Foreword

When we introduced ‘corporate governance’ as an elective during my tenure as Director of LIBA, we found the course to be an extremely popular one. The course became popular, partly because of the subject, but largely because of the popularity of Professor Fernando. His book Corporate Governance: Principles, Policies and Practices distills and collects the results of all those years of teaching by Professor Fernando at LIBA. I am greatly honoured by the privilege accorded to me by my former colleague in being asked to write the foreword to his book. Today, governance has become a hot subject in every field. We need good governance in government, especially in people-elected governments. In fact, governance is important for effective delivery of the vision of any organisation—NGOs, religious bodies, trade unions, even families.

Corporate governance gains greater importance since it is the largest sector in any country involving most of the human and natural resources and making the largest contribution to the economic development of a country. Unless there is proper corporate governance, no country can progress. Though the importance of corporate governance was always implicit, its relevance came to the fore only after the crisis created by Enron, Andersen and others. Human tendency is to lock the stable after the horses are stolen but, thank God, people awoke to the situation before all the horses were stolen. Today, like the three sisters of a religion—faith, hope and charity—three sisters of corporations—business ethics, corporate governance and social responsibility—are necessary to satisfy all the stakeholders. Everyone speaks about them, most management schools teach them but, alas, very few practise them. At this juncture, it is very timely to have a book on corporate governance from a person who has many years of corporate experience and is an eminent professor of the subject.

The book, starting with the meaning of corporate governance and why it rose to a preeminent position, tackles various issues. Any organisation in a social order has to comply with legal obligations. But this is the minimum one should do. If a corporation fails to comply with the law, the law enforcers will deal a severe blow as they have done to so many corporations. Unfortunately, they catch the culprits very late or after others have caught them, as we often see in movies. But if a corporation believes that it is sufficient to meet the legal requirements alone and aim at maximising profit, it will meet a tragic end sooner than it expects. Today, an organisation has to move beyond legal compliance; it has to have social welfare, quality of life and the country’s development at heart. Unless a corporation tries to practise these, it will be swept away by the mighty current of self-interest. If it wants to follow the path of the “invisible hand”, its “survival” will be at stake. Professor Fernando, while considering legal compliance, business ethics, corporate governance and social responsibility, also deals with the need for the corporations to have a deep concern for environment. Environmental concern should arise not merely from social responsibility and ethical compliance concerns, but also from the point of view of profitability, growth and ultimately to offer quality of life to its employees and customers. This implies that a corporation, for its very existence, has to be concerned about environment. Professor Fernando deals with all these areas with a large number of examples, in his usual lucid and powerful style. These days, a lot of books are trickling in on these subjects, but very few are comprehensive. I have seen only one, but it is in four volumes. This book will meet the need of management schools, corporations and enforcing authorities.

St Ignatius of Loyola used to speak of his little book Spiritual Exercises as a collection of exercises to be practised if one wished to transform oneself. Similarly, this book is a collection of chapters on corporate governance, not just to be read but to be practised. One has to practise it with great sincerity and zeal. It will transform not only the corporate world, but also politics, NGO administration and religious bodies.

N. Casimir Raj, S. J.
Director
XLRI
Jamshedpur