DMK leader slinks away from a Tata board

PV Kalyanasundaram, an independent director on the board of Tata Communications, resigned on May 20, citing personal reasons. Mandatory disclosure to the stock exchanges by the Tata group firm listed on the Bombay Stock Exchange and the New York Stock Exchange would have gone unnoticed had it not been for the director’s affiliation to the Dravida Munnetra Kazhakam (DMK).

A 53-year-old lawyer, Kalyanasundaram who has been on the board of Tata Communications since 2005, also happens to be an organising secretary of the DMK that is currently embroiled in a corruption scandal involving allocation of spectrum or airwaves to cellular telephony firms.

Senior party functionaries A Raja and Kanimozhi are in judicial custody and have been lodged in Tihar jail.

Kalyanasundaram’s position on the board of a telecommunications firm raises questions about conflict of interest, especially as the DMK has handled the telecom ministry at the Centre for a good part of the past decade.

A close confidant of DMK leader M Karunanidhi,

Kalyanasundaram has been seen in the constant company of the leader ever since Karunanidhi’s daughter Kanimozhi was arrested and interrogated by the Central Bureau of Investigation.

“Kalyanasundaram was nominated by the government of India as an independent director on the board of Tata Communications in September 2005,” a Tata Communications spokesperson said. “We cannot comment on his political affiliation, if any or the reason for his resignation.”

The government of India still holds 26% equity stake in the company that was once known as Videsh Sanchar Nigam Ltd or VSNL.

However, the 2009-10 annual report mentions only two directors as government nominated — Manish Sinha and AK Srivastava.

“A few weeks back, the government wrote to the company withdrawing the nomination of Kalyanasundaram and he put in his resignation,” a senior Tata Comunications executive said. He did not want to be identified.

Similarly, from a corporate governance perspective, Tata Communications seems to have overlooked the need for disclosing the political affiliation of its independent director, which is not in keeping with the group’s earlier stance on similar issues.

In the past, when the Tata group faced similar situations — where their stalwarts either decided to join a political party or take up political office — they were politely asked to demit office in Tata companies.

Cases in point are Minoo Masani, who was affiliated to the Swatantra Party, who had to reluctantly resign after JRD Tata asked him to do so, although the two continued to have the best of relations.

So too, was Nani Palkhivala, who voluntarily stepped down from Tata directorships after he was nominated as India’s ambassador to the US during the Janata party rule.

Although Palkhivala had represented Indira Gandhi in the court on occasions, in view of his standing as the country’s leading expert on the Indian Constitution.

“If indeed it is true that the  director was a senior functionary with executive role in the political party, it would have been desirable to disclose that information to the shareholders at the time of nominating his candidacy for election as an independent director,” said professor N Balasubramanian who teaches corporate governance at the Indian Institute of Management in Bangalore.

While the Tatas were known to be fastidious about political affiliations then and maybe even now, another heavyweight conglomerate Reliance Industries has Yogendra Trivedi, a board member, a tax expert who also doubles up as the treasurer of Nationalist Congress Party.