Rajat Gupta, chairman of the board of directors at Indian School of Business (ISB), who is currently caught in a controversy alleging him of insider trading in the US, has decided to resign from the board. This comes after the US Securities and Exchange Commission (SEC) filed charges against him for allegedly leaking confidential details to Galleon Group hedge fund manager Raj Rajaratnam. Sources said Gupta has offered to resign but the ISB board is yet to accept his resignation.
According to sources in the know, the chairman has submitted his voluntary resignation to uphold corporate governance norms. Earlier, ISB had stated that the allegations against Gupta are totally baseless and he would continue to be the chairman on the ISB executive board. Rumours are also rife that Gupta could resign as chairman of the board of Genpact, a leading BPO.
While Ajit Rangnekar, ISB Dean was not reachable for comments, sources said there has been enough pressure on the board on Rajat Gupta’s role in the institution. A strict instruction has been passed to ISB-ites through an internal mail which says not to get involved with the media calls. “As of now, Rajat Gupta is still on board as chairman and we have no confirmation about his resignation,? ISB spokesperson said. As planned, the board is meeting on April 2 and will have its graduation day on the same day.
The SEC had said Gupta has passed illegal tips about Goldman Sachs to hedge fund billionaire Raj Rajaratnam, the founder of the Galleon Group. He has been slapped with insider trading charges for allegedly leaking secret details to Galleon Group hedge fund manager Raj Rajaratnam about Warren Buffett’s plan to invest $5 billion in the company. The 62-year-old Gupta is one of the highest-ranking corporate executives implicated in the government’s wide-ranging insider trading probe which has resulted in criminal or civil charges against dozens of individuals.
Brand ISB was earlier severely injured after the resignation of former ISB dean Mendu Ram Mohan Rao, who was indicted in the Rs 7,800-crore Satyam scandal. Following it, the arrest of Anil Kumar, Director of McKinsey and co-founder of ISB, over the hedge fund insider-trading scheme, also hit the ISB brand.
But ISB is still putting up a brave front. “The ISB community is confident that Rajat Gupta will be vindicated. He continues to be the Chairman of the ISB Executive Board,” ISB had said in a statement last week.
Meanwhile, in a similar move, Gupta has tendered his resignation to GVK Emergency Management and Research Institute (GVK-EMRI), a non-profit organization. However, the board at GVK EMRI is also yet to accept his resignation.