News that Ireena Vittal has resigned from the position of independent director on the board of Axis Bank has focused the spotlight again on the issue of gender diversity in Indian corporate houses. Vittal resigned from the position, ostensibly, to avoid conflict of interest arising out of Bharti Airtel winning a payments bank licence in partnership with Axis Bank. Bharti Airtel’s CEO, Gopal Vittal, is Ireena’s husband.
Earlier this year, the Securities and Exchange Board of India (Sebi) came out with guidelines to include women on corporate boards. The Sebi move was occasioned by the fact that several companies did not have even a single woman director on their boards. Listed companies that did not meet the requirement were fined Rs 50,000 with additional penalties to kick in if the situation was not rectified in six months.
But gender diversity in Indian corporate boardrooms continues to be a mirage. Even when women make it to corporate boards, they are hardly independent. Often wives and associates of the proprietors are given board positions, making a mockery of the concept of independent directorship.
Given this background, Ireena’s resignation counts as a wise move. She may have taken the step to pre-empt any questions on her independence given that she is Gopal Vittal’s wife. A report in The Economic Times on September 3, 2015, however, also sought to portray her resignation as a case of gender bias. The report quoted HDFC chairman Deepak Parekh as saying that the resignation was an “overreaction”.
On Twitter, the issue was taken with the headline of the report itself, which read: “Gopal Vittal’s wife's exit from Axis triggers row”. Commentators lambasted The Economic Times for referring to Ireena as Gopal’s wife, and not an individual who has had an illustrious career of her own.
There are two issues here. The conflict of interest arises from Gopal’s company getting the payments back licence. So, of course, the Economic Times story was headlined to reflect that. Ireena left the Axis Bank board for no other reason but her husband’s stewardship of a company with which her own (as independent director) company now has a commercial transaction. This is a clear-cut case of conflict and Ireena wisely opted out.
Second, Ireena sits on the boards of many other companies such as Titan and Wipro; so it is unlikely that her resignation had anything to do with her gender. That The Economic Times chose to go with this line is surprising. The news report said: “Some like Rama Bijapurkar, who was an independent director on the Axis Bank board for nine years till January 2013, allege a gender bias saying India still cannot accept that women have identities independent of their spouses.”
Consider a situation. Suppose an issue comes up before the Axis Bank board demanding a vote on a commercial transaction with Bharti Airtel in relation to the payments bank licence. Would Ireena’s vote be eligible in that case, given that her husband is the CEO of the benefiting company? This is corporate ethics 101 and it is surprising that the issue is being framed in another way.
The problem is that, we as a society, seem to have such a poor recognition of the concept of conflict of interest that we fail to honour people such as Ireena who take a principled stand. In doing so, we risk attributing motives to them or their organisation which further damages this important conversation.
Instances of conflict of interest come up again and again in our public life. It raised its ugly head repeatedly over the last few months. External affairs minister Sushma Swaraj had appealed to the British government to help the controversial former IPL boss Lalit Modi obtain visa papers when her daughter was employed in a firm that represented Modi. While this case made headlines, conflict of interest is a widespread phenomenon in Indian politics, as highlighted by an ongoing Newslaundry series.
There is a third issue. We are, rightly, quick to criticise proprietors when they instal their family members in board positions. A Reuters report from earlier this year said: “Reliance Industries, India's largest conglomerate by market value, has installed the wife of chairman Mukesh Ambani, while the stepmother of tycoon Vijay Mallya now sits on the board of Mangalore Chemicals and Fertilizers.”
If we are going to call out these instances of impropriety, then we should be equally attuned to cases of conflict when management is involved. It is therefore heartening that a senior corporate executive - who is not even the owner of any company - has taken the right stand on this issue.