The Basel Committee on Banking Supervision (BCBS) was formed in response to the messy liquidation of a Cologne-based bank in 1974. On 26 June 1974, a number of banks had released Deutsche Mark (German Mark) to the Bank Herstatt in exchange for dollar payments deliverable in New York. On account of differences in the time zones, there was a lag in the dollar payment to the counter-party banks, and during this gap, and before the dollar payments could be effected in New York, the Bank Herstatt was liquidated by German regulators. This incident prompted the G-10 nations to form towards the end of 1974, the Basel Committee on Banking Supervision, under the auspices of the Bank of International Settlements (BIS) located in Basel, Switzerland. The Committee was established to facilitate information sharing and cooperation among bank regulators in major countries. The Basel Committee was constituted by the Central Bank Governors Continue reading
Business Ethics
Business ethics (also known as corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and business organizations as a whole. Business ethics can be both a normative and a descriptive discipline. As a corporate practice and a career specialization, the field is primarily normative. In academia descriptive approaches are also taken. The range and quantity of business ethical issues reflects the degree to which business is perceived to be at odds with non-economic social values.
Recent Developments in Corporate Governance
The Department of Company Affairs, in May 2000, invited a group of leading industrialists, professionals and academics to study and recommend measures to enhance corporate excellence in India.  The Study Group in turn set up a Task Force, which examined the subject of Corporate Excellence through sound corporate governance and submitted its report in Nov. 2000.  The task force in its recommendations identified two classifications namely essential and desirable with the former to be introduced immediately by legislation and the latter to be left to the discretion of companies and their shareholders.  Some of the recommendations of the task force include: Greater role and influence for nonexecutive independent directors Stringent punishment for executive directors for failing to comply with listing and other requirements Limitation on the nature and number of directorship of managing and whole-time directors Proper disclosure to the shareholders and investing community Interested shareholders to Continue reading
Important Recommendations for Ensuring Good Corporate Governance
Historically attention was paid to the subject following the collapse of Savings and Loan companies in USA in the mid 1980’s and the SEC of USA taking a tough stand on the same.  It is ironical that once again it was the US which brought in Sarbanes Oxley Act and along with it very stringent measures of Corporate Governance.  In passing, we may add that there is no corresponding legislation in India. Later, Adrian Cadbury report was an important milestone, which spelt out 19 best practices called the “Code of Best Practices”, which the companies listed on the London Stock Exchange, began to comply with. Some of those guidelines applicable to the Directors, Non-executive Directors, Executive Directors, and others responsible for reporting and control are as follows; Relating to the Directors the recommendations are: The Board should meet regularly, retain full and effective control over the company and Continue reading
Case Study on Corporate Governance: WorldCom Scandal
Established in 1988, WorldCom was formed so that the strongest, most capable public relations firms could serve national and international clients, while retaining flexibility and client- service focus inherent in independent agencies. Through WorldCom, clients have on demand access to in-depth communication expertise from professionals who understand the language, culture and customs in the geographic areas of operation. WorldCom has 105 offices in 90 cities and 40 countries on five continents, more than 2000 employees and recorded revenue of US $ 243.5 million in 2008. In the 90’s WorldCom was involved in acquisitions and purchased over 60 firms. The complete financial integration of the acquired company must be accomplished, including an accounting of assets, debts, and a host of other financially important factors. WorldCom moved into Internet Traffic, controlling 50% of US Internet Traffic and 50% of the e-mails worldwide. In 1997, WorldCom and MCI completed a US $37 billion Continue reading
Case Study on Corporate Governance: Enron Scam
Enron is an energy-based company in Houston, Texas that deals with the energy trade on international and domestic based. Enron Corp. Is one of the world’s largest energy, commodities and Services Company was created out of merger of two major gas pipe line in 1985. Enron was created by merge between Houston Natural Gas and Internorth. Houston’s gas’s CEO Kenneth lay headed the merger of the two companies. After that Kenneth lay become the CEO of Enron. Earlier Enron was Enron was solely involved with the distribution and transmission of electricity and gas of United States. In merger, Enron incurred a large amount of debt, and which resulted deregulation, after this Enron was no longer had the rights of its pipelines. The company had to find a way to generate profits and cash flow. Kenneth lay hired Jeffrey Skilling to work for Enron as an accountant. Skilling suggested the practice Continue reading
Historical Perspective of Corporate Governance
The seeds of modern corporate governance were probably sown by the Watergate scandal in the United States.  The global movement for better corporate governance progressed in fits and starts from the mid-1980s up to 1997.  There were the odd country-level initiatives such as the Cadbury Committee Report in the United Kingdom (1992) or the recommendations of the National Association of Corporate Directors of the US (1995).  It would be fair to say, however, that such initiatives were few and far between.  And while there were the occasional international conferences on the desirability of good corporate governance, most companies — both global and Indian knew little of what the phrase meant, and cared even less for its implications.  More recently, the first major stimulus for corporate governance reforms came after the South-East and East Asian crisis of 1997-98.  This was no classical Latin American debt Continue reading