Rajat Gupta steps down from ISB board

Updated on: Wednesday, March 23, 2011

Bringing down the curtain on the fortnight-long suspense, Indian School of Business (ISB) Chairman Rajat Gupta offered to quit the board till his pending matter with the US Security Exchange Commission is settled.

The matter will now be placed at the next board meeting on April 2. If it is accepted, one of the other members of the board, which includes N R Narayanamurthy, HDFC’s Deepak Parekh, Bajaj Auto’s Rahul Bajaj, ITC’s Y Deveshwar and Godrej’s Adi Godrej, among others, could take up the post.

Gupta, the former managing director of global consulting firm McKinsey, was one of the founders of the ISB in 2001. He has been charged with insider trading by the Security Exchange Commission (SEC) in the US.

The allegation against Gupta, who has claimed to be wrongly accused, was that he had leaked confidential information about Goldman Sachs and P&G in 2008 and 2009 to Galleon hedge fund manager Raj Rajaratnam, who used the details to make huge profits. Consequently, Gupta quit the boards of Goldman Sachs, Proctor & Gamble and Genpact.

This is the third time that the ISB has found itself in a controversy because of the alleged misdoings of its bigwigs. Anil Kumar, a director on the board and also from McKinsey, had to quit after being charged with stock market misconduct in the US. Kumar accepted the charges and left. In 2009, ISB’s dean Rammohan Rao had to step down after the Satyam scandal broke. Rao was on the board of Satyam at a time when the Rajus were cooking up their books and siphoning off cash from their company. Rao is now being tried for various violations of the Companies Act in a Hyderabad case.

Analysts, however, said the reputation of the institution, as a provider of good management education would not be sullied as a result of the Gupta episode.

“Nonetheless, the bosses have to look inward to figure out why scandals about their top guns break out with such amazing regularity,” a professor at ISB told TOI on the condition of anonymity. ISB, which has overcome teething problems, is now on course to establish its second branch in Mohali. The Mohali branch will become operational in 2012. Besides a meeting of the executive board of the governing council, April 2 will also be the convocation day for the present batch of ISB students.

IN EXIT MODE

• Gupta, the former managing director of global consulting firm McKinsey, was one of the founders of the ISB in 2001

• After Anil Kumar and Rammohan Rao, this is the third time that the ISB has found itself in a controversy because of the alleged misdoings of its bigwigs.

Rajat Gupta steps down from ISB board

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