Thaindian News

Hyderabad, March 21 (IANS) Three weeks after the US Securities and Exchange Commission (SEC) slapped insider trading charges on him, Indian-American businessman Rajat Gupta has offered to resign as chairman of the Hyderabad-based Indian School of Business (ISB) which he founded a decade ago.

Gupta has requested the board that he be relieved of his responsibilities, Sriram Gopalakrishnan, director of marketing and communications at the ISB, told IANS here Monday.

He said the board will consider Gupta’s request when it meets April 2.

Gupta, who is facing insider trading charges in the US, will not attend the board meeting, which is also likely to pick his successor.

“Rajat Gupta has requested the ISB Executive Board to relieve him of his responsibilities till his pending matter with the US SEC is resolved,” said a statement by the premier business school.

“This, and the appointment of the new chairman, will be tabled at the upcoming board meeting April 2,” the statement added.

Gupta, former chief of global consulting business McKinsey & Co, has been accused of having passed on confidential information on Goldman Sachs Group Inc. and Procter & Gamble Co. (P&G;) to hedge fund manager Raj Rajaratnam, founder of Galleon Group LLC.

Gupta, an alumnus of the Indian Institute of Technology-Delhi and Harvard Business School, allegedly disclosed information to Rajaratnam about a $5 billion investment in Goldman by Warren Buffet’s Berkshire Hathaway Inc.

Gupta, however, has denied the allegations terming them baseless. During the last three weeks, he quit from the boards of many firms including Goldman, P&G;, American Airlines and Genpact Ltd.

ISB, the brain child of Gupta, was ranked as the 12th top business school in the world by Financial Times, London, last year.

Gupta, 62, co-founded ISB in 2001 with a group of leading industrialists and academicians from India and abroad. He has since been chairing both executive and governing board.

He has been instrumental in the meteoric rise of ISB, whose board comprises the who’s who of Indian business and top global CEOs.

The 32-member executive board comprises Indian CEOs including Adi Godrej, Chanda Kochhar, Y.C. Deveshwar, Rahul Bajaj, Pramit Jhaveri and Sunil Mittal.

The business school also has a governing board comprising CEOs of global corporations and headed by Gupta but it is the executive board that takes decisions.

From an initial class of 126 students, the school has grown to 570 students. Over 2,300 alumni of the school have made a mark in business and industry.

ISB, which recently set up its second campus in Mohali, Punjab, is affiliated with Kellogg Graduate School of Management (Northwestern University), Wharton School (University of Pennsylvania) and London Business School,

After US SEC had filed insider trading charges against Gupta on March 2, the ISB had come out with a statement supporting him.

“The ISB community is confident that Rajat Gupta will be vindicated. He continues to be the chairman of the ISB Executive Board,” the ISB said in a statement.

Gupta had also sent mails to his friends in the board and the faculty denying the charges.

However, pressure was mounting on the board to take a call on Gupta as there were apprehensions that the charges could affect the ISB brand as Gupta was the second top official of ISB to face allegations of insider trading in the US.

The business school had already come under cloud after one of its co-founders, Anil Kumar, was named an accused in the Galleon insider trading case.

Anil Kumar, the McKinsey & Co director, was asked to step down voluntarily from the ISB board in Oct 2009.

Earlier the same year, India’s biggest corporate fraud at Satyam Computers also cast its shadows on the ISB. Satyam founder and chairman B. Ramalinga Raju, who confessed to the fraud, was also on the ISB board.

Another board member and former dean Rammohan Rao, who was Satyam’s independent director, quit following allegations that he failed to protect the interests of shareholders.