Sucheta Dalal :The Keshub Mahindra Conundrum
Sucheta Dalal

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The Keshub Mahindra Conundrum   

June 29, 2010

The Bhopal case judgment should be an eye-opener for corporate India to clean up its act

On 8th June, 26 long years after the Bhopal gas tragedy, a magistrate’s court convicted eight persons connected with Union Carbide India Ltd (UCIL) and sentenced them to two-years’ imprisonment for causing the death of over 15,000 people by negligence. Among these was Keshub Mahindra, the 85-year old chairman of Mahindra & Mahindra (M&M). The verdict shook up India's corporate honchos. Everybody knows that, 26 years ago, being offered the chairmanship of a multinational company was an honour akin to being the Honorary Consul General of a country. They occupied a largely decorative post, attended board meetings, built global connections and, in the insular economic environment of those days, occasionally helped open doors for the MNC in Delhi. While nobody wants to talk openly about the judgement, industry associations and industrialists are all solidly behind Mr Mahindra. The case will wind its way through different levels of the judiciary and it will be decades before a final decision by the apex court.

The question really is: Should Mr Mahindra step down from his various directorships? Obviously, his close advisors and lawyers have been telling him not to bother. We believe he is being wrongly advised. “How can he be held liable when he had nothing to do with running Union Carbide,” ask his sympathisers. Well, it is not about whether he is liable, but about the law and the legal process. Instead of getting a bunch of lawyers to split hairs over what the Companies Act decrees, it would be in good order for Mr Mahindra to step down voluntarily, until the legal process is completed. The whole country is now outraged by the travesty of justice in letting off Warren Andersen even as various Congress ministers and spokespersons are at pains to convince us that nobody can, or must, be held responsible for the unspeakable tragedy that claimed over 15,000 lives.

It is hardly the time for corporate India to whine about lack of independent directors or that they should have no accountability. Let’s face it. Stricter corporate governance rules have meant extraordinary perks and payments to ‘independent’ directors, precisely to ensure that they question management. Even today, companies make no attempt to offer directorships to anyone who will be truly independent; that is the reason for the alleged scarcity of directors in a nation of over a billion people. There is a lot that is wrong with India’s legal process, its investigation and enforcement machinery and the colossal corruption that is responsible for it all. Corporate India has never made any systematic attempt to use its clout to clean up the system, because it has learnt to live and thrive in dirty politics. But to use the Bhopal judgement to make a case for less accountability for non-executive directors or chairmen would be a big mistake.
Sucheta Dalal

-- Sucheta Dalal