When Harvard plays a role in dirty boardroom Politics- Thanks to the Dean
In October 2016, there was a high decibel boardroom coup in India’s largest conglomerate Tata Sons. Though Tata had once been regarded as an ethical organization, rampant allegations of corruption and fraud (H1B US fraud case and Air Asia corruption charges etc.) had put the conglomerate under scrutiny. As a result, when a few board members orchestrated a completely unforeseen ouster of its Chairman who had been seeking to clean up the corruption, the markets responded in a massive selloff of the company’s stock which saw Tata lose $16 billion of its value in a matter of days.
So, what does Harvard have to do with this coup in a Third World country?
Global experts in management and corporate governance such as John C Coffee, Head of corporate governance at Columbia University and Paul Pelosi Jr have raised serious questions on the role played by Harvard Business School (HBS) Dean Nitin Nohria in the stage-managed Tata boardroom drama. Was Nitin Nohria the villain in this Saga? In an article titled 'Why is the Dean of Harvard Business School Implicating Himself in an International Business Coup?’* Omari West writes, "Two years before Nitin Nohria rose from relative obscurity to the Deanship of Harvard Business School in 2010, the seeds of his current ethical dilemmas were already being sown”. Making a connection between the massive donation by Tata to Harvard Business School (incidentally just before Nohria’s promotion) and Mr. Nohria’s appointment as Dean of HBS, Mr. West writes, "Nohria’s appointment to the board of such a large donor firm did not raise eyebrows at the time; but in hindsight it presaged the drama that would unfold at the company later. In a surprise boardroom coup on October 24, Nohria along with Amit Chandra (his brother in law) & other Tata Sons Directors voted to oust current Tata Sons Chairman Mr. Cyrus Mistry”.
John C. Coffee, Director of the Center on Corporate Governance at Columbia Law School, stated, “A Dean or University President cannot be an adequate independent director on the board of a company that is a major donor. Tata is a very major donor to HBS and its Dean is thereby compromised."**
He further raises ethical questions about “corporate governance in the context of Nohria’s connection with Ajay Piramal (indicted in an insider trading case and advisor to the HBS Dean) as well as Nohria’s brother-in-law Amit Chandra (of Bain Capital India) who were brought on the board of Tata Sons, just before Cyrus Mistry’s sacking. These two individuals have a questionable track record in corporate ethics and had not even attended a boardroom meeting before they decided to fire Cyrus Mistry. He writes, "It is precisely this type of incestuous inter-corporate dealing among directors that an academic of Mr. Nohria’s stature would be expected to guard against. That a dean of one of the world’s most prestigious academic institutions could end up embroiled in such apparent violations of corporate ethics is a cause for alarm in some circles. Not least of which because Tata Sons owns several large publicly traded subsidiaries, including Tata Motors and Tata Communications, both of which are listed on the New York Stock Exchange. The matter could have significant implications for the future of the company and India’s reputation as a global corporate leader".
Cases have been filed against Prof. Nohria, Ajay Piramal and Amit Chandra to illegally fire Cyrus Mistry and for overlooking their duties as independent directors of the multi-billion-dollar group. According to various news coverage and sources, Prof. Nitin Nohria before the board room meeting had told Cyrus that if he did not resign, he would be fired in the boardroom meeting. Read Nirmalya Kumar 1*** and Nirmalya Kumar 2
Here are a few questions that we want to pose before the Harvard President’s Search Committee:
Can a short-listed candidate for the President of Harvard also serve in one of the most powerful positions at a major Harvard donor?
Doesn’t it give the search committee pause that Dean Nohria (supposedly an authority on corporate governance) forced out the Chairman of a company whose GDP is greater than many countries to resign while ignoring any of the required steps to ensure proper due process for such a consequential decision?
- Does Dean Nohria’s ability to fundraise overshadow his complete disregard of business ethics in practice? Is this how low Harvard has stooped to further enrich itself?
- How would students and faculty in more ethically sensitive parts of Harvard University perceive this clear conflict of interest? Is he the head of academic institution or the head of a Corporation? Or shall we say ask (-) an #academicprestitute with hidden agendas and a deficit of ethics?
*'Why is the Dean of Harvard Business School Implicating Himself in an International Business Coup?
**Tata is a very major donor to HBS and its Dean is thereby compromised."
***Read Nirmalya Kumar 1.
****Read Nirmalya Kumar 2.