Lessons in integrity from Bharat Ratna Sir M Visvesvaraya

Please read on till the end! 
Bharat Ratna Sir M. Visvesvaraya (15 Sep 1860- 14 April, 1962) was one of India's finest sons. The breadth of his achievements mark him out as the Leonardo Da Vinci of India.
He was a Civil Engineer par excellence. He devised innovative techniques that were well ahead of his time. Among them,

• The Block System of Irrigation – to optimize, control and evenly distribute water supply to agricultural lands over many villages. The supply was rotated within “blocks” in each village to curtail misuse and water-logging. This system, devised in 1899, is still used in Deccan Canals.
• The "collector well” in Sukkur in Sindh province (Pakistan). The area was hot and arid, and they had to pump water from River Sndhu to a hill nearby, filter it and supply water to the town through pipes.They did not have enough money for filters. Visveswaraya solved this ingeniously by digging wells in the river bed itself close to the river bank to obtain spring water through percolation. Thus filtering was achieved without installing filters. To increase supply of water, a tunnel was driven from the bottom of the well under the flowing river. This is now standard civil engineering textbook content under the Heading, “Collector Wells”.
• He designed and patented Automated Floodgates, which permit flood water to enter a reservoir without water level exceeding full reservoir level, thereby reducing risk of submerging surrounding land. The gates are automatic because they open and close at the rise and fall of water in the reservoir for flood control. He designed water supply schemes for many towns in Bombay Presidency, Hyderabad and later as Chief Engineer of Mysore State.

As Dewan of Mysore State, he established many rural industries and set up basic education for small shop owners in the fields of book-keeping and commerce. Agricultural schools were opened to help with modern agricultural practices that reduced farmers’ overdependence on rain and good luck. Many industrial workshops and training institutes were set up. Public libraries were established. The Kannada Sahitya Parishat was formed. Many books on science were published in Kannada. The University College of Engineering (now known as University Visvesvaraya College of Engineering) and Maharani’s College for Women came into being. He established the Mysore University, as until then, all colleges in Mysore State were under Madras University. He established the Bhadravati Iron and Steel Works, The Mysore Sandal Oil Factory, the Mysore Sandal Soap Factory, the Metals Factory, and the Chrome Tanning Factory. He started the Bank of Mysore (now State Bank of Mysore) and The Mysore Chamber of Commerce. The Institution of Engineers (India) celebrates his birthday, 15th September every year, as Engineers Day.
He differed with Mahatma Gandhi whose view essentially was “Industrialize and Perish”, while Sir MV's motto was the opposite, “Industrialize or Perish”, but great men that they both were, both respected each others' views and capabilities.
Sir MV led a very simple life. He was known for his honesty and integrity. In 1912, Maharaja of Mysore appointed Visvesvaraya as his Dewan.

Before accepting the position of Dewan of Mysore, he invited all his relatives for dinner. He told them very clearly that he would accept the prestigious office on the condition that none of them would approach him for favours.

When on tour on official business, Sir MV carried a set of candles bought with his personal money, and used them for personal work like reading etc in the night after he was finished with official work.

Just think – this man lived a life of total personal integrity that we cannot even imagine today. It has taken another simple person like Anna Hazare to raise our collective anger against corruption. Across the political spectrum are ranged small minds who do not want to see corruption rooted out of this great country. They do not realise that because of their selfish interests, India is held back from fulfilling its rightful role in the world by the “hand-brake” called corruption. It is time to release the hand-brake and surge forward..

Ratings are rotten - proof from an insider

Earlier, I had written about the fact that rating agencies' methodologies were suspect - "Rating agencies will have to revisit their sovereign rating norms. Currently, it is unthinkable in their models to question the rating of AAA to the US".
Now, there is proof from an insider that the rating agency Moody's was utterly compromised and conflicted.  This 78-page Comment on SEC Proposed Rules for Nationally Recognized Statistical Rating Organizations makes for shocking reading, though it confirms what we had always suspected - that conflict of interest permeated all levels of this "Nationally Recognized" rating organization. It is a must-read for those trying to understand how the crisis of 2008 could have happened, and the role of rating organizations in this crisis.

