morally reprehensible

Revelations about Tata ’s donation to Harvard “deeply disturbing and morally reprehensible”

 

“Nailed it” ....  That is how Duff McDonald, author of The Golden Passport, reacted to the recent Daily Caller article exposing Ratan Tata’s use of public funds to gift $50 million gift to HBS. 

 

Head of Corporate Governance at Columbia University, John Coffee has made it clear Nitin Nohira is “compromised”.  Ex-Chairman of US Business School Deans and current President of Baylor University Livingstone has made it clear that Dean Nohira is way out of bounds from what is morally acceptable behavior for a Dean. Now India’s Parliament has condemned the way Ratan Tata gave the $50 million to Harvard by using public Indian funds set aside for the poor instead of using his personal money. 

 

Experts from all angles- business, academia and politics-have weighed in condemning the misuse of funds and severe conflicts of interest that exist. The world is asking, “What will Harvard do? Repay the money? Fire Dean Nohira?” Or, will it “continue to project an uncaring, unfeeling image of elites who were born with silver spoons in their mouths oblivious to their privilege and unwilling to make amends for their apparent unethical behavior?

Harvard Not For Sale is pleading for Harvard to govern itself ethically. If it does nothing, the beating drum of change will only grow louder. Please clean things up before the cost is much greater for all of us. 

In case you missed the article, you can read it here

How does one of America’s most prestigious institutions catering to the elite manage to have its silver spoon taken from the most destitute? And how can such a revered institution of business management be so blind to the ironies of accepting questionable funds that go against every tenet of good governance? Recent revelations regarding the naming of Tata Hall at the Harvard Business School (HBS), if true, are deeply disturbing and morally reprehensible.

As reported in “The Times of India” and several other publications, a $50 million gift agreement brokered between the HBS Dean and well-known Indian business magnate Ratan Tata (who is an HBS alumnus) in 2010, resulting in the subsequent construction of Tata Hall in 2013, is now under investigation by the Indian government.

India’s Public Accounts Committee’s (PAC) sub-committee on Direct and Indirect Taxes has two principal concerns: first, the $50 million donation in question came directly from Tata Trusts, an Indian philanthropic organization, rather than Ratan Tata’s personal funds; second, this donation inappropriately took advantage of the tax-free status of donations from charitable trusts.

While Tata Trusts are often mistaken to be private family trusts, they are, in fact, registered public charitable trusts with funds belonging to the Indian public. The Indian government sub-committee investigating this matter has stated, “construction of [Harvard’s] Tata Hall did not amount either to charity or international welfare in which India was interested,” but instead was for the “promotion of personal interest of one/some of the trustees of various Tata Trusts.”

While the investigation is ongoing, assuming the government’s investigation proves these conclusions, what will Harvard’s moral obligation be? Return the funds, or rectify it in some other way?

The purpose of a public charitable trust in India is to benefit the country’s poor and downtrodden. But instead, by using these funds to construct Tata Hall at Harvard, public money has apparently been misdirected to the most privileged and wealthy in the world. Compounding this insult, in 2017, the Tata Institute of Social Sciences (TISS), previously a significant beneficiary of Tata Trusts funds, stopped financial aid to students coming from India’s most economically and educationally disadvantaged castes primarily due to funding deficiencies. The funds for the poorest in India have literally been redirected to the wealthiest.

 

Although not included in the ongoing PAC investigation, an equally important concern in the unfolding story is the conspicuous role played by HBS Dean Nitin Nohria in this now-questionable transaction. Five months before the announcement of the large $50 million Tata gift on May 4, 2010, Dr. Nohria was appointed Dean of HBS. His good fortune in landing such a large gift for the HBS endowment would initially seem logical for the new Indian-born dean and shouldn’t have seemed suspicious. But three months before the completion of Tata Hall in September 2013, he was appointed a non-executive director to the board of Tata Sons, the holding company of Mr. Tata’s companies.

 

Experts in corporate governance and management, in particular, Paul Pelosi Jr., former Speaker of the House Nancy Pelosi’s son and Columbia Law’s John C. Coffee have raised serious questions about the propriety of a university dean serving on the board of a company that is also a major donor. Professor Coffee has even asserted, “the Dean is thereby compromised.”

 

While the action to appoint Nohria to the Tata board raised more than a few eyebrows in the U.S., the subsequent turmoil within the Group has served to only heighten these concerns. Against a backdrop where the former Chairman Cyrus Mistry, who had been brought in to restructure the large and complicated operations of the Tata Group with serious resistance from Ratan Tata, Dean Nohria voted him out along with three new board members — all associates of Nohria, including his brother-in-law.  (One of these new board members has a questionable track record of corporate ethics ((i.e., insider trading)) and two of them had attended just a single Tata board meeting prior to the vote to remove Chairman Mistry.)

Another prominent casualty was former Tata Sons board member and Mistry supporter Nusli Wadia, who had 37 years of experience as an independent director of Tata Steel, 35 years in Tata Chemicals, and 18 years for Tata Motors. In a phone interview, Mr. Wadia explained “Mistry was bringing in more ethics and balance to the company. He brought in a much better corporate governance framework; and that upset Ratan.”  In the two months following the boardroom coup, the value of Tata’s listed companies dropped by $17 billion.

 

Because of the ethical questions raised in the way the funds were donated to HBS and the subsequent impropriety of a perceived quid pro quo between Dean Nohria and Ratan Tata, it would appear that Harvard has some explaining to do. The nature of Mr. Tata’s gift may prove to be a public relations disaster if the Indian government’s investigation determines the funds should have never been taken from poor Indians and sent to rich westerners.

 

This kind of lapse in moral behavior is the reason so many people have lost faith in important institutions that have provided clarity in the past. Can a school, indeed the preeminent business school that holds itself out as the standard for best practices in management, really afford to avoid addressing a situation where its actions have been less than exemplary? Already a groundswell of Harvard students and alumni are demanding answers to the institutions deafening silence. Will the institution own up to the problem and remedy the situation? Or will it continue to project an uncaring, unfeeling image of elites who were born with silver spoons in their mouths oblivious to their privilege and unwilling to make amends for their apparent unethical behavior?