18 bluechip PSUs lacks required number of independent directors: CAG

Eighteen state-run firms, including bluechips like ONGC, IOC, OIL and GAIL, did not have the required number of independent directors on their board in 2010-11 fiscal, a CAG report said.

Of the 466 Central Public Sector Enterprises (CPSEs) audited by the CAG during 2010-11, 18 companies did not have the required number of independent directors and in 29 companies there was no such representatives on board, the Comptroller and Auditor General (CAG) said in a report tabled in Parliament today.

"The government of India may ensure induction of the requisite number of independent directors on the board of CPSEs," CAG said in the report titled 'General Purpose Financial Reports of CPSEs'.

The CAG listed Bharat Coking Coal, Indian Oil, Bharat Petroleum, Mangalore Refinery and Petrochemicals, Chennai Petroleum, NHDC, Eastern Coalfields, Hindustan Copper, ONGC, OIL, Electronics Corp, among others, as PSUs that did not fulfill Sebi's listing norms.

As per Clause 49 (I) (A) (ii) of the listing agreement and the DPE guidelines, where the Chairman of the Board is a non-executive director, atleast one-third of the Board should comprise independent directors and in case he is an executive director, atleast half of the board should comprise independent directors.

The CAG further said that in 19 companies, two-third of the members of the Audit Committee were not independent directors, while in 12 companies, the chairman of the Audit Committee was not an independent director.

Also, the whistle-blower mechanism was not observed in 11 companies.

It added that anti-fraud and anti-corruption policies were not observed in the six CPSEs and in 12 CPSEs there was no system of reviewing of such policies by audit committee. (PTI)