Business Code of Ethics

Being Ethical

Being ethical and a businessman are altogether paradoxical. Business is synonymous to growth, only an opportunist person can lead the entire organisation for the fulfillment of the single point objective, boosting up revenue. This is altogether a non-criminal act of prudent business management that may not necessarily be absolutely ethical. When business competitors leave no stone unturned for ensuring each others failure expecting ethical practices is abnormal.

Personally I am a big fan of Ratan Tata, the former head of the oldest and largest business empire in India, the Tata Group. The elite list in fact a minuscule archive of gentleman- businessman that I personally adore and admire. Be that be Narayan Murthy of Infy or Mr.Bose, the name i.e. identical to unparalleled acoustic products. Well I never proclaimed, the business practices followed by these organisation just mentioned are completely principled or these gentlemen are completely unaware of the major unethical doings in their respective organisations. However, these honorable men primarily focus on delivering quality products and services rather than making profit. In this highly competitive business context unless you have an edge over others you are certain for purging when competitors resort to all possible methods (including the ones not in copy book). So the sum and substance of this thesis is either you be an ordinary businessman or an extraordinary one who not only professes ethics but also possesses some unordinary big ideas that put you in the lead.

Coincidentally, when I last appeared for my CFA exam, I had a spirited read through of the code of ethics section. The core of the stream entirely focus on the said subject and the ever intriguing questionnaire are aimed at reviewing the potential of a candidates understanding of the topic when applied in real life business. The ethics are so crystal clear on quite complex areas of operations that it can smell a rat in a usual looking business deal. The humor is, a stalwart student of the same stream, Rajat Gupta defied all the ethics in the lust for making more money. ‘Insider Trading’ may be a strange term in India but its quite common in USA with several monumental convictions. One principle that rules the business world is ‘make money’, money prevails over all ethics. Why just business, money controls the whole world as the only universally spoken language.

Now if somebody claims Mr.Ambani is corrupt (that principally everybody agrees), but the charges may not be legally tenable. The case may be rejected by the court on the very ground of common jurisprudence. Everything is right as long as that’s not criminal and there is no place for ethics as long as that generates good money. However, here lies the main difference between an ordinary businessman and an extraordinary one. Till you promote an ordinary idea and commercialise to earn profit, you are bound to employ corrupt mindset for survival and growth. In contrast, an extraordinary idea sells itself with clear cut advantage over others in competition.

The Big Idea

Lets understand one more theorem, both in private and public sector the ordinary staffs are mostly corrupt or unethical at least in the matter of promotions as compared to the actual talented ones. The talented lot repose their faith in their own skills for growth so need not to adhere to any lowly or unethical method. The ordinary here implies both the IQ aspect and lethargic attitude. Desire for money would always be there but the dearth of big ideas and talent always gives space to unethical actions. Google, Facebook or Apple are the best examples, how big ideas can make really big money not necessarily being unethical.

Money Sleeps For Ever!!!

 “Greed is good” ~ Wall Street. Three words that are arguably the finest epitaph for the era of excess that began in the 1980s, excessive greed compounded even further and finally culminated in the most serious economic crisis in 2008 impairing the whole economy. “Madness is badness of spirit, when one seeks profit from all sources” – Aristotle. We have the new nomenclature as coined famously by British media “Casino Banking” quite evidently instrumental for high growth across business verticals, multiplying money over a century now. Greed probably closely echoes the inherent driving spirit of the industry. However the exposure is now unlimited and stakes are quite high, financial crisis are driving the economy to nothing but a double deep recession. The unraveling facts yet to appear in public domain might potentially bring in new surprises in the crises laden economy.

“How much is enough” ~Money Never Sleeps, sums up the important message to the underlying problem. After the Financial crisis of 2008, there was a hue and cry all over the globe about the functioning, administration and regulation of Financial Institutes. The most impacted are the banks which as per me form the most regulated sector in the industry. In an industry where a bank operates with a capital of 2% to manage £1 trillion asset/public money this becomes more imperative to censure the fooling around in the way of making money. We all have heard about the BASELIII, ICB, Dodd-Frank, SOX compliance, various stress tests and other global and local regulations coming into force like never before. Another result was a fire sale of assets to boost balance sheets. The banks were desperate to raise capital and shrink their balance sheets, often under orders from regulators. Banks now need to assess the impact of revised regime and their ability to track leverage ratio (exposure/capital), liquidity coverage ratio, large exposures, regulatory capital, risk management etc.

To add to Bankers woes, ICB now has brought in the reforms to ring-fence retail banking operations from their “casino” investment banking business. Capital ratios requirements are further raised. There is a tremendous pressure on banks by banking supervisors, central banks and finance ministries. The tighter the regulatory framework, the more likely the rules will be different from country to country, which would drastically raise the fixed costs of an international strategy, given that a number of the big players are global. These regulations are further viewed as obstacle to cross-border mergers and acquisitions by certain market participants.

The tight regulations still cannot compensate for inadequate supervision by regulators and poor decisions and rogue trades by bankers. We are in a global market and tight local regulations would mean there is no level playing field in cross border sectors/operations. Having said this, I completely endorse the BASEL III norms and banks across the globe should adopt and adhere to these guidelines, sooner the better .In a way, there would be a single set of regulations for all competitive entities. Regulators must understand that too many, or too complex rules are completely unnecessary and unwanted. By prescribing overdose of sleeping peel the regulators might be scripting for Hollywood sequel to Michael Douglas starrer  ‘Money Sleeps For Ever’. Nevertheless, these steps underscore the intention behind and the coherent message in order to build a robust industry. To conclude my view is to find the right balance to enhance the efficiency of a Bank, ensuring accountability and effectiveness of banking sector as a whole.

 

Co-Authored by Kartar Singh Parmar, written almost 18 months ago on the contemporary conditions in banking sector.

A Gladiator Who Defied The Anarchist Empress, Again…

Power corrupts and absolute power corrupts absolutely. In the late sixties, the proximity towards power exposed this wild side of her more apparently. The madness of her absolute power was so extreme that she demolished the very structure of democracy that initiated her into Indian Politics. The most powerful leader ever born in India was so power hungry that she would happily encroach upon all socio-political codes established by our revered constitution. If I go by the hearsay, she even perpetrated elimination of the most honest and loved leader of our nation in connivance with anti national external forces. As the continuance of the slain leader in office could have perpetually marred the anarchist queen’s chances in politics. There were similar allegations around the death of her younger son who was once her chief political mastermind cum henchman. May be that’s her strategy to prolong her affair with the chair even if that means killing her own people.

Whenever the paid puppets make frivolous claims about significant contributions of the empress towards developing this ever developing nation, I often charge back with two monumental contributions of her as essential add-ons. Typically two ‘C’s, Corruption and Criminalisation. Her assertion, “corruption is a global phenomena now’, is so reprehensible as a PM of a poor country, exhibits nothing more than a gloomy mindset of the so called tall leader. Truly she is the mother of the entire breed of  politicians of this generation, inheriting those two important genes in their DNA. She did this meticulous and added these 2 perilous pillars systematically into the grand democratic framework of our constitution. 

Can she hide?

 (She returns from electioneering in Orissa. A stone thrown at her split her lip and broke her nose)

Well whenever we discuss about the root of corruption in our country, I find myself lost in the obvious root cause analysis. Surprisingly, the empress usually rescues me from the so called entanglement, by making the honest confession. Very evidently the corruption was completely rootless until the show was managed by the “Man of Peace”, so the circumstantial evidence too points the finger toward the queen. Who was synonymous to this very nation as someone once famously mentioned “She is India”, going little further she even renamed the political party by her name. The naked dance of  power in literal sense reminding the folklore of Aurangzeb as a cruel and oppressive ruler. Well she too reinforced dynastic politics by gatecrashing herself and enrolling her off-springs as the natural heir to the chair. Proclamation of emergency in mid seventies as a hopeless last measure to avoid losing power clearly underscores her tyrant attitude.

ET once mentioned she legalized corruption in India. She in fact nationlised corruption along with the banking sector. Tales of her bribing public servants during elections and general governance was so widespread that corruption became practice (a necessary evil) a generally accepted norm in India. However, stimulus to write this exclusive piece on the empress was more for the other stupendous contribution, criminalisation. In fact the empress was drawing synergy from this unique fusion story of corruption and criminalisation as a tool for chronic power. The media was made deaf and dumb, the opposition was reduced to prisoners languishing behind the bar and nation at large was terrified from the fear of castration. In one of our regular discussions, my journalist friend working as a state govt information officer, instigated me to write a blog on this. Well, the story is yet to unfold, the brave accounts of the local Robin-hood, a gladiator who had the guts to defy the empress.

The story continues…

Is Technology a necessary evil?

Save Planet

A strong inscription in my childhood memory, is a non-fiction story of an object called “Plastic”. The exact narrative described it as “the biggest invention of last century”. The heroic account was so loud that most of my childhood discussions were dedicated to this telling theory of  technological insurgency. If 18th century was committed to brand new innovations, the next centuries credited to acceleration and spread through industrial revolution. Stress on consumption to promulgate growth was the only corporate slogan though with necessary lexical alteration. The very last thing on the card was concern for nature, which is regarded as very regressive and con-industrialization. Quite obviously industrialization ensured employment, good life style and technology in the reach of common man. Come 21st century, the whole perspective underwent an exhaustive change, flipping the very perception upside down with more focus on preservation than growth.Well, it must be quite evident now about the relevance of plastic in the outset, of course because of the hazards that pose now.

The fact remains that just two centuries of advancement inflicted the kind of extreme harm to this billions years old planet that millions years of human civilization could not. In true sense, we the inhabitants are pushed to the edge, even a slightest unfavorable wind could perpetually diminish us. Global warming, glacier melting, irregular monsoon, harsh climatic conditions, shrunk ozone layers are new demons of this century. Nature was never so harsh or unpredictable before but there is a limit to what our planet can take. Not to blame the scientists, who invested their lifetime for such great contributions, but little did they know their brain child would be so massively abused for commercial interest with complete apathy towards ecosystem.

Every grade increase in electronics integration sparks off a rank increase in global warming. This is the cost we have to pay for faster computing from one scale of integration to another very large scale integration. Also a a large population turned to be an unworthy couch potatoes with the handy gadgets with absolutely no psycho-physical work. Being a technologist myself, it required a lot of mental strength to condemn my bread and butter. But I am too a natural rationalist believe in intellect and deductions to justify everything including the technology itself.

Clubbing science and technology together for the purpose of further introspection and deeper analysis. Like any other evolving study all the theories presented so far are rather incidental bye-products than the conclusive final output. Every day we discover new things that denounce an established theory. After decades of usage a new study reveals that a particular medicine suffers from some specific side-effects. Similarly, side-effects of a technology comes to light after such a long time of use that the same would have actually caused serious damage to the case. Lets take the example of another colossal creation, the cell phone. Inadvertently, the cell phone effects a lot of health hazards notably from the radiations from the towers as well as the handsets. The impact could be as devastating as brain tumors and other critical ailments including cancer. The hazardous waste that the last decade has produced is sufficient enough to knock down the whole galaxy let alone our tiny planet. The bottom-line is rather emphatically clear on the intrinsic price of technology but the question is, ‘Are we all collectively ready to pay the price?’.

With technology in our blood now, this is absolutely meaningless to discuss about discarding technology. With or without technology the apocalypse is for sure, and we are far off now to rewind. Nobody wants the next generation to inherit the legacy of a spurious ecosystem nearing its natural ending. An orthodox view reminds me of the golden era of our civilization in the medieval period. With supreme command over knowledge of different departments of science they still stayed away from misusing technology in the manner as we did. The commandment always stressed upon preservation rather than exploitation. May be the benefits accrued fared miserably against the cost sustained. Our little concern now could ensure a safe and secured planet for the future.Every industrial revolution must see a matching investment in green revolution to counterbalance the negative impact. The corporate plans to aggressively promote a technology should be reinforced by a fairly aggressive approach to manage the technology debt that would be left behind.

After all technology is civilization.