In yet another sign of growing bitterness in the IndiGo cockpit, independent director Anupam Khanna has pointed out to "tremendous trust deficit" in the board and has suggested chairman M Damodaran to immediately implement confidence-building measures.
"Needless to say, tremendous trust deficit has built up that we as a board must wring out, but that will take time and we need confident-building measures today," Khanna wrote in an email to Damodaran on August 5.
Khanna, a non-executive independent director on the airline's board, has also questioned the approach adopted by Damodaran in resolving the issues raised by co-founder Rakesh Gangwal.
Khanna questioned the reason behind Damodaran's decision to implement the new policy on related-party transactions and approving the resolution on board size post the annual general meeting of August 27. These matters were also raised by Gangwal in his letter to the board of directors on August 5.
"Turning next to the new governance issues that emerge from your approach, I do not see the logic behind scheduling meetings after the AGM. We had agreed to complete the process by passing resolutions...if a meeting is necessary, it should be held before the AGM," Khanna added.
As the matter has been festering for over a year, Khanna also asked the chairman to communicate the uncertainty regarding the two contentious issues to the shareholders, financial markets and the regulator.
The mail written by Khanna was shared by Gangwal, on his website. Khanna was a year senior to Gangwal at IIT Kanpur.
Sharing the letter, Gangwal accused "certain company executives" of not informing the stock exchanges of Khanna's letter to Damodaran with regard to the differences regarding approach adopted for a new policy for RPTs and the board's size.
"Interestingly, certain company executives decided not to upload a relevant email dated August 5, 2019, from Anupam Khanna, independent director and chairman of the nomination and remuneration committee, in which Khanna responded to Damodaran. Allow me to correct the omission on part of the company by sharing Khanna's email," Gangwal said on his website, where he attached the letter.
IndiGo had called this website as unreliable and misleading in an exchange filing on August 6. In the same exchange filing, the airline had uploaded two emails, one from Gangwal and the other from Damodaran.
The emails indicated that Gangwal and Khanna have asked the board to implement the new RPT policy and appoint an independent woman director immediately, ahead of the annual general meeting that will take place on August 27 However, in response, Damodaran assured that these matters will be addressed post AGM, hence the timing for these measures appears to be the bone of contention now.
Khanna's letter to Damodaran seems to be creating "a serious new governance issue."
"Moreover, a serious new governance issue appears to be emerging with the approach you have laid out (specifically related to holding various meetings after the AGM). More specifically, the issue that remained to be resolved concerns the risk of questionable decisions and has nothing to do with the competence or integrity of the independent directors," Khanna wrote in the letter.
He was responding to comments made by Damodaran in his letter, where the chairman had called the concerns of Anu (Rahul Bhatia's InterGlobe Enterprises) pushing through questionable decisions as unfounded.
"The fear that, in the interim, the IGE group will push through questionable decisions, does no credit to the IDs that will be on the board, or to the fiduciary responsibilities of the directors including those nominated by the IGE group," Damodaran had said in his email on Aug 5 to the board of directors, company secretary Sanjay Gupta and CEO Ronojoy Dutta.
In the email to Damodaran, Khanna has supported his argument of appointing an independent woman director immediately and approving the resolution to mandate the appointment of IGE nominees after the appointment of independent directors and that the IGE group can ride roughshod over the opposition of all directors.
"The safeguard is precisely for situations when the full complement of IDs (independent directors) is not in place and the IGE group with its numbers can ride roughshod over the opposition of all directors. This has happened in the past and our fiduciary responsibility compels me that this risk must be avoided to safeguard the interests of minority shareholders as well as other stakeholders in the company and the national public," Dr Khanna said in support of his argument.
Khanna reiterated that the resolution on policy changes with a condition of four independent directors on the board needs to be circulated right away as a "guardrail."
He also claimed that he was prevented from appointing an independent woman director even when he is the chairman of the nomination and remuneration committee.
"...I was stymied from taking proper and timely action on inducting a woman director or indeed the second independent director (a position you filled)," Khanna said.
First Published: IST