Corporate Governance Business Report

p CORPORATE GOVERNANCE BUSINESS REPORT

2007

Good corporate governance as a system of governance is essential from all points of view - legal , social , ethical and economic . Western corporate world has made much headway in this direction . Many corporates who have taken strides in good governance and can prove to be beacon lights to others moving in the same direction but some firms have taken a different path . The case of Clearstream Banking S .A . where there is corporate failure and scandals involving mis-governance and unethical behavior on the part of the

company

Clearstream Banking S .A (CB ) is the clearing division , based in Lexemberg , of Deutsche Borse . It was created in January 2000 through the merger of two clearing groups . Right from 2001 there are accusations of tax evasion , money laundering and other types of fraud

CB basically is doing record transactions between accounts of different banks . Instead of carrying heavy cash the concerned bank gives instructions to CB to credit or debit the amount to the concerned account holder .CB helps in the money movements around the world

An Analysis of Corporate Governance Structure , Practices in Clearstream Banking S .A

With Liberalization brought mixed results in the world economy , the Corporate governance has been has seen a turnaround since the 1990s which brought in its wake a spate of corporate scandals . Later on scores of companies made public issues with large premium and then disappeared prospectus misled the public . The management of CB diverted funds and investors had no option but to repent their lost money . Primary market literally collapsed in the after math of these failures . Slowly , many a family owned businesses moved to become widely held limited companies The question , how to function in a corporate setup overriding family interest and obligations called for a code of governance . Similarly CLEARSTREAM BANKING S .A . also came under strain due to scams , governance failure was inadequate management practices and weak supervision (Van Horne , James C (2001 ,Towards Excellence in Board Performance , Prentice- Hall : New York

Auditors were following questionable accounting practices on behest of the management and often advising on how doubtful accounting choices might be made so as to remain on the right side of law and at the same time , escape detection by users of financial information . All these factors put strong pressure on many corporates to evolve a good governance practice

Over a period of time companies have evolved sound principles of governance , intertwining corporate governance with social responsibility . These companies have become global and it is common to find global norms of accounting and disclosure being followed in these corporate houses . Rights of employees , stock options , independent directors , meeting quality norms , price warranty and guarantee - all these have made room for quality governance . Managers have become trustees of shareholders (Chandra . Prasanna (1995 . Guide to Corporate Functions , Harper and Row , New York

CORPORATE GOVERNANCE PERSPECTIVE TO THE OPERATION OF CLEARSTREAM BANKING S .A . -ISSUES FACED

The management of the company believes that corporate performance in the long...