A Fantastic Article on the Tata Group

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Very readable, very authentic, and (for once) fairly uncritical article in The Economist.on the Tata Group.
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How Schools in Denver were cheated by Bankers

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Here is another sordid story of bankers' greed -- where they sold sophisticated structured products to a School Board who lacked the expertise to assess the risks of such a product realistically -- while the bankers laughed all the way back to their offices!!
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An ancient parable with modern characters

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A dear friend of mine, Kiran Sreedharan, pointed out a great piece by Aadisht Khanna. AK says that this old  parable of "the weaver and chariot maker is one of the Panchatantra stories that usually doesn't make it to primary school textbooks or Amar Chitra Katha, mostly because it's full of sex, war, and moral hazard".
Like most really great stories, this one is a cutting commentary on recent events in the US financial markets, and rip-roaringly hilarious because it is so true. Only, we are looking at that truth through the goggles of an old parable. 
Aadisht writes a very interesting blog at wokay.in  However, in my view, this ancient parable with modern analogies is something that puts most of his blog entries in the shade. 
PS: 8 Mar, 2011
This page seems to have moved, but I found the same parable here. Obviously, this is an un-attributed lift, because this blog entry is dated after the date of this blog entry of mine. 
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Interesting stories about Milk -- whether manufactured or secreted

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After reading the article on dairy farming in Vermont (see immediately preceding blog post), I investigated a little more and came up with a wide variety of sometimes startling writing on the milk and milk products that we eat and drink. Thought I would share some of them with you.

• A piece on why all milk other than human milk is not good for humans.
• A warning from the US FDA and the CDC against drinking raw (ie, fresh, unpasteurised) milk.
• An essay on the virtues of breast milk which contains this remarkable observation :

It would take 135 million lactating cows just to substitute the breastmilk of the women of India; that many cows would require 43% of the surface of India be devoted to pasture.

• A disturbing article on how milk is marketed even though it is known that it is bad for health.
• Another disturbing article by an Indian origin author.
• An article on Mahatma Gandhi's views on milk.
• A dairy industry press release on the importance of milk in the diet provides significant contrast to the above writings, but consider possibility of conflict of interest!

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Bankers' Honesty or Stupidity?

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My wife recently wanted to close one of her salary accounts (opened by her former employer and not used after she changed employers). I sent my office assistant to the bank with the relevant letter and authorisation.


There was hardly any money in that savings account, but I was surprised when the assistant told me that the bank had told him to pay Rs.5 being the negative balance. I presumed it must be because of the unused cheque leaves, or some account closing charge that I was not aware of, and promptly forgot about it. But the bank did not -- they actually discovered that there still was Re.1/- in my wife's account and hence sent her a letter signed by some authorised signatory, and accompanied by a multi-city Banker's Cheque signed by no less than two bankers in the sum of Re.1/-.


I do not know whether to laud them for being so punctilious and honest, or to laugh at the system's stupidity.
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When Technology Runs Ahead of Laws and Ethics

Ever since safe abortions were made possible and test-tube babies happened, our laws and ethics are being left hopelessly behind by technology.

• What can one say of the paternity/ visitation rights of a non-anonymous sperm donor who is not married to the mother?
• Or to the pregnant lady who is not allowed to abort in the third trimester, after she has come to know that her unborn child is condemned to lead an poor quality existence?
• Or to the lady who got the wrong fertilised egg implanted in her womb? Does she have an obligation to carry it to term? If she does, what right does she have in relation to the child born?
  
• Or to the Passport Officer who did not want to issue Indian passports to the children born in India showing a German lady as the mother, when the twins born of an Indian surrogate mother with sperm of the father but an anonymously donated egg?
• Or to the parents of a child whose grandfather will also be its father because of the sperm donated by the father-in-law? 

I wonder why all these people are seduced by technology into uncharted moral and legal waters when a perfectly acceptable solution called adoption exists?

 

Business Ethics Training

Nowadays I have been busy authoring caselets for an interactive web-based training capsule on business ethics. The challenge here is on several fronts, for me. First, I have to write fiction. This is new for me. Second, I need to imagine a scenario where a specific type (or at most, two types) of ethical dilemmas arise. Third, I am part of a largish team - including very accomplished writers who convert my 2-page story into a "Storyboard"; then graphic artists create animation characters and finally, the animation team animates the story. It is an excellent experience in collaborative working. Hope this course will be ready by end of May.

Corporate Failures: Tyco International Ltd

Tyco International Ltd. made several products, from healthcare supplies to electronic and plastic adhesives. It accused three former high-level executives to have entered into a fraud. The three accused managers were former CEO L. Dennis Kozlowski, former Chief Financial Officer Mark Schwartz, and former general counsel Mark Belnick who have since been indicted for fraud and theft by the Securities and Exchange Commission (SEC) as well as their former employer.

Both, the SEC and Tyco International indicted the former executives on charges of civil fraud and theft. They were accused of giving themselves interest-free or low interest loans for personal purchases of property, jewelry, and other frivolities. According to the SEC and Tyco, these loans were never approved or repaid. These former high-level executives were accused for the following reasons:

1. Waiver of Loans to employees and themselves:
Kozlowski and Schwartz were accused of issuing bonuses to themselves and other employees without approval of Tyco’s Board of Directors. These bonuses in effect acted as de facto loan forgiveness for employees who had borrowed company money or were used to buy the silence of those who suspected the former CEO and CFO of fraud. The individuals who received loan forgiveness said that they were not aware that they were participating in anything illegal; they were told the program had the board’s approval. Tyco and the SEC say it did not.

After an internal investigation into the matter by Tyco, it was revealed that 11 out of 51 Tyco employees were discharged from the liability of repaying loans at Kozlowski's direction and without board approval. This amounted to $56 M in bonuses that in effect canceled out loans they had taken from the company's relocation program, adopted in 1995. This went to such an extent that in addition to waiving the loan repayment, extra money was provided to reimburse them for the tax consequences of the loans.


How did it happen?
Kozlowski, issued a memo in September 2000 to an HR officer that the board had approved more than $95 million in forgiving loans to employees, even though it hadn't. Kozlowski told Patricia Prue, Tyco's Senior Vice President, HR, that the loan forgiveness payments were meant as a bonus for their good work. In turn, Prue also received a forgiven loan of about $1.3 M.

Mark Foley, a vice-president of finance, prepared a memo signed by Schwartz, that showed the company would include the expense as part of other charges, rather than account for the loans individually as employee compensation.The total payout from the program was $96 M, of which Kozlowski received $33 M and Schwartz $16.6 M.

2. Selling of Company Shares:
Kozlowski, Schwartz, and Belnick were also indicted on charges of selling their company stock without telling investors, despite their obligation to do so under SEC rules. In sum, the three are accused of stealing $430 M dollars from Tyco International.

3. Misuse of Company Funds:
Kozlowski used company’s funds for personal expenditures, including a $15,000 umbrella stand, $97,000 for flowers and $2,900 for coat hangers. Some of the furnishings that lacked any "legitimate business purpose" included a $17,100 traveling toilet box; a $6,000 shower curtain; and $2,200 gilt metal wastebasket.

The company said Kozlowski misused $62 million of the company's coffers to purchase a $16.8 million apartment on Fifth Avenue in New York and $14 million for improvements and furnishings to the apartment. The executives lived lavish life on the company’s funds.

4. Avoiding sales tax on paintings:
Kozlowski bought roughly $13 million in paintings and was charged with conspiracy, tampering with physical evidence, falsifying business records and sales tax violations. The paintings included "Fleurs et Fruits" by Pierre Auguste Renoir and "Pres Monte Carlo" by Claude Monet.

How did it happen?
Kozlowski and his coconspirators generated false documents, such as invoices and shipping documents, to make it appear as though the artwork was to be shipped out of state and therefore not covered by New York state sales tax provisions. In order to thwart tax auditors, Tyco employees were directed to sign false documents reflecting the receipt in New Hampshire of artwork.

Kozlowski actually shipped empty boxes out of state and had an art consultant remove a $425,000 painting from his $17 million duplex apartment at the corner of 76th Street and Fifth Avenue and ship it to Tyco offices in New Hampshire. There, an employee allegedly signed for it before it was immediately returned to Manhattan and reinstalled in the apartment.



How was it revealed?
Kozlowski's downfall started in early January, 2002, when Irwin Nack, an investigative counsel to the superintendent of the New York State Banking Dept., came across a series of bank transfers that struck him as highly unusual. Within few days, a number of transfers had moved into the bank account of high-end Manhattan art dealer Alexander Apsis. From there, they were quickly moved to offshore accounts. Morgenthau had put 6-8 people on the Kozlowski case full-time, including investigators, analysts who specialize in economic transactions and financial records, lawyers, and paralegals.The team worked all summer examining subpoenaed documents, e-mail, and financial statements -- and built a much larger case against Kozlowski and other Tyco executives. It accused the former CEO and CFO Mark Schwartz of taking $170 M out of the company and pocketing $430 M more in tainted stock sales. From one small suspicion grew one of the biggest white-collar cases in history.