Academician or Tata’s Trojan Horse
In the entire Tata boardroom episode one man who definitely exceeded his mandate was none other than HBS Dean and Director at Tata Board- Prof. Nitin Nohria. So who is Nitin Noharia? How and why did he get so much prominence at the Tata Board? Is it because of his academic track record (Incidently he is NOT from Harvard but an outsider) or his willingness to promote a business house agenda with there money and his power.
His profile at HBS read, ‘he has served as co-chair of the Leadership Initiative, Senior Associate Dean of Faculty Development, and Head of the Organizational Behavior unit. Dean Nohria's intellectual interests centre on human motivation, leadership, corporate transformation and accountability, and sustainable economic and human performance’.
Nohria, son of the former Chairman of Crompton Greaves, Kewal Krishan Nohria, was appointed to the Tata Sons board in September 2013. It is in public domain, that Tata had made a generous donation of $50 million to Harvard Business School in 2010 which helped Nohria get appointed as Dean of HBS. Harvard Business School had said at the time that this was the largest gift from an international donor in the school’s 102-year history. Though prima facie its not illegitimate for a big donor to play a recommendatory role in the school’s next Dean’s appointment. It was the possible acts of corruption, ethical misconduct and conflict of interest that followed his appointment as HBS Dean were what raised alarms across the world.
The real problem is how the Dean of HBS became a lobbying person for corporate interests across the world. As per reports in the media, Prof. Nohria and his brother in law Mr. Amit Chandra played the role of corporate henchmen to remove Mr. Mistry’s as the Executive Director of the Tata Group. The legal charges filed by Mistry in the court, allege that the newly inducted directors Amit Chandra and Ajay Piramal compromised on their fiduciary duty when they should have abstained from voting. “The three newly inducted independent directors had barely attended one board meeting and yet have purported that it was more than adequate for them to form a judgement over how a complex group of companies was being run and that its executive chairman who had run the Tata group for a period of four years must be removed,” said the affidavit.
Mr. Amit Chandra, country head of private equity firm Bain Capital, Mr. Ajay Piramal, Chairman of Piramal Enterprises Ltd, and Venu Srinivasan, Chairman of TVS Motor Co., joined the Tata Sons board on 25 August, 2016. The ouster of Mistry happened on 24 October, 2016.
As per the affidavit “Not only are they (Nitin Nohria and Amit Chandra) related, they have also been consultants to and earned revenues from the companies which were under the control of Ajay Piramal.”
Nohria has been also blamed for knowing the financial fraud in an Air Asia deal, he concealed the information from the Board of Directors and not reporting it. It has been widely reported how he left a board meeting for an hour to take instructions from Ratan Tata. In an email from Cyrus Mistry, former Chairman, Tata group to Tata Board has made serious allegations on role of independent directors- “I have often presented to the trustees, before and after Tata Sons board meetings. This created alternative power centres 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) had to leave a Tata Sons board meeting in progress for almost an hour, keeping the rest of the Board waiting, in order to obtain instructions. 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”.
The Securities Exchange Board of India and Bombay Stock Exchange (India’s largest stock exchange) started an investigation into this act as reported by the media. Even if Prof. Nohria has not committed any criminal offense but India’s biggest stock exchange opening investigation into his actions and Prof. Nohria (along with his brother in law) acting as henchmen of corporate interest is nothing less than ethical malafide.
Few allegations made against Prof. Nohria which he should explain in form of a clarification:
- As Dean of HBS, would it not be conflict of interest for Dean to become a Director in a company where one party is donor to HBS?
- Does it behove a Director who doubles as prof of ethics to step into a Chairman’s office ask him to resign or he would be fired?
- Did he walk out of a board room meeting to get on a phone call? Considering no form of outside communication is allowed during a Board Meeting.
- Who did he make a call to?
- Is India’s Securities Exchange Board of India and Bombay Stock Exchange investigating a case of insider trading where the Dean of HBS is a possible accused?
- When did he first know of Air Asia fraud? And what actions did he propose as a Board Member to unearth the fraud?