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Can a public sector unit’s board have a member whose immediate family has businesses in the same sector?
The immient appointment of Vennelakanti Kalyana Rama as Chairman and Managing Director of Container Corporation of India (Concor) raises this disquieting question of a potential conflict of interest.
Members of Kalyana Rama’s immediate family, including his wife and brothers, have or have had interests in several companies, including some in the logistics space, in which Concor operates.
PSU appointments typically undergo rigorous vigilance clearances, and Kalyana Rama has secured all the relevant approvals, including from the CVC. Currently Director (Projects) in Concor, Kalyana Rama will take over as Concor CMD from October 1, when current CMD Anil Kumar Gupta superannuates.
While Kalyana Rama could not be reached for comments, Gupta, responding to BusinessLine ’s questions, said “the disclosures made as per AS-18 in the Annual Report of Concor are as per the laid-down procedure.”
Gupta added: “As declared in the Annual Report, there have been no transactions with any of the companies listed in your query. The financial statements have been duly approved by our Audit Committee... and by the board. These... have also been approved by our shareholders.”
On page 188 of Concor’s Annual Report for 2015-16, eight firms have been listed under “enterprises owned or significantly influenced by key management personnel or their relatives.” Of these, two, Seshasaila Logistics and Conzug Logistics, have businesses in the logistics space. Also, several firms were incorporated after he was absorbed in Concor.
Asked whether the issues were discussed at Concor’s board meetings, raised at the Appointments Committee level, and whether independent directors are aware of the matter, Gupta said: “The functioning of Concor’s board of directors is a confidential matter and requisite disclosures have all been made.”
Interestingly, the CMD-designate, who had joined the Concor board last year as Director (Projects), had not provided this information in the 2014-15 annual report, thus violating PSU conduct rules. The information has been disclosed to the board in 2015-16, which is also seen in Concor’s latest annual report.
BusinessLine has also had the information verified from the Corporate Affairs Ministry through data analysis firm Facts n’ Data.
The wife the CMD-designate was a director in six firms listed in the annual report, but ceased to be a director in five of these with effect from August 1, 2016; she was replaced by Siva Rama Prasad Veenalkanti, who, it appears, is the brother of the Kalyana Rama, according to Facts n’ Data.
Another brother, Veenelakanti Subramanyam, is director in nine companies listed in Concor’s annual report.
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