Rao: Questions raised

New Delhi, Jan. 5: The Centre may remove former Satyam director M. Rammohan Rao from some government panels.

Sources said Rao, who is the dean of the Indian School of Business in Hyderabad, could be removed from the search committee to find a replacement for V. Leeladhar, the deputy governor of the Reserve Bank of India.

Recently, Left leader Abani Ray had written to Prime Minister Manmohan Singh on the need to keep Rao out of prestigious panels till “the role he played as an independent director (on the Satyam board) was cleared”.

Rao is also on panels to select top personnel for the Telecom Regulatory Authority of India and the Securities and Exchange Board of India.

Headed by RBI governor D. Subbarao, the committee to replace Leeladhar also has finance secretary Arun Ramanathan and former SBI chairman V. Kamesan.

It is believed to have shortlisted five names for the deputy governor’s job.

Bank of India chairman T.S. Narayanasami, Punjab National Bank’s K.C. Chakrabarty and Canara Bank’s A.C. Mahajan are in the race.

Leeladhar is involved in supervision, and RBI officers have said that the post does not require a banker.

Satyam had to abandon the acquisitions of two Maytas firms, promoted by the relatives of its chairman B. Ramalinga Raju, after protests by investors, including institutional entities. Questions on the role of independent directors who are supposed to act on behalf of minority shareholders have since been raised.

In the letter to the Prime Minister, Abani Ray had stated that “independent directors have a role to play. They are supposed to protect the interests of small shareholders. If they do not, they should be taken to task for it. You cannot have rights and no obligations”.

Rao has resigned from the Satyam board on December 29, distancing himself from the decisions taken by the board.

At an interactive session in Calcutta today, Tata Sons director J.J. Irani alluded to Satyam and said that the chairman and executive directors of firms should provide correct information to independent directors.

“However, walking away from the board after some problem crops up does not solve the issue. It has to happen before. Ultimately it’s the quality of the independent directors that matters,” he said.