Sterlite has announced an increase of 50% in net profit for the first quarter ending June 2010. But one of its vice-presidents is languishing in jail, because the management screwed up.
Varadharajan, Vice-President (Indirect Taxes) for Sterlite based in Tuticorin was arrested on Friday night on the charges of Sterlite evading excise duty to the tune of over Rs 700 crores.
One would have expected that the company will work towards getting the employee out on bail on Monday, but that has not happened. The next hearing is apparently only on Thursday.
It is unclear to me how a vice-president should be held liable for such an act. If anything, the Chief Executive or the Finance Director (in the board) should have been hauled up in front of the court. Instead, we see the CEO M.S. Mehta announcing the company results, while a lower level employee is thrown in jail.
It is time the corporate top men - full time executive directors and chief executives - take full responsibility for the acts of their companies and not get their lower level employees undergo punishments on their behalf. Any decision to pay or not to pay excise duty would have only been taken by the CEO along with the approval of the board, given that the amount disputed is over Rs 700 crores.
It is also a wake-up call for the professional managers. Never accede to what the owners and directors want you to do, if you think it is against the law. You can always quit the company and find another job. It is not worth spending even one day in a jail, for some fat cat in London to make obscene profits.