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Group no.8
Topic – Corporate Governance Failure
Nirav Modi Scam
• Financial instrument used – Buyer’s credit
• Procedure to take buyer’s credit
• Check documents and credit worthiness
• Security deposit
• Issues Letter Of Undertaking
• Through SWIFT (Society for worldwide interbank financial
telecommunication) pass the information
• Amount is transferred to Nostro account
• After delivery the payment is made
Scam
• No security deposit
• Officers send Letter Of Undertaking to Axis bank Hong Kong and
Allahabad bank
• 11,000 crores LOU’s
• January,2018 again asked to issue buyer’s credit
• Started from 2011
Control measures
• The Board should meet regularly retain full and effective control over the
company and monitor the executive management
• There should be a clearly accepted division of responsibilities at the head of a
company, which will ensure balance of power and authority
• The Board should include non-executive Directors of sufficient caliber and
number for their views to carry significant weight in the Board’s decisions
• There should be an agreed procedure for Directors, in the advance, of their duties
to take independent professional advice if necessary, at the company’s expense
Guidelines Relating to the Non-Executive Directors
Recommendations
Mandatory:
•Audit committee
•Risk management
•Code of conduct
•Nominee directors
•Whistler blower policy
Non – mandatory:
• Companies should be encouraged to train their Board members in the
business model of the company
• Evaluations of board performance
THANK YOU