Friday, July 20, 2012

... And The Face of all that is Shamefully Wrong at ISB

Now look at it this way again to get a better perspective. Soon after the SEC investigations and allegations against him were made public, here is what Rajat Gupta did-or had to do-in the United States. He took ‘leave of absence’ from the $1.4 billion venture fund New Silk Route which he had founded. He quit the boards of Goldman Sachs and Procter & Gamble. His resignation was also accepted by the boards of Genpact, American Airlines and Harman International. In fact, even as this issue goes for printing, we get news that Rajat Gupta has resigned as Chairman of the Governing Board of the Public Health Foundation of India. Some of his colleagues in this board are Nobel Prize winning economist Amartya Sen and Planning Commission Deputy Chairman Montek Singh Ahluwalia. But Gupta continues to be the Chairman of Board of ISB. What is strange is the manner in which Gupta is clinging on to ISB, the B School he helped found by using his amazing network of corporate contacts across the world. If he can quit his positions of trust and authority in the United States as a result of the serious charges against him, why is he further damaging the already damaged reputation of ISB by clinging on? In fact, the official response from ISB is nothing short of brazen, something you would expect from the office of corrupt politicians we all love to hate. It says, “ We note that the U. S. SEC has initiated administrative and civil proceedings against our Chairman, Rajat Gupta. We also note the statement of the counsel for Rajat Gupta, which asserts that the allegations are totally baseless. The ISB community is confident that Rajat Gupta will be vindicated. He continues to be the Chairman of the ISB Executive Board.”

This is not the first time that ISB has been publicly embarrassed because top people involved with the B School have been found involved in notorious scams. The other big name that shamed ISB was M Rammohan Rao, the former Dean of ISB. Rao also happened to be a Board member of Satyam, whose promoter B Ramalinga Raju is now accused of monstrous financial skullduggery. Rao happened to preside over a Board meeting of Satyam that took the controversial decision to buy out Maytas Properties and Maytas Infrastructure, both firms promoted by the family of Ramanlinga Raju. The former Dean of ISB, Rao was an ‘independent’ director of Satyam with the responsibility of protecting the interests of the company and its shareholders. Quite clearly, Rao brazenly failed to perform his duty and would probably have got away with it if other shareholders had not raised a hue and cry about that controversial Board decision of Satyam. Even when the decision of Satyam and the Board was slammed by one and all as one of the worst examples of crony capitalism, Rao remained with the ISB. It is only when Ramalinga Raju made a public confession of his wrong doings and Satyam virtually collapsed that Rao quit as the Dean of ISB. And of course, I have already talked about Anil Kumar, the Ex-Mckinsey honcho and co-founder of ISB who was forced to take ‘leave’ from ISB when the U.S. SEC formally charged him with insider trading back in October, 2009. He is now the star witness in the trial against Rajratnam.

The obvious question to be asked is: what exactly is going on at ISB, that is touted as one of the most prestigious B Schools in the world? Is the institution being run by academicians or by wheeler dealers who conveniently take leave when their follies are exposed in public? Equally important, if Rajat Gupta-either voluntarily or not-has quit his positions in almost all other companies and institutions, what kind of message is being sent by ISB about its adherence to ethics and good governance when Gupta stubbornly clings on to the helm at ISB?

This magazine had two years back ranked ISB as the number one B-School in India. However, good faculty and teaching alone doesn’t make an institution great. It is now clear ISB has become a symbol of all that is rotten in Indian corporate culture. Our corporate titans think that money can buy everything. So ISB has a big campus and has got the money to get the best faculty to come and teach. But education is more than having moneybags and wheeler dealers. It is primarily about running the institute with real educationists. However, just like the Indian corporate sector, ISB seems to believe in running itself with the help of wheeler dealers. And just the way the empty headed corporate heads of India blindly follow the McKinseys of the world without questioning their intellect or commitment, ISB has been getting one after the other fixers on board with extremely questionable ethics and not necessarily high intellect. It is a shame that they have not yet forced Rajat Gupta to resign. If this is the example it is setting for its students in terms of ethics, the Financial Times must stop ranking ISB in their future surveys. Or, is ethics not important when it comes to judging a B-School?