[Guest article by Sanjay Anandaram, entrepreneur turned investor. In this post, Sanjay brings up few interesting discussion points related to entrepreneurs running multiple ventures and importance of good governance system.]
Julius Caesar the great Roman emperor divorced his wife Pompeia as he considered his honour and position compromised because Pompeia was indirectly associated with a trial for sacrilege. He explained that his wife should not only be free from sin but from suspicion. Given the state of our political system, this kind of requirement seems laughably quaint. But if the system is to improve, keeping this principle in mind is crucial because it is a pre-requisite for good governance in the political as well as the business spheres.
In the last column, I had talked about the need for more entrepreneurs to enter the political sphere. But, and there always are buts, this comes with a significant caveat. The caveat of suspicion of “conflict of interest” becomes therefore especially applicable to those entrepreneurs who’ve decided to be in public service. Our courts which enjoy enormous credibility amongst other institutions in India have a well established system in this regard. Recently, in the case of Ajmal Kasab the Mumbai terror accused, judge Mr M L Tahiliani debarred lawyer Anjali Waghmare from defending Ajmal Kasab on grounds of conflict of interest since she had accepted the legal brief of a surviving witness in the Mumbai attacks.
It would be rather unprecedented for a CEO of a startup that’s in the process of finalising its initial funding to suddenly declare that he would be involved in another venture in an altogether different area and that he or she would be able to do justice to both adequately. Both the existing startup and the new venture call for passion, active and intense hands-on involvement if they are to truly deliver on their promise. The new venture will require the CEO to spend over a 100 days a year in another city and spend an enormous amount of time catering to a totally different set of stakeholders than in his startup. On what basis can the respective stakeholders believe that the CEO will deliver on the promises in spite of the enormous pressures and constraints? Now, what if the new venture was politics and that the CEO was standing for elections with the hope of becoming a Member of Parliament?
Stakeholders want to see focus and be confident that the person in charge is concentrating on delivering the best possible results for them. In addition, people around the world frown upon the CEO having multiple interests especially when there’s enormous potential for serious conflicts of interest issues to arise.
Good governance requires interested parties to recuse themselves from being involved in any situation or decision that can cause a conflict of interest. For example, can a CEO be part of the committee that decides on his own compensation? Can a CEO be involved in writing his own appraisal or that of a subordinate who’s a relative? Should a CEO do business with a company run by family member or a very close friend? If so, what should be the safeguards? Is the relationship at an “arms length?” to address concerns of conflict of interest and prevent suspicion? Increasingly, companies are realizing the virtues of being transparent and above board. Entrepreneurs in politics will hopefully bring about the much needed impetus to the issue of good governance. An issue that cannot be overstated. Therefore, they need to set the standards for the rest of the political system to follow.
Perfectly Entwined
Mr Rajeev Chandrashekhar is well known as the founder Chairman of BPL Mobile. He’s a Rajya Sabha MP from Karnataka and currently Chairman of Jupiter Capital which has interests in infrastructure (transportation, logistics, utilities, aviation, electricity), defence technology and media. His company is developing the first non-metro greenfield airport in Karnataka at Hassan. Mr Chandrashekhar is backed by the BJP the current government in Karnataka.
Mr Vijay Mallya Chairman of Kingfisher Airlines is a Rajya Sabha MP and on the Parliament Consultative Committee on Civil Aviation.
Captain Gopinath founder of Air Deccan (merged with Kingfisher Airlines) is now the founder CEO of Deccan Express Logistics which is in the process of raising Rs 300 crore in initial funding out of a total estimated Rs 1000 crore over 3 years. The business of logistics and air-freight involves central and state government regulations. Captain Gopinath is a Lok Sabha aspirant.
There are potential conflicts of interest in the above cases. Shouldn’t the principle of Caesar’s wife be applicable? Can the CEO do justice to two sets of diverse stakeholders (employees and investors in one and the general public in the other) without compromising one or the other?
What do you think?
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I can’t understand this post…Where is the conflict of interest here???
Listen to the oath taken by each MLA/MP/Ministers…. So you have listened to the oath … like u listened to the promises he made before election…that is the end of political CEO…what he does is none of your business… during the course of his/her social work it is possible that the business may get benefited in some way. How can you stop some CEO from doing some social work on his spare time.
Very funny.
You have listed some of the entrepreneurs turned politicians… show one politician who does not run a business or part of a business.
Entrepreneurs can shine in politics exceedingly well. As you have mentioned it is a different ball game and carefull planning and execution is required.
Practical example : Sanjeev Bhikchandani of Naukri is CEO who has been successfully running naukri.com (recruitment), jeevansathi.com (matrimonial) and many such ventures.
All this talk of one CEO one company is VC crap. This is the reason why VC makes entrepreneurs dumb & dusted.
Applying same on politics, as long as it is transparent and performance driven, an individual holding few post is best thing that can happen.
@Ajay I was trying to be sarcastic about politicians doing multiple jobs. Ethically and Morally and logically CEO’s cannot run multiple businesses with public/private money.
What that tells is…
i) Either his/her 100% time as a CEO is not required for that company … so he can step down to other position.
ii) OR He/She can put that 100% and make that one company 150% more profitable.
I repeat this not applicable to chacha-mama-mom-pop group of companies running in every town and village and city. This is about handling public and someone else money.
As CEO or politician, one individual plays several roles, for example looking after several internal departments, head of various initiatives. Looks like you are thinking like manual labour. As CEO, the individual is enabling their team to do the job/direction, such position is more participative which takes less % of hours. Hence your theory of ‘one person one job’ is again crap.
How many roles you play in your job ?
One person one job is not a theory… it is a rule.
There is a lot of difference between full-time job and freelancer and consultant.
You can be a freelancer/consultant/Advisory Board Member/non-executive director/etc with as many companies as you want.
But cannot take up a full-time-job like Programmer,CEO,VP,MLA,MP and do other jobs which pays you (you can still do free-of-cost services to as many company as you want …some company may ask for deceleration ).
One person One job is a rule … but there are always some who break the rules….and no questions asked…this post tries ask questions that is all
Gopinath pretends to be for the people yet he sold out for millions of shares and ran an airline and the staff into the ground.