Corporate governance, Mr. Narayana Murthy, Mr. K.V. Kamath and NDTV?

Is Corporate governance in India selective? Would Mr. Murthy like to clarify?

Is Corporate governance in India selective? Would Mr. Murthy like to clarify?
Is Corporate governance in India selective? Would Mr. Murthy like to clarify?
D A T E S & E V E N T S
Date What happened
October 13, 2008 In an exclusive interview to NDTV, Prannoy Roy lobs easy questions to K V Kamath, Chairman ICICI, when there was a run on the Bank and everyone was edgy about their money with ICICI Bank.
October 14, 2008 ICICI sanctions a personal loan to Prannoy Roy and Mrs. Roy of Rs. 350 cr. (under examination by CBI)
February 20, 2009 N R Narayana Murthy emails explicit intent to quit NDTV Board to Prannoy Roy that is concealed from Exchanges/ SEBI and Shareholders.
May 2, 2009 K V Kamath joins/ appointed on Infosys Board
August 3, 2009 NDTV control changes hands to VCPL and funds used to pay back ICICI bank (Rs. 350 crores) resulting in loss of 48 crores to ICICI Bank as per CBI FIR.
September 17, 2009 N R Narayana Murthy resignation made public and papers filed with ROC and Stock exchanges.

Ever since NDTV was listed and until September 2009, Prannoy Roy took pride and made it a point to “tom-tom” that Mr. N.R. Narayana Murthy (NRN) is on the Board of NDTV and Infosys and he is not on the Board of any other Company in the world. It was like a badge of honor awarded in a battle and of course a certificate of highest corporate governance standards NDTV stood for.

What is extremely perplexing is that NRN clearly expressed his intention to quit in a communication to Dr. Prannoy Roy on Feb 20, 2009, but this fact is not disclosed, or recorded at a Board Meeting…

Now that NRN is grabbing the headlines last 24 hours, PGurus did some digging and came across some interesting facts for Prannoy Roy and Mr. Narayan Murthy to answer –

In the filings made with ROC (Govt of India records), we found that Mr. Murthy / NDTV has filed a resignation letter from the Board of NDTV dated September 17, 2009. However, what is of complete intrigue and very suspicious is the fact that Mr. Murthy qualifies this letter (copy below) of September 2009 (unlike any other instance for a listed company, legal practice or convention) by stating the following paragraph:

…I am not In a position to devote time to my duties as a member of the NDTV Board. Hence, as communicated to you in my email dated February 20, 2009, I would like to relinquish the position of a director at NDTV.

What is extremely perplexing is that NRN clearly expressed his intention to quit in a communication to Dr. Prannoy Roy on Feb 20, 2009, but this fact is not disclosed, or recorded at a Board Meeting or more importantly as per law not taken as the resignation date. The Board records the resignation date as September 17, 2009. It is a well-established convention and settled law that as soon as a Director expresses his unequivocal intention/ intent to resign from the Board of a Listed Company, as a matter of corporate governance and transparency, Dr. Prannoy Roy should have informed the Board and thus the minority shareholders. This fact is of further legal relevance as the qualified “official resignation” letter that is uploaded on the ROC website along with the statutory Form 32 (below) by the referred Para that states that effective date of resignation is actually Feb 20, 2009.

The above is a very serious breach if looked at in light of the fact that being the first corporate citizen of India and respected World over for ethics, transparency, and corporate governance practices, NDTV was the only Company whose Board NRN served as an Independent Director and the fact that he had unequivocally communicated his decision to Resign on Feb 20, 2009 this becomes a price sensitive information for not only the minority shareholders of NDTV but also an event in the Indian Corporate sector as NDTV claims to be the most respected Media brand in India that always took pride and in fact and “capitalised NRN’s presence on the Board” with Investors and general shareholder community the world over. Why wasn’t this fact made public by NRN and Prannoy Roy? What was the motive of back dating this event in the September 2009 letter?

This issue gains phenomenal significance and is also of investigative value as during the period February 20, 2009, and September 17, 2009 certain events and transactions have taken place where it is clear from public disclosures that the Promoters had transferred control in the Company to an unknown person (3rd August 2009 it seems) or have done certain transactions involving their equity stake (26%) that contravene the various Disclosure, SEBI Regulations and other Laws of RBI and I and B Ministry etc.. What is of complete intrigue is the illegal change of control (now determined by SEBI in favor of a bogus entity – Vishvapradhan Commercial P. Ltd.) i.e. 26% voting rights in NDTV was, it clearly appears, done with the knowledge of & complicity of ICICI Bank under the chairmanship of Mr. K.V. Kamath, who also happens to be a colleague and good friend of NRN and was on the Board of Infosys Ltd. In fact, NRN would have been clearly aware of Indian banking practices and laws as no Loan or structuring transaction of a magnitude of Rs. 350 plus crore can be done by a Bank without the approval of the Chairman / Board of the Bank. Thus, did NRN, K V Kamath along with other officials of ICICI Bank make this happen to favor Prannoy Roy and Radhika Roy with some quid pro quo or on behalf of some other beneficiary?

Another interesting dimension comes to play here, was Mr. Murthy aware of the fact that the signing partner of PWC (statutory auditors of NDTV) was also the signing partner of promoters personal holding company (RRPR Holding P Ltd). Besides, the same person two years back left PWC and is now on the Board of NDTV as an Independent Director! Not to mention that RRPR Holding and Roys personally are named in the FIR lodged by CBI on the ICICI Bank issue.

Of course, we have not heard the last of this as CBI has registered a First Information Report (FIR) in this matter on June 2, 2017, alleging wrongdoing by Roys and ICICI Bank. Would it not be relevant that CBI & SEBI also question all the Board members (including NRN) about the shenanigans during that period and why such material information was concealed from all? Besides the legal aspects, all three stalwarts here (NRN, K V Kamath, and Prannoy Roy) need to clear the air and of course uphold the basic principle of probity in public life before preaching and talking about ethics, values and corporate governance.

Remember Prannoy Roy interviewed Mr. Kamath during a turbulent period of ICICI Bank when it appeared as though there was going to be a run on the bank! The interview date was August 13, 2008. And when was the loan from ICICI to NDTV sanctioned? August 14, 2008! And who went on to join the board of Infosys on June 20, 2009? Mr. K V Kamath!

We have obtained a copy of NRN’s resignation letter to Prannoy Roy from RoC filings (Form 32) and are showing it below:

Narayana Murthy_resignation Letter Feb 20 2009 Communication by PGurus on Scribd

Team PGurus

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