian corporate are not united and most of them, during the annual general meetings, are busy setting up their personal relations with the management and forget issues which are crucial to company's survival.
