Ranbaxy Corporation Case Study

Ranbaxy's criminal guilty plea and $500 million in fines and penalties has brought back the spotlight on corporate governance. The criminal case focused on sales in the US market. However, if media reports are to be believed, Ranbaxy committed systemic fraud in its worldwide regulatory filings. The US case dates back to the year 2004. This is the initial year when the Corporate Governance Code, which was issued by Sebi in the year 2000, was made mandatory. Therefore, it is quite likely that many independent directors had no clear idea about their responsibilities and accountability. But that cannot be said about independent directors on the RanbaxyBoard. In the year 2004, Ranbaxy Board had Tejendra Khanna, Gurucharan Das, P S Joshi, Vivek Bharat
In both cases, the top management overrode the internal control system. On January 2, 2013, southern district of New York judge Barbara Jones gave a landmark judgment. The judge did not see a case of the former independent directors of Satyam acting
We have to wait for Court rulings to understand Court's interpretation of 'diligence' in the context of independent directors.

The dictionary meaning of the word diligent is 'Having or showing care and conscientiousness in one's work or duties'. Did independent directors fail to act diligently? Did independent directors fail to catch signals from the exit of Devinder Singh Brar (then CEO), Rashmi Barbhaiya (then president, R&D), Rajinder Kumar (successor to Rashmi) and Dinesh Thakur (whistle blower in this case and subordinate to Kumar), who were celebrated leaders of the company, in quick succession. Their exit signaled that something was wrong.

Assume that independent directors had taken notice of that and arranged exit-interview and interacted with the employees at random to know the cause of their exit. I guess that process would have been futile, as none would have blown the whistle in the absence of protection to whistle-blowers. Thakur had blown the whistle in USA and not in