Genpact, IIT, ISB keep the faith in Rajat Gupta

Rajat Gupta, America’s latest whipping boy for corporate malfeasance, may have had to resign from the boards of Goldman Sachs and Procter & Gamble, but Indian outfits including Genpact, IIT Council and Indian School of Business (ISB), are standing by him.

Gupta, a 1971 alumnus of Indian Institute of Technology (IIT), Delhi is a member of IIT Council — the umbrella organisation set up by ministry of human resources development (HRD) and chaired by the HRD minister Kapil Sibal — and chairman of the governing board of ISB, ranked 13th globally by Financial Times.

Referring to the assertion of Gupta’s counsel that the US Securities and Exchange Commission (SEC) allegations are “totally baseless,” ISB spokesperson Sriram Gopalakrishnan said “the ISB community is confident that Rajat Gupta will be vindicated. He continues to be the chairman of the ISB Executive Board.”

“SEC has not contacted Genpact in this investigation and as far as we are aware, neither Genpact nor its shares are involved,” Genpact spokesperson Nandini Kochar said in a statement.

Confirming that Gupta continues to be Genpact’s chairman, Kochar added in an emailed statement, “As the matter is in litigation, it would be inappropriate for us to comment further.”

Experts on ethics and governance pointed out that it is nothing short of double standards that Gupta chose to resign from the board of institutions in the US while remaining on the board of Indian institutions.

“Is it because there is lesser scrutiny here?” asked a senior executive at a multinational business advisory agency that advises clients on business ethics and corporate governance. “It reflects the poor ethical and governance ecosystem that organisations here have come to tolerate.”

For ISB, this is the second time that a senior leadership member is caught in high profile corporate governance scandal. In 2009, M Rammohan Rao, the then dean of the Hyderabad-based management school, resigned from his position after his implicit involvement in the Satyam corporate accounting scandal as a director on the board of the company came to light.

Calls made to Kapil Sibal went unanswered.

Emails sent to both Gupta and his counsel Gary P Naftalis too remained unanswered.

Satyam founder B Ramalinga Raju confessed in January 2009 that he had cooked the books of the company to the tune of `7,163 crore.

Gupta continuing as the ISB governing board’s chairman goes against that precedent.

To avoid confusion, situations like these should be included in the code of conduct that binds board members of organisations, said Ganesh Ramamurthy, director, governance, risk and compliance at KPMG. “That said, the bigger challenge is to prevent code of conduct just remaining on paper and not being implemented in spirit.”