Those trouble-makers in ITC are in deep trouble themselves, finally. The fight for management control in the board room that began in 1992 now threatens to finish all the company's board members between 1991 and 1994 along with their accomplices outside, following the chargesheets issued last week by the Enforcement Directorate to some 20 former and existing ITC directors in the $ 110-million foreign exchange violation case.

Rightly, ED has spared none, neither chairman emeritus Krishen Chugh, nor the present CEO Yogi Deveshwar. Worse-still, those part-time nominee directors representing two main groups of shareholders, the UK-based promoter BAT and Indian financial institutions, the real shadow boxers in the power tussle, have also been charge-sheeted.

Although the nature and contents of the chargesheets to those FI nominees are not very clear since one of the business dailies has referred them as `show-cause notices,' this is certainly for the first time that government-controlled institutional nominees have been directly implicated as being participants in unlawful corporate activities.

These nominee directors have been exercising full authority without any responsibility. In ITC, the FI nominees have been practically in total control of the board since 1991. ED's deputy director KK Kabirpanthi seems to have done as good a job in the ITC case as CBI's high profile joint director U N Biswas in the Bihar fodder scam investigation.

Behind the ITC management's struggle for holding on to the power were known be some of the country's most powerful bureaucrats and politicians. At this stage, I am particularly happy that ED, working under heavy pressure these days from their high ranking political masters in the government, had chargesheeted the firm's non-executive directors and the executive chairman, who were interrogated but not arrested and detained and, thereby, giving an impression that they had no major role in the alleged Fera violation of such gigantic nature.

Former ITC chairman Jagdish Sapru, who was arrested and detained in connection with this case, has not yet been served with a chargesheet. Although Sapru's name figures in the `Bukhara' restaurant case in the US, a brainchild of Chugh, may not be involved in subsequent developments leading to an alleged Fera violation.

ITC's non-executive directors behaved probably most irresponsibly during the whole episode by refusing to take full cognisance of the special audit report and deposition before the ITC's board audit committee by some of the ITC senior executives and whole-time directors.

While the FI nominees seem to have a single point agenda of keeping the executive management in power, BAT nominees, fighting for the management control, conducted themselves poorly by not focussing on the exact nature of financial irregularities allegedly committed by Chugh and his close associates in the company.

BAT probably knew ITC's all activities abroad. It was unlikely that the BAT Industries chairman issued a press release alleging `financial irregularities' in ITC and his loss of faith in the then ITC chairman, Chugh, without specific knowledge of such irregularities. It is possible that BAT was afraid to disclose the questionable ITC deals abroad as that could have established the British tobacco giant's involvement, directly or indirectly, in some of them, including alleged transfer pricing in leaf tobacco export.

If this is true, BAT nominees on the ITC board are as much a party to the Fera violation case for concealing vital information as the FI nominees for trying to ignore the other available information to protect the executive management.

I only hope that ED has done its homework well so that the charges could be proved genuine and held good in the court of law, leading to conviction. It will be an extremely good lesson for the government, its financial institutions and ITC's overseas promoters.

I do not agree with some of my friends in the corporate sector that Chairman Deveshwar and his other colleagues on the ITC board, who have been chargesheeted by ED, should immediately resign in keeping with a good tradition of corporate governance.

No one is guilty unless convicted by the court. This is exactly what Bihar chief minister Lalloo Prasad Yadav has been saying in defence of his decision to continue in the job until found guilty by the court. I agree with the Bihar CM in the view of the Delhi high court judgement against the CBI in the Jain havala case.

While the prosecution failed to establish the charges against some of the top politicians allegedly involved in havala deals, a state chief minister lost his job and parliamentarians their seats. Politicians and businessmen have the ability to bounce back from the brink to their respective businesses. And, they often do. But, it is not so easy for professional executives.

However, if ED's charges are established and those facing them are convicted, they will have no choice but to leave ITC in disgrace. In fact, many senior ITC executives, who could never imagine that their bosses were capable of such activities, have long been in the opinion that the government should have instituted a full-length investigation into the Fera as well as the excise evasion cases after forcing a total board-level clean-up by asking the directors to leave.

Disgusted, some of these senior executives left ITC and one, Kamal Ramnath, a dear friend, died a premature death of a heart attack. It is within the powers of the company law board to appoint any number of directors on the board of a company and then act against the existing management in public interest. ITC is fundamentally too strong a company to be destabilised by the sacking of one or all the members of its board.

Its financial performance in the last five years, despite the chaos and confusion at the board level, is a glaring example of ITC's intrinsic management strength. I wish ITC soon gets a management it truly deserves.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.