Breach of TRUST
“Sad but not Surprising”
India’s parliament has determined that Tata’s $50 million donation to HBS was given illegally.
India’s largest corporate group i.e. The Tata Group is owned by Public Charitable Trusts (i.e. Tata Trusts) whose beneficiaries are the people of India. These are not a personal family trusts. The Original will of the founder and family members was documented to be spent in India and also to fund the institutions set up by the founders through these trusts. As such, the Tata trust were given various tax exemptions much like a nonprofit or church in the United States. The requirement for this tax status dictates that funds be applied for public charitable purposes in India only as per the will of the settlors.
Disdainfully, this money was used in the largest international donation ever made to Harvard Business School instead of it being used for the poor, disabled and deprived classes etc. in India. As a result, it is being enjoyed by the wealthiest university in the world in the United States.
The Public Accounts Committee (PAC) which is the body within India’s parliament that discovered the findings is “aghast that the trusts are investing money in prohibited modes of investment despite the law which strictly prohibits Public Charitable Trusts from holding such assets”.
What’s worse is that Harvard, our alma mater, seems to have helped Tata, with its business savvy, to circumvent the law and enabling the $50 million donation. This was achieved by the Tata trustees setting up a new trust in India (Tata Education and Development Trust - TEDT) that did not have the restriction of applying its funds only in India. The funds from the founding fathers trust were transferred to this new trust (Tata Education and Development Trust - TEDT) and then funneled to Harvard. By doing this, not only are the trustees in a clear breach of trust but also the governance of our esteemed institution is prone to challenge.
HBS Dean Nitin Nohria was the main person responsible for arranging this donation from Tata to HBS. After he orchestrated the donation, he was named Dean of HBS and a board member of Tata.
India’s parliamentarians met last week and determined that Tata misused these funds that were meant to support the needy in India. As a result, Harvard may be morally obliged to pay back the $50 million. What is worse is that this act could raise highly undesirable ethical questions which for no fault of any of us (barring a few rotten apples amongst us) bring great disrepute to the great institution of Harvard.
What all is Dean Nohria bringing to our alma mater? 1st involvement in Panama Leak, now this Scam, what next?
Thank God for the Search Committee for not letting him buy his way to the position of President Harvard.
- Economic Times - PAC recommends probe into alleged tax violations by Tata Trusts
- Times Of India – Probe recommended into alleged tax violations by Tata Trusts
- Business World - PAC recommends probe into alleged tax violations by Tata Trusts
- Mumbai Mirror- TISS stops financial aid to students from backward classes
- Times Of India - CAG questions Rs 3,000 crore of investments by two Tata trusts