Indian Merchants Chamber has called upon the Union Government, Sebi and Institute of Chartered Accountants of India (ICAI) to act quickly to plug the loopholes in the provisions of relevant Acts and rules for ensuring accountability and transparency in corporate governance.

Shocked by the revelations of a massive fraud perpetrated by Ramalinga Raju, Chairman of Satyam Computers, on his company's stakeholders, the IMC President M N Chaini, said that the episode had tarnished image of the Indian corporate sector, particularly those belonging to IT industry, in the eyes of international investors.

Apart from causing serious damage to the clean reputation of Indian corporate sector, the fraud, said to be the largest in the Indian corporate history, caused immeasurably large losses to investors around 75% of whom were said to be senior citizens, he said.

The massive fraud, that was quietly being hatched away from the public eye for a few years, should not have escaped the eagle-eyed scrutiny of auditors both internal and external. The regulators must quickly find out whether it was also a case of unholy complicity and abetment. At any rate, it is necessary to devise strong barriers to recurrence of such happenings.

Chaini asserted that the non-executive Independent Directors could not legitimately be held accountable or criminally liable for their companies' alleged malfeasance. "It is ridiculous to hold the non-executive Directors guilty for the wrongdoing of the full-time executive directors who are hands-on with the day-to-day administration of the company," the IMC President said.

"The Chamber has asked to the Union Government to expeditiously amend the relevant provisions of the Companies Act, Negotiable Instruments Act and Criminal Procedure Code for insulating the Independent Directors from the criminal and other liabilities ensuing from the wrongdoings of their corporates.

"If this is not done, grave injustice may be caused to the community of Independent Directors.  The Chamber apprehends that this episode might scare away a large number of highly talented and experienced Independent Directors from rendering service on the Boards of the corporates, dealing a severe blow to corporate governance in the country. Therefore, we call upon the government and the regulators to initiate effective prompt action, well before any damage is caused", Mr Chaini said.