August 2, 2010 6:57 pm
Shareholders of Mahindra & Mahindra, the Indian industrial conglomerate, have re-elected Keshub Mahindra, a revered business elder, as the company’s chairman in spite of his conviction over his role in the Bhopal gas disaster.
In July, 86-year-old Mr Mahindra, formerly the non-executive chairman of Union Carbide’s Indian subsidiary, was the most senior executive to be convicted of negligence in a court ruling over the industrial accident at the company’s Bhopal pesticide plant in1984.
He and six others face a two-year jail sentence and a fine of Rs100,000 ($2,000) for one of the world’s worst industrial accidents that killed more than 23,000 people. He is on bail and has appealed against the judgment, handed down in Bhopal on 7 June.
Mr Mahindra’s re-election is a test of corporate governance standards in India that have come under greater scrutiny since the financial scandal at Satyam, one of the India’s largest IT outsourcing companies.
Mr Mahindra has also been re-elected to the board of HDFC, one of India’s private banks.
Salman Khurshid, the minister of corporate affairs, has been drawing up new legislation to update the 1956 Companies Act to strengthen the role of non-executive directors in companies, typically dominated by family owners.
Mr Khurshid has described Mr Mahindra’s decision to remain chairman as reflecting a well-considered “legal consultative process” and has warned against any hasty government intervention.
Arun Nanda, an M&M director, said the company was “sure that there was no contravention of the act” and that a non-executive director could serve on a company’s board if an appeal of a court judgment was under way. He said there was “no ambiguity” in the law.
Mr Mahindra is one of India’s most celebrated industrialists and has implemented a code of conduct for directors at M&M. Educated at the University of Pennsylvania in the US, he first became chairman of Mahindra & Mahindra in 1963.
Mr Mahindra also sits on the board of Bombay Dyeing, the Mumbai-based textile company.
His nephew, Anand, has internationalised the Bombay Stock Exchange-listed group, which is today India’s largest tractor producer and sports utility vehicle maker.
Pradeep Mehta, the secretary general of CUTS International, a Jaipur-based think-tank on trade and regulation, said Mr Mahindra had already stepped down from a prime minister’s advisory committee on trade and industry and should probably “hang up his boots” from an official role at his family’s company.
“At this stage [of his life], it would have been a good time to go into the sunset,” he said.