<b> Street Food:</b> Men on boards and those who aren't

Even as the world was busy with the unceremonious exit of Cyrus Mistry from the Tata group, another shock exit seems to have been quietly in the works.

The resignation last week of National Stock Exchange’s (NSE) managing director and chief executive officer, Chitra Ramkrishna, 52, well before the completion of her tenure in March 2018, came a surprise to many. With the press release citing ‘personal reasons’ raising more questions than it answered, tongues have started wagging on what these reasons could be.

While this column does not want to join the speculation, it is common knowledge in exchange circles that some anonymous letters have been floating around, which have also reached the regulator.

Some of these whistleblower letters were about algorithmic trading and co-location facilities; others were not. When Mumbai-based MoneyLife magazine reported about one of these letters, Ramkrishna and her trusted lieutenants decided to sue the magazine and its founders for damages of Rs 100 crore.

In the decade or so I have followed the bourse, NSE’s media strategy has ranged from being friendly during new product launches, being economical with information at other times and becoming aggressive when something uncomfortable comes up. But, even by those standards, taking journalists to courts was uncharted territory.

The move badly backfired. A single-judge bench of the Bombay High Court called the exchange ‘arrogant’ and wondered if there was truth in those anonymous letters. Though an appeal was moved, the very reputation that was sought to be protected by the case lay in shambles.

In hindsight, this triggered more media scrutiny into the allegations. Follow-up letters from the Singapore-based whistleblower did not help. As the finance ministry and the Securities and Exchange Board of India got into the act, the focus increased on the people running the show. Former Competition Commission of India chairman Ashok Chawla was brought in to get things back on track.

Soon after her appointment to the top post, Ramkrishna hired the services of a consultant named Subramanian Anand. His credentials and qualifications to ‘advise’ Ramkrishna on the matters of the exchange, where she had spent nearly half her life, remain vague even now. While some exchange communications talk about his ‘21 years experience’, people in the know say not many of these were spent in senior positions on prominent institutions of the stature of NSE. Some senior people who'd been with the bourse since inception quit.
 

Though hiring of consultants was not an abnormal practice, the substance of Anand’s engagement, including the powers and remuneration, were more like that of an employee. In March 2015, he was made the director of NSE IT, the bourse's information technology arm. From April that year, he was designated group chief operating officer.

Such critical appointments normally go through the nominations and remunerations committee of the board, which would have brought in the needed validation of credentials and justification of remuneration. As pressure built from multiple quarters, Anand is said to have decided to end his contract in October.

It would be interesting to know if the board of directors, especially the public interest directors, raised the relevant questions on both these issues when they first came up over two years ago.

The larger question is whether managements of companies and institutions should be allowed to use non-board people for critical functions and use board members as rubber stamps. Why do people taking board positions, who usually come with eminent credentials, agree to be yes-men of managements, howsoever star-studded these might be? Should appointment letters of board members come with a mutual fund-like disclosure saying, “Past track record no guarantee of future performance?”