Professional Documents
Culture Documents
1. Legal compliances –
Fera violation in which The ED found out that around $ 83 million was transferred into
India as per ITC's instructions on the basis of the accounts maintained by the Chitalia
group of companies. According to the ED officials, the ITC management gave daily
instructions to manipulate the invoices related to exports in order to post artificial profits
in its books. A sum of $ 6.5 million was transferred from ITC Global to the Chitalias'
companies and the same was remitted to ITC at a later date.
Shareholders Manipulation – In the last quarter of 1997 ITC share price underwent
dramatic ups and down. In October it reached to 652.90 later it fell to around d 525. It
again rose to 601.50 in November after reaching 488.30. In December it again rose to
648 and then touched a low of Rs 526. ITC half yearly results were announced on 21st
November 1997 on 20th November, the share price increased from 489.70 to 505.40 on
the NSE while 506 on BSE. There was a whooping 28.7 million shares changed hands
on the NSE while BSE reported 11.1 million share traders, the highest in the history of
ITC’ s stock.
Companies Act – According to companies act they violated a number of laws and
regulation pertaining to the FERA violation. There were no efficient corporate
governance practices in the company. The Mps wanted the DCA to investigate into the
matter as they felt ITC contravened various sections of the Companies Act and willfully
and deliberately misinterpreted information causing loss to shareholders. After that they
were penalized by Section 68 which states offences by companies.
Corporate Citizenship - ITC was forced to take back rice from Iraq when the gulf war
started the rice was lying in the warehouses so ITC tried to export it to Sri Lanka and it
was not successful as the rice were starting to rot already which was a big issue in
parliament of Sri lanka and this forced ITC to import the rice back to India which was not
allowed under FERA. So the Directors misused the ethical conduct by exporting rotten
rice.
Trusteeship – The board of directors was arrested as there involment of share price
manipulation exporting of rotten rice to Sri Lanka against FERA regulations which was a
direct indication of breaking the trusteeship or the moral values of a person or company.
Starting from October30, 1991 to November5, 1991 more than 15 Directors of the
company was arrested.