Professor Krishna Palepu and Dean Nohria. Birds of a Feather
Professor Palepu is the Ross Graham Walker Professor of Business Administration at Harvard Business School. He also was a Senior Associate Dean at the Harvard Business School for several years, overseeing the school's research, and its global initiative. Ironically, he has also been quoted often for his views on corporate governance.
We have already properly introduced Dean Nohria. What connects Dean Nohria and Professor Palepu? They both have been key players in serious cases of insider trading and corporate malfeasance but still manage to be employed and adored at Harvard Business School. Let us explain. Professor Palepu was the key figure in the biggest corporate fraud case in India’s history. Prof Palepu was found guilty and fined $430,000 for his role as an independent director in the Satyam scandal. Yet he still teaches at Harvard and is often quoted regarding cases of corporate governance. What gives? How about Dean Nohria?
Mr. Palepu played a major role in the biggest fraud cases ever in India’s history. He was found guilty and fined $430,000 for his part in the Satyam scandal.
In an email to the Tata Group board (Nohria is a Tata board member) former Tata Group Chairman, Cyrus Mistry stated, “I have often presented to the trustees, before and after Tata Sons board meetings. This created alternative power centers without any accountability or formal responsibility, invalidating the very governance role of nominated directors, who I would assume would use their own independent judgment and discharge their fiduciary duties, were reduced to mere postmen. As an example, once, the trust director (Nitin Nohria) stepped out of a Tata Sons board meeting in progress that too for more than an hour, keeping the rest of the Board waiting, in order to obtain instructions from Mr. Tata. Such a work pattern has also created the added risk of contravening insider trading regulations and exposed the Trust, apart from exposing the trustees to potential tax liabilities. These circumstances forced me to circulate a note on corporate governance in order to clarify the distinct roles of Tata Trusts, Tata Sons Board, and the Boards of the operating companies”.
Independent directors are paid to protect shareholder interests. Dean Nohria has his PhD in Corporate governance. How can he and Professor Palepu continue to be looked to as experts in the field of corporate governance after having committed these acts? Alumni and students need to demand an explanation especially as Dean Nohria is being seen as the new President of Harvard.
And what about Harvard? What is the University doing to explain or justify their continued employment at Harvard? Are there any policies in place?
Governing external behavior or engagements for profit? Mike Milken, the respected inventor of ‘junk bonds’ who was later jailed for insider trading, ever be allowed to represent our University regarding ethics unless he, at the very least, addressed and admitted his wrongdoing?
One thing is clear, we need to adhere to a code of ethics at such a prestigious institution or our brand will remain up for sale globally.
An example of Harvard being sold out is in the case of Professor Nohria becoming Dean of Harvard Business School. Dean Nohria was named Dean 2 months after Tata donated $50 million to the school. Shortly thereafter Tata appointed Dean Nohria as a Tata Director. A glaring conflict of interest that no other university would allow. In a similar case Professor Palepu was found guilty similar conflicts of interest and insider trading and was fined a much higher amount than other directors on the board of Satyam for his role. Why did Harvard not do anything?
It would not be a surprise to have Prof. Palepu now canvassing and lobbying for Dean Nohria’s elevation to the President’s Post.
It’s time Harvard drafted and enforced a code of conduct for Professors and Deans who serve as company consultants and board members. If any member lends his name to a board, (s)he is also lending the name of Harvard, and should be made more accountable. Similarly, in cases of corruption or unethical behavior they should be debarred from the pious Academic institution.
Will Harvard act against people like Professor Palepu or Dean Nohria?
If Dean Nohria becomes the President of Harvard, do we expect he will enforce ethical standards? It’s like a cat amongst pigeons. Irreparable damage is being done. It is time to align our efforts to safeguard Harvard’s reputation.