Palepu may have to quit DRL board

10 Jan 2009, 0424 hrs IST, Rumi Dutta & Dev Chatterjee, ET Bureau

MUMBAI: Havard Professor Krishna G Palepu, the former non-executive director of Satyam Computer Services, may have to step down from yet another company board. Following India’s biggest accounting scandal, Dr Reddy’s Laboratories has informally asked Mr Palepu to resign from its board where he is an independent director. A source in Dr Reddy’s Lab told ET that the company’s senior management has sent feelers to Mr Palepu to quit.

The company’s board is meeting on January 20 to consider the December quarter results. His role is expected to be discussed during the meeting

Mr Palepu was a non-executive director on Satyam’s board, which cleared the books cooked under Ramalinga Raju’s leadership. “We have not heard from Mr Palepu so far. While other directors have confirmed attendance at the board meeting, Mr Palepu has still not contacted us,” a source at Dr Reddy’s said.

A Dr Reddy’s spokesperson said the company had no comments to offer. Several e-mails to Mr Palepu remained unanswered.

Satyam’s annual reports reveal that the Harvard professor had received a remuneration of Rs 90 lakh from Satyam as he was conducting customised leadership programmes for Satyam’s employees. Ever since Satyam announced the controversial acquisition of Maytas Properties and Maytas Infrastructure, Mr Palepu has not spoken on this issue. He, however, resigned from Satyam’s board in the last week of December.

Incidentally, Mr Palepu was also on the board of Global Trust Bank (GTB) which collapsed in 2002 following an accounting scam.

In a reply to an earlier ET questionnaire, the Harvard Business School clarified that it has nothing to do with Mr Palepu’s actions while serving on the boards of Indian companies. “The situation you describe would have nothing to do with Harvard University or Harvard Business School
as institutions. The HBS faculty is involved with companies as individuals. All correspondence on this matter would have to be directed to Prof. Palepu himself,” a Harvard spokesperson said on December 22. A subsequent email and a telephone call to HBS after Ramalinga Raju’s mea culpa yesterday did not elicit any response.

TR Prasad, former cabinet secretary and an independent director on Satyam board, had told ET that none of the independent directors were aware of the accounting fraud in Satyam and they came to know about the cooked books only after they received an email from Mr Raju. “We had relied on the auditor PricewaterhouseCoopers on this as it was they who audited the results.”

PwC, on the other hand, has said it relied on documents supplied by the company. PwC was involved in auditing Global Trust Bank as well.


via:E.T