Anatomy of a committee
Posted on December 16, 2010 | Author: T R Ramaswami | View 500
Why only corporate boards, we should also have transparent governance norms for committees formed by regulators so that they are truly independent and not tame Baa Baa Black Sheep bodies.
Dilution of lock-in regulations. 100% margin for QIBs in book-built IPOs. French auction for FPOs.
Did any of these and many others go through any committee or even put up for public comments? And is this called transparency?
The government packs PSUs with babus disguised as ‘independent’ directors and the ‘independent’ regulator looks on.
Let alone regulations — what about regulator committees? Should we not have norms for committees formed by regulators? To twist a transparency proverb — those who want others to live in glass houses should first remove their own clothes.
Compare the composition of any committee with the players in that market. How many are represented? Who represents them?
Should industries not be represented on policymaking bodies by their respective organisations rather than individuals?
Further, is it correct for those who have commercial interests to be on such committees and ensure ‘regulatory’ business?
Also observe how some members, whose constituency one would think is far removed from politics, change with every change in government.
Sometimes multiple committees/subcommittees with overlapping/confusing terms of reference are formed, if one committee is recalcitrant, to enable cherrypicking.
Many committees have a disproportionate number of members from the regulator itself. Why?
Is it to ensure that what the regulator wants gets through and to nip in the bud what it does not want?
Since the recommendations are dealt with by them again should not regulators be off all committees? Any committee can easily form its own secretariat.
Regulators can always ask a committee for views on any matter. Such a view without regulator representatives would be more independent. Perhaps, this is the problem.
There is another question. If a regulator is against a proposal recommended by a committee, assuming that such a recommendation even gets through, who then defends the committee’s views before the regulator’s board?
Should not rules for constituting committees be disclosed and made transparent?
How much do we know of these committees and what they do? Sometimes, we only know the members. There is no information of how many times they have met and who were present.
We also do not know what they are likely to discuss and what they discussed. Should not the attendance of the members be reflected on the website as a measure of corporate governance?
A media editorial once stated that some members rarely/never attend. Further, it is not too difficult nor will it compromise ‘secrecy’ (an oxymoron in the times of disclosures and transparency) if the short points of the agenda are issued through an official press release.
It is amusing and regrettable, but perhaps not surprising, that much of the information comes through the media through selective leaks that are nothing but trial balloons for the proposals.
Sometimes, this was enabled, perhaps deliberately, by having media representatives on committees under a different hat. Perhaps, there were quid pro quos. Also, government and regulators are the only ships that leak from the top.
The history of committees is full of frequent coups coinciding with top-level changes in regulators. It reflects the evolution of behavioural psychology in group relationships — like lions.
Every new lion that takes over a pride kills the cubs (members and ideas) of the previous lion.
Does not the credibility of a standing policy making committee suffer if it can be changed, virtually in toto, every few years?
Committees must have a definite structure — not by individual names, but defined by appointment/office held, regardless of who the individuals are.
Since discretion is a dirty word, how about a perpetual pro rataallotment of seats on all committees commensurate with the role and responsibilities of the players in that market?
There should definitely be places for truly independent members. Repeat — truly independent.
However, committees must be continuously refreshed. So, let half the committee be replaced (the individuals, not the bodies they represent) every two years or after 10 meetings, whichever is later.
And please, none wearing more than one hat because they usually talk through one of them and exhibit schizophrenia.
Frequent change of committee members results in recommendations of previous committees being virtually forgotten or reversed without debate. Is this not disrespect for the time and effort the committees have put in?
This is one of the main reasons why we keep getting snafus. Because, instead of having a smooth harmonious flow of reforms, the discontinuity that comes with each new committee (sometimes convenient for regulators) puts past unresolved but important issues into the backburner and introduces new favourite topics.
Every new committee acts like a Brahma, creating its own new universe. Ultimately, the old issues come home to roost in an unsavoury fashion and it is Kaliyug once again.
Further, the goals and objectives of establishing committees would be substantially enhanced if an internal functional code for them is also in place.
While it would be too much to expect such a code to be as rigorous as Robert’s Rules of Order, it would be beneficial for regulators to consider issuing guidelines/procedures for committees/subcommittees.
Soon they would acquire a distinct character and style that could well become benchmarks for others to emulate.
Robert’s Rules of Order is the Bible for committee procedures, including parliaments, particularly the US Congress. Paradoxically, democratic bodies are following procedures formulated by someone who belonged to a most undemocratic organisation — General Henry Martyn Robert (1837-1923) was the engineer-in-chief of the US Army.
He has only established in no uncertain terms that a disciplined approach always gives the best and fastest results.
Let the debate begin. Otherwise, committees could well become, if they are not already, Baa Baa Black Sheep (BBBS) Come-Meet-Teas, used or ignored by regulators, as convenient.
But why blame regulators — they are also ignored, when convenient, by the government.
Incidentally, a BBBS committee is largely composed of people who are picked because they have mastered the art of bleating “Yes Sir, Yes Sir, three bags full”! They open their mouths only to eat biscuits.