ETHICS AND

CORPORATE
GOVERNENCE
FAILURES IN
INDIA
PRESENTATION BY :
ANSHUL SETHI
229012
 INTRODUCTION

Ethics and governance are essential for maintaining trust, transparency,

and accountability in any society, especially in a diverse and rapidly
developing country like India. However, repeated failures in these areas—
evident in corporate frauds, political corruption, and weak regulatory
oversight—have undermined economic growth, shaken public
confidence, and hindered development. This presentation will explore
the root causes, major cases, and impacts of these governance failures
while discussing potential reforms to strengthen ethical practices and
foster more transparent governance in India.
 The Kingfisher Airlines case is a major corporate scandal
in India, involving the airline's founder Vijay Mallya, who
defaulted on loans worth over ₹9,000 crore due to
financial mismanagement and misuse of funds.

Launched in 2005, the airline ceased operations in 2012

after accumulating massive debts.

Mallya fled to the UK in 2016, evading legal proceedings,

and has since faced extradition attempts by Indian
authorities.

The case highlighted significant governance and regulatory

failures in India’s banking system and sparked discussions on
corporate accountability and the management of wilful
defaulters.
 IMPACT ON VARIOUS
STAKEHOLDERS

Employees Banks Investors Customers

Thousands of The consortium of Shareholders and

employees lost banks faced huge investors saw their Passengers were
their jobs and were losses as Kingfisher investments wiped stranded and faced
left without defaulted on loans out due to disruptions when
pending salaries, worth over ₹9,000 mismanagement and the airline suddenly
leading to severe crore, turning them lack of transparency, ceased operations,
into non-performing eroding trust in damaging public
financial hardship
assets (NPAs) and corporate trust in the airline
and protests..
shaking confidence in governance. industry..
lending practices.
 GOVERNANCE FAILURES
Weak Corporate Oversight Poor Financial Transparency

The company lacked strong governance

The airline misrepresented its financial
structures, with inadequate checks on
health to lenders and investors, failing to
executive decisions. Vijay Mallya's over-
disclose the full extent of its debt and
centralized control led to poor financial
financial problems..
management and excessive risk-taking.

Ineffective Board of Directors Lack of Regulatory Enforcement

Indian regulators did not adequately

The board failed to provide sufficient
monitor or intervene in Kingfisher’s
oversight of management’s decisions.
operations or its loan defaults. Weak
There was a lack of independent and
enforcement allowed the company to
informed decision-making to
accumulate unsustainable debt without
counterbalance Mallya's influence.
timely corrective action.
RECOMMENDATIONS Strengthening Corporate Governance:
Implementing stricter governance norms, including
independent boards and transparent financial reporting,
can ensure better oversight and accountability.

Enhanced Regulatory Oversight:

Regulatory bodies like the Securities and Exchange
Board of India (SEBI) and the Reserve Bank of India (RBI)
need to enforce stricter compliance and monitoring
mechanisms for financial institutions and corporations.

Debt Recovery and Resolution Frameworks

Developing more effective frameworks for debt
recovery and insolvency can help protect lenders and
promote responsible borrowing and lending practices.

Promoting Ethical Corporate Culture

Companies should foster a culture of ethics and
integrity, prioritizing long-term sustainability over
short-term gains, which can contribute to better
decision-making and governance.
 COMMONWEALTH GAMES
The Commonwealth Games held in Delhi in 2010 were
spoiled by widespread allegations of corruption, with
officials accused of inflating costs, awarding contracts
to favored companies, and misappropriating funds
intended for infrastructure development.
Investigations revealed that the Indian government
incurred significant financial losses, with reports
estimating that up to ₹70,000 crore (approximately
$10 billion) were mismanaged or lost due to fraudulent
activities associated with the Games' organization.

The scandal led to the arrest and prosecution of several key officials,
including the former chairman of the Organizing Committee, Suresh
Kalmadi, and sparked public outrage, resulting in calls for greater
accountability and reforms in the management of public events.
 GOVERNANCE FAILURES
Lack of Transparency Ineffective Regulatory Oversight

Contracts were awarded without proper Weak monitoring by authorities allowed

oversight, leading to inflated costs and corrupt practices to flourish during the
favoritism in the bidding process.. event’s organization.

Political Interference Inadequate Risk Management

Political influence and connections played Failure to implement proper financial

a role in appointing unqualified individuals controls and risk assessments led to
to key positions, leading to significant cost overruns and delays in
mismanagement and inefficiency. project completion.
 IMPACT ON VARIOUS
STAKEHOLDERS
Government Business International
Citizens
Officials Community Community

Loss of credibility, Significant financial Legitimate businesses Damage to India's

legal action losses from international
were sidelined by
against involved misappropriated reputation,
corrupt practices,
officials, and long- public funds, leading resulting in
with contracts being
term damage to to reduced skepticism about
awarded to favored
political investment in the country’s ability
companies, leading to
essential public
institutions due to unfair competition. to organize large-
services and
corruption. scale global events
infrastructure
efficiently.
RECOMMENDATIONS Strengthening Transparency
Implement stricter regulations for public tenders and
contracts, ensuring open and transparent bidding
processes

Enhanced Accountability
Establish independent oversight bodies to monitor and
audit large-scale government projects, ensuring
accountability for officials and contractors.

Clear Ethical Guidelines

Enforce strict ethical standards for officials involved in
public projects, with clear penalties for corruption and
conflicts of interest.

Digital Tracking Systems

Use digital platforms to track project expenditures,
timelines, and progress in real-time to ensure
transparency and prevent financial mismanagement.
THANKYOU
Anshul Sethi: 229012