1. In bullet form, identify the corporate governance issues featured in the case.

 Promoting objective, ethical and responsible decision making.

 Transparency
 The importance of Code of Business Conduct and Ethics
 Board independence
 Accountability

2. In bullet form, what are the alternative courses of actions which the independent
director might have rather done? Identify the possible business, financial or
governance consequence of each course of action? Make sure to provide
supporting evidence from the Code of CG, Code of Ethics or any other policy or
standard to bolster your answers.

 Mr. Neil Shah should have refused to meet Paul Joseph. He should have
disclose to the board members the information he has obtained from Paul.



• • • No, should not have agreed to meet Paul Joseph. As soon as

the words “irregularity in the tender process” raised his antenna, he
should have thanked Paul for the information and replied that HFC
would look into the matter. Having met Paul, he has violated The
Code of Conduct of HFC which is in compliance with the Corporate
Governance Clause 49 sections (b) and (c). The high stakes involved
also creates significant incentive for unethical behavior.
• • • We recommend that Mr. Neil Shah immediately calls for a board
meeting, disclose to the board members his actions and the
information that he has obtained from Paul. He should also recommend
the board members to set up an independent team to investigate the
irregularities in the bidding process. The above recommendations
would result in the board members deciding to remove him from his
incumbent position in HFC until the investigation gets over.

3. Which principles, if any, of corporate governance may have been followed or

violated in the case?

Followed principles:
  The Board have at least three independent directors.
 Independent directors of the Corporation possess necessary
qualifications.
 Independent directors of the Corporation have served for 6 years which
doesn’t violate with the maximum tenure of an independent director.
 The Board have established Investment Committee, which allows for
specialization in issues and leads to a better management of the Board’s
workload.

Violated principles:

 The Audit and Ethics Committee of the HFC board is chaired by a one
person (Neil Shah). This violated recommendation 3.2 of SEC Code of
Corporate Governance stating that the Chairman of the Audit Committee
should not be the chairman of the Board or any other committees.
 Neil Shah has violated The Code of Conduct of HFC which is in
compliance with the Corporate Governance Clause 49 sections (b)
and (c).
 The Board has inefficiently implement and monitor its compliance with the
Code of Business Conduct and Ethics and internal policies.
 Independent director (Neil Shah) does not promote and exercise
transparent, objective, and independent decision making.
 Independent director does not exercise duty of loyalty.
 Independent director does not act on a fully informed basis